News Profit's Takes

The Video Game Industry Is Consolidating

Last week, Epic Games announced plans to purchase Tonic Games Group, the company that made Fall Guys. This move is just one of the hundreds of acquisitions that have taken place in the gaming world over the last several years. In this $180 billion industry, companies are finding it more and more difficult to survive on their own.

Jason Schreier, an Esports blogger for Bloomberg, says that consolidation in the gaming industry seems like a no-brainer. “Consolidation seems like a win-win. Sellers can guarantee themselves stability, while buyers get more content to serve a fanbase that’s hungry for new games. But there are also costs. An industry dominated by a handful of big companies could eventually lead to creative stagnation and other symptoms of monopolization, like limited choices and higher prices.”

The Profit‘s Take:

The author here is asking a great question worthy of discussion – is consolidation among game developers a good thing for the industry or not? My view is that it’s all good. Big game developers (or big companies in general) are not set up to be innovative. They will always struggle with true innovation. Consolidation means money makes its way down to successful entrepreneurial game dev teams, encouraging more startups, and bringing innovative thinkers inside big game developers. When those people leave after their lockup periods, they have money in their pockets to go start new game dev shops, and the cycle continues. This creates a healthy ecosystem of innovation and success. Consolidation is good and is the standard lifecycle of any successful industry.

(All information was provided by Bloomberg)

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