Microsoft’s recent acquisition of Activision Blizzard, worth an impressive $69 billion, has caused a significant shift in the gaming industry. With this acquisition, Microsoft has removed one of the few large independent video game publishers trading on the Nasdaq. As a result, shares of Take-Two Interactive Software and Electronic Arts have experienced positive gains.
This acquisition was closely watched within the global regulatory environment, as it served as a barometer for future tech deals. Microsoft faced numerous challenges and had to make concessions on streaming rights to successfully complete this historic agreement.
Now that the deal has closed, Microsoft’s success sets a precedent for other major technology companies looking to establish a stronger presence in the gaming industry. Research firm Newzoo forecasts that the global games market will generate an impressive $187.7 billion in revenue in 2023.
Analysts have been anticipating the positive impact of the Activision deal on video game stocks for months. This acquisition reduces the number of options available for public equity investors seeking to invest in the industry, which consequently increases valuations. Furthermore, if Microsoft incorporates Activision games into its Xbox Game Pass subscription service, it could potentially save gamers money, allowing them to allocate their funds towards other games.
Overall, Microsoft’s acquisition of Activision Blizzard has not only shaped the gaming industry but also presented promising opportunities for other key players like Take-Two Interactive Software and Electronic Arts. As the gaming market continues to flourish, it will be interesting to witness the evolving landscape and potential future acquisitions within this dynamic sector.
Potential Targets for Big Tech Suitors
Take-Two and Electronic Arts (EA) are two companies that are highly likely to attract the attention of big tech companies looking to make strategic acquisitions in the gaming industry. Meanwhile, there are also European game publishers such as Ubisoft and CD Projekt that could generate significant interest in terms of mergers and acquisitions.
With popular franchises like Grand Theft Auto, Red Dead Redemption, and NBA 2K, Take-Two has established a strong presence in the gaming market. This makes it an attractive prospect for big tech suitors. Raymond James analyst Andrew Marok believes that Take-Two will likely command a premium valuation, given the ongoing interest from major tech and media companies in gaming deals.
In recent trading, Take-Two shares remained stable, indicating steady investor confidence.
Electronic Arts (EA)
Boasting franchises such as Madden NFL, EA Sports FC (formerly branded as FIFA), The Sims, and Battlefield, EA’s portfolio is impressive. As a result, it is emerging as a potential target for big tech companies aiming to expand their gaming offerings. However, EA shares experienced a slight decline of 0.8% during Friday’s trading session.
European Game Publishers
In addition to North American companies, European game publishers are also attracting attention in terms of M&A prospects. Ubisoft, the publisher behind popular franchises like Assassin’s Creed and Rainbow Six, has the potential to ignite significant interest. Similarly, CD Projekt, known for its highly successful games The Witcher and Cyberpunk 2077, could also emerge as an attractive target.
During Friday’s trading, Ubisoft saw a modest increase of 0.4% in share price, while CD Projekt shares in Poland closed at 0.3% higher.
While Nintendo is unlikely to be sold, Microsoft has committed to bringing Call of Duty games to Nintendo platforms. This move could significantly benefit Nintendo’s stock, particularly if valuations across the gaming industry experience an upswing.
To summarize, Take-Two and EA are the primary targets for big tech companies seeking expansion in the gaming industry. European game publishers like Ubisoft and CD Projekt are also drawing attention. Additionally, Microsoft’s alignment with Nintendo could have positive implications for both companies.