Major acquisitions and mergers create giant consortia that will seek to define their entertainment holdings, creating a franchise ecosystem.
2022 saw the culmination of development and investment aimed at creating a changed landscape for entertainment consumption. The conditions seem ripe to lead entertainment brands towards consolidation, mergers and growth.
The market, thanks to increased investments, sees large companies seeking to create franchise ecosystems on the main platforms, and a physical presence is now becoming as important as a digital, online and connected presence.
Developments in the out-of-home entertainment scene continued to accelerate. Recent months have seen increased investment in existing developments, with funding for restructuring and growth as well as a hunt for new entertainment hardware.
One such example was seen during Round 1 USA, which revealed that a considerable import of Japanese entertainment cabinets will take place in US venues. The operation had started a new investment towards opening additional venues and updating already opened venues to stay ahead, providing unique entertainment.
Streaming Content Interruptions
The streaming content landscape, for its part, has seen the most incredible restructuring due to the impact of consumer consumption caused by the various lockdowns, and also by a consolidation movement from the film and entertainment industries towards the creation of a new streaming (digital) content ecosystem .
Major power plays have defined the end of 2021 and the beginning of 2022 in this market. One such example comes from the constant rumors surrounding streaming platform Roku seeking to acquire studio and entertainment giant Lionsgate. This is seen as a future development following Amazon’s acquisition of MGM.
Likewise, these developments have disadvantages as well as advantages. The streaming wars have seen big companies invest millions in market share, only to be decimated by poor implementation or market fluctuations. The Walt Disney Corp. has invested heavily in establishing its Disney+ streaming platform, but has yet to hit the astronomical adoption numbers set. The decline in subscriptions to the Disney service comes just as the company is restructuring to prepare for what it sees as the coming storm.
One of the major developments was the announcement last year of the ViacomCBS and Comcast deal. The move marked an effort to bring the respective company’s content to a wider audience, supporting their own streaming platforms and illustrating important developments in this area.
Meanwhile, the Paramount+ and Pluto TV platforms are competing in a complicated and volatile environment. Market share leader Netflix saw some $50 billion drop in value as it fell short of its major targets of hitting its target of 222 million subscribers by the end of 2021. need to strengthen the structure and establish market security is a factor. in the vast marketing budgets at stake, and the need to establish audience recognition.
In search of an evolving ecosystem
Consolidating the alphabet soup of streaming services was seen as essential in these feverish waters. The big names are seeing solidification achieved through a scalable ecosystem, including not only streaming entertainment, but also vast libraries of content and even, in some cases, a physical identity.
Sources see vast tech giant Apple poised to seek to consolidate its position. Already a leader with its Apple+ platform, the potential to grow a library of content and properties has sparked widespread speculation of a major acquisition in the future, with names such as Sony Pictures suggested as targets by some observers.
All of these developments can trace their implications not only to the impact of the pandemic, but also to the global restructuring of the streaming service, with industry analysts suggesting the streaming market saw spending exceeding $220 billion. It’s interesting to compare that to estimates from the gaming industry, recently valued at some $175 billion.
Video game players to win
These gigantic developments in streaming would soon be accompanied by similar gargantuan deals in gaming.
2022 had barely begun when news broke that two gaming giants were involved in merger talks.
It has been announced that Microsoft, the software and technology company, which also owns the Xbox games console and gaming platform, intends to acquire one of the biggest video game publishers, Activision Blizzard in a deal worth $68.7 billion. It will be the largest such deal ever seen in the video game industry to date and has yet to be confirmed by both boards, with possible federal review, but is expected to be ratified in 2023.
Meanwhile, Microsoft was looking to establish its Xbox brand, having launched the latest generation of the gaming platform, while also expanding its online game store (the Xbox/PC “Game Pass” service), surpassing the few 2.5 million subscribers.
There are several overlooked things about Microsoft’s acquisition of the Activision Blizzard empire. Many observers missed the fact that, as part of the acquisition, Microsoft would gain King – the powerhouse of mobile gaming applications, with popular properties such as “Candy Crush Saga” – a series that has been downloaded some 2, 7 billion times. The deal now gives Microsoft a powerful presence in the free-to-play online and mobile gaming industry.
Also overlooked was Activision’s ownership of Major League Gaming – a professional esports organization, tied to many of the major competitions surrounding Activision Blizzard games such as “Diablo” and “StarCraft”. This acquisition, now under the Microsoft banner, will disrupt the esports sector and could also promote the development of competitive leagues.
When it comes to the OOH scene, both companies have ventured into the entertainment business. More recently, Microsoft licensed its phenomenally popular Raw Thrills property to create “Minecraft Dungeons Arcade,” having also worked with the amusement developer on licenses such as “Halo: Fireteam Raven.” Similarly, Raw Thrills worked with Activision on a short-lived entertainment version of “Guitar Hero Arcade”, while King would partner with Adrenaline Amusement on “Candy Crush Ticket”.
News of the acquisition marks a period of feverish activity in the international gaming and investment industries. Mergers and acquisitions were being considered by many large companies, as they raced to position themselves in this changing global landscape.
Investors reacted positively to the news of Microsoft’s acquisition of Redmond Corporation.
The winners turned out to be smaller video game developers, who saw their investments increase as investors sought to benefit from the changing landscape. It is expected that more major deal announcements from other companies and studios are to come.
Many observers have attempted to portray these mergers and acquisitions in the streaming and gaming landscape as reactions to the establishment of a dominant position in the “metaverse”. The ability to deliver consolidated brand and content strength positions companies for success.
The definition of the metaverse and how it will define future business has been confusing, with some attributing it to the emergence of Web.3.0, a hyper-immersive virtual commerce space, successor to the current web. Meanwhile, others see the concept as a recreation of a virtual world environment consumed only in VR, a successor to “Second Life.”
Whatever the truth about what is on offer, these major acquisitions and mergers are creating giant consortia that will seek to define their entertainment stakes, creating a franchise ecosystem.
(Editor’s note: Excerpts from this blog post are from recent coverage in The Stinger Report, published by Spider Entertainment and its director, Kevin Williams, the leading interactive out-of-home entertainment news service covering the immersive frontier. and beyond.)