Video Game Publishers Are Takeover Targets

    December 29, 2004

An interesting article in the Wall Street Journal today makes the case that 2005 will be the year of takeovers in the video game industry.

From the article ‘Videogame Makers Are Playing Takeover 2005’:

“Now, some of the game industry’s big guns — medium-size and large game publishers — are being stalked themselves, as possible takeover targets.

The prowling for deals comes as production and marketing costs for videogames escalate. The trend is expected to become more pronounced as the $24 billion global industry shifts to a new generation of game consoles in the next year or two. Industry executives and analysts predict spiraling game costs will cause further consolidation.”

The article mentions Electronic Arts, IAC/InterActiveCorp, Viacom, Walt Disney and Microsoft among the possible acquirers.

“Microsoft will come under increasing pressure to fill in the dearth of games as it prepares its next-generation Xbox for sale late next year. One possible target would be Take-Two, the maker of the blockbuster “Grand Theft Auto” series, whose newest versions appear first on Sony’s PlayStation 2 game console before they are made available on other machines.”

The article ends with …

“Microsoft also could try buying its way into Japan, one of the largest videogame markets in the world but one where Xbox sales remain anemic. The sheer size of EA makes it an unlikely acquisition candidate for all but the likes of Microsoft — a hookup that Mr. Crabtree of Leeb Capital Management says he could envision.”

If Microsoft can’t win via innovation … it will grind its way to the top via acquisition. Just my 2 cents.

Rich Ord is the CEO of iEntry, Inc. which publishes over 200 websites and email newsletters.

Rich also publishes his blog WebProBlog which focuses on internet business and marketing trends.