DEAL FUEL BY ROCKET EQUITIES — January 2022
The Blizzard in the Gaming Revolution
“The deal that will change the industry forever”: Analyst
‘Call of Duty’ creators Activision Blizzard has recently been bought in an all-cash deal by Microsoft for $68.7 billion US.
With this latest acquisition, Microsoft strengthens its position in creating their METAVERSE where they can combine Activision’s strong presence in mobile gaming with their cloud technology capabilities and give Xbox the edge in console gaming.
According to Global Data principal analyst Rupantar Guha, this is one of the “biggest tech merger and acquisition” in history not just in gaming but in the entertainment industry. Disney’s acquisition of 21st Century Fox for $71.3 billion in 2019 and Take two’s acquisition of social game developer Zynga early this year for $12.7 billion were some other notable transactions in the recent past.
MiDIA Research’s senior analyst Karol Severin describes that this deal has been ‘transformational for subscription adoption, the publisher landscape and the competition in both the console and cloud tech spaces.’
Mobile gaming is critical for Microsoft to reach the three billion gamers worldwide. Making Call of Duty exclusive to Xbox — or even just included as part of Game Pass — could be just the differentiation strategy for Xbox and seal the deal for them when these consumers decide between Xbox Series or PS5.
For More — Connect with us at deals@rocketequities.com/.
Latest From RE’s Cutting Edge Industry Research
Monetization in Esports — What is it Now & What’s Next
A look at the different segments and how they are monetized in esports & gaming.
RE TITBITS
According to Mordor Intelligence, the global gaming market was valued at USD $173.70 billion in 2020 and is expected to reach a value of US $314.40 billion by 2026, registering a CAGR of 9.64% over the period of 2021–2026. Asia Pacific is the largest market, followed by Europe & North America, Middle-east & Africa is the fastest-growing market for gaming.
As of 2020, China ranked first among the biggest gaming markets worldwide, with global revenue of $40.85 billion. In comparison, the market in the United States ranked second, generating approximatly $36.92 billion in annual revenues. A trend we have seen continuing in 2021, as shown in the figure above.
With countries like China, Japan, South Korea, Germany, France, Italy, and Spain featuring among the top 10 countries driving revenue in the industry, there also is a pressing need for the publishers to localize their games to suit the domestic markets.
Gaming companies can tap into the revenue being generated in the industry by adapting games across regions, overcoming the language barrier, acquiring a loyal userbase, and building a global community.
So, for a game publisher to truly unlock the earning potential of their game, the game has to be available to players across these countries, in their local languages, appeal to their cultural preferences, and be popular among the gaming communities of these regions.
Revenue within the video gaming industry has exploded in recent years, with the mobile gaming market alone worth over 77 billion U.S. dollars in 2020.
Game publishers have to be creative in terms of generating revenue with the rising demand forof free- to- play games. Some of the common monetization strategies include :-
· Publishing the game on digital distribution platforms like Steam and earning money against every time the game is purchased from the platform
· In-game advertisement for mobile games
· Downloadable content or DLC
