J. Clement
Research lead covering internet and gaming
In October 2023, the biggest video game merger and acquisition saga of all time finally came to an end – Microsoft concluded its purchase of gaming giant Activision Blizzard, making this the biggest video game company acquisition in history. The COVID-19 pandemic increased M&A activity in the gaming industry, with companies eager to spend money on extending their footprint within a booming market – however, as of 2024, the tide has turned, and the gaming sector is currently dealing with the consequences of high levels of industry consolidation and overspending in better times.
In 2023, more than 11,250 people working in the gaming industry lost their jobs due to layoffs, and 2024 is not shaping up to be much kinder. In January 2024, Microsoft laid off about 1,900 gaming division employees, with half of the layoffs occurring at the freshly integrated Activision Blizzard, drawing the ire of industry regulator FTC , which had already in December 2023 filed to appeal the decision to approve the merger. While unlikely to reverse the biggest M&A in gaming history anytime soon, the consequences of this deal are a preview of the trials that the gaming industry will have to undergo in the next few years.
What goes up must come down
In 2023, the annual value of video gaming industry mergers and acquisitions (M&A) amounted to over 76 billion U.S. dollars. The console segment accounted for the most significant share of the total, almost entirely due to the closing of Microsoft's acquisition of Activision Blizzard for 68.7 billion U.S. dollars. The annual number of closed gaming industry M&A in 2023 amounted to 121, down from a peak of 322 mergers two years before.Hey big spender
Despite the general contraction of the gaming market, some companies are still making big strategic investments with hopes of long-term payoff. Chinese digital giant Tencent and its various subsidiaries were the top strategic buyer in terms of video game industry mergers and acquisitions in 2023, closing five public deals at a value of more than 1.58 billion U.S. dollars. Tencent's M&A activities were ranked first in deal volume, but Savvy Games Group placed first in terms of gaming M&A deal value during the measured period. The game company, backed by Saudi Arabia’s Public Investment Fund (PIF), spent about 4.9 billion U.S. dollars in gaming-related mergers and acquisitions.Impact of the M&A frenzy
After the boom times of the pandemic , when media and digital industries saw record highs in spending and investment, 2024 paints a very different picture. Gaming companies are reassessing their needs and trimming down their operations through closures, layoffs, and divestitures – and some businesses are hit harder than others.In 2023, more than 11,250 people working in the gaming industry lost their jobs due to layoffs, and 2024 is not shaping up to be much kinder. In January 2024, Microsoft laid off about 1,900 gaming division employees, with half of the layoffs occurring at the freshly integrated Activision Blizzard, drawing the ire of industry regulator FTC , which had already in December 2023 filed to appeal the decision to approve the merger. While unlikely to reverse the biggest M&A in gaming history anytime soon, the consequences of this deal are a preview of the trials that the gaming industry will have to undergo in the next few years.
