December
14, 2020
7 min read
This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.
Opinions expressed by Entrepreneur contributors are their own.
When I signed up for my annual prepaid service for sporting events channels in January of this year, I never imagined that for six months my indecision about which channel to put in the background while preparing my work pending for the next day would be reduced to the following finalists : 1970 horse races (by mere occurrence and curiosity) vs. the world leagues of international ESports all day, every day of the week, in any language, with commentators, subtitles, and even the option to enable a narration box in sign language. If this is not vanguard and acceptance of the masses, then I do not know the definition of those two words.
Don’t get me wrong, it’s not critical. In fact, I have learned to live and accept myself without having to hide it: I am a lawyer by day, and a gamer by night. And I don’t feel so alone, because according to data from Statista , at the end of August this year, it was me and 2.7 billion other casual or professional gamers in the world; about 266 million in Latin America alone.
My passion for what were in those days black and white screens and “cartridge” operating systems was started, against all odds, by my mom. My first memories in the world of video games are in the summer without schools, sitting in front of the box television, connecting my Super Nintendo with yellow, red and white cables, listening to the instructions of my mother who, although she never played a video game, she was more involved in the story of the plumber with the mustache and red hat than I was. Proof of it? The magazines she bought with clear instructions on how to finish the game 100 percent perfectionistly.
But what seems to be an industry of good times, leisure, and for some vice, in reality is a world of corporate jealousy, pitched battles that unfold at the limit of what is allowed by the anti-monopoly authorities of the world, and above all , billion dollar transactions (valued in US dollars) with one purpose: That my 2.7 billion fellow gamers and I consume.
The unquestionable need of the world in these times of confinement to do everything from the comfort of our homes and cell phones, makes the valuations, returns and profits that the large video game companies have brought to their investors in these months go unnoticed; Proof of this is the return of EA ( Electronic Arts ) of approximately 20% in the value of its shares from January of this year to date, or the almost 45% increase in the value of Nintendo’s share in the same time frame.
In the world there are 2.7 billion casual or professional gamers according to Statista / Image: Depositphotos.com
It is obvious, The Washington Post published it after a study carried out by themselves: the sales of video games, consoles, accessories and ” add-ons ” jumped equivalent to 35% of the sales of the same period in 2019.
This news goes unnoticed only because the earnings of streaming entertainment companies, service companies for the purchase and sale of goods online, monopolize the front pages for their increases well above the aforementioned percentages.
It is precisely in this “dark side” and stealth of the video game industry, where my daytime profession meets my nighttime hobby; Each of these transactions, negotiations, acquisitions and in general, power-plays of the three main players in this industry ( Microsoft , Sony and Nintendo) have behind complex negotiations, extensive periods of due diligence, stretches, loosening and many lawyers.
I was talking about it with colleagues a long time ago: today we are in the middle of a battlefield where Microsoft and Sony are in a race to cover as much content as possible, exclusively and jealous for their respective consumers; Nintendo watches from afar because its consumers and users are usually also consumers and users of Microsoft or Sony, but never both. This phenomenon is known in gamer slang as “Console Wars” ; Sony and Microsoft fight to restrict video games that previously could be played on both consoles, to only one, thus forcing consumers who consider themselves loyal to a video game franchise to have to change consoles in order to continue playing the games that are of their choice . The consoles have new models every two or three years, and the average price of the last generations of consoles has been $ 400 to $ 500; Let’s take that number against the number of active consumers in the world and get a good idea of the amounts that these hardware sales represent.
Proof of the above is the news that a few days ago shook the world of financial markets, law firms specialized in intellectual property and Media, and we gamers. The surprise acquisition of Zenimax, a controlling company of studios that develop video games, by Microsoft was made public. The surprising thing: Zenimax has 8 development studios, each studio has its extensive catalog of intellectual property and video game franchises that have been in the heart of the consumer for decades, and the price that Microsoft had to pay for this total acquisition was $ 7.5 billion. American dollars.
What a surprise I was when, before reading the details and numbers of the acquisition, the authorities in matters of prevention of monopolies and unfair competition could not stop the transaction, citing that the operation did not meet the initial requirements for an investigation, justifying that The operation was NOT a merger between peer competitors (horizontal merger / acquisition), but rather the acquisition of a content development company by a company that is responsible for distributing said content.
Today we find ourselves in the middle of a battlefield where Microsoft and Sony / Image: Depositphotos.com
I anticipate, this acquisition will be in the academic textbooks for the professions of business management, lawyers, accountants and software developers, leaving obsolete the lessons that I had to learn in similar books with operations such as: Disney buying Star Wars , or the quintessential example of mergers and acquisitions in the entertainment industry: Time Warner and Fox News in 1997.
It will be interesting to see how this operation impacts the “Console Wars” landscape, giving Microsoft a considerable advantage over rival Sony; It will be even more interesting to see how the world of video games will move from being in the third pages to take the place of Amazon and Tesla in the front pages of Wall Street.
Meanwhile, my recommendation is to be aware of this transformation in the world of entertainment; what I’ll do is lean back, relax and look forward to the next updates, turning on my console and inviting my friends to a game of our favorite video game.
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