Players (and investors) are now betting on which company may be the next to be picked up. Wall Street seems to think that Electronic Arts, which makes the super-popular Madden NFL franchise of football video games, could be the most likely target.
Electronic Arts has made several acquisitions over the past year, including a $ 1.4 billion acquisition of Playdemic, the developer of a popular mobile golf game owned by WarnerMedia. AT&T (T)-owned parent company of CNN.
But unless EA makes a move, it increasingly looks like the legendary weird man in play.
That Zynga (ZNGA) agreement will provide Take-Two Interactive (TTWO) a greater presence in mobile gaming. Take-Twos shares rose 1% on Tuesday.
And Activision Blizzard (THAT WE) will now have, thanks Microsoft (MSFT), one of the deepest pockets in the world to help develop new games (and potentially absorb the cost of any further lawsuits related to allegations of sexual harassment and discrimination).
As more people seek to play games on their phones (in addition to consoles or PCs), companies lIke Electronic Arts, as well as the smaller French game developer Ubisoft, may need to do more to strengthen their presence in this market. Ubisoft (UBSFF) shares rose 8% on Tuesday as investors bet it is also a prospect of takeover.
Activision Blizzard already took a big step into the mobile world in 2016 with the acquisition of nearly $ 6 billion by Candy Crush maker King Digital.
The attraction of gaming, a lucrative business for Apple thanks to the fees it charges on games purchased through its App Store as well as its Arcade service, is not lost on other technology giants. Facebook (FB) owner Meta, Google (GOOGL) and YouTube’s parent alphabet, Amazon (AMZN) and Netflix (NFLX) have all dipped their toes in the gaming pool.
Game companies are also looking to build a presence in the so-called metaverse, virtual worlds that have become more popular among younger users.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Microsoft Chairman and CEO Satya Nadella in a statement on the Activision Blizzard agreement.
“We are investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming secure, inclusive and accessible to all,” he added.
It sounds like Microsoft may have been targeting the gaming platform Roblox, which was released last year and has become a meta-worst phenomenon. Roblox now has a market value of $ 46 billion, more than either EA or Take-Two. Roblox shares rose 2% on Tuesday.
“Microsoft’s desire to strengthen its metaverse … questions the implications for the self-employed, including Electronic Arts and Take-Two, or even an established company like Roblox, and whether they are technically and financially disadvantaged if the metaverse is actually the next limit. of interactive entertainment, “Stifel analyst Drew Crum said in a report Tuesday.
The Microsoft-Activision agreement could also put more pressure on the Japanese conglomerate Sony – maker of the PlayStation console and operator of PlayStation Studios, its video game development division – to step up its own gaming game.
While Sony is developing a number of blockbuster, PlayStation-exclusive games, the company has lagged behind Microsoft in launching a true competitor to the Xbox Game Pass cloud subscription service.
Shares of Sony fell 7% on Tuesday. The company was not immediately available for comment when asked about its reaction to the Microsoft acquisition.
But shares of Japanese rival Nintendo (NTDOF), which makes the popular Switch console, increased by about 2%.