Netflix-Ubisoft, Disney-Nintendo And The Mega Media Mergers We Don’t Need

Consolidation is happening all across the video game industry, with massive publishers devouring smaller ones on a nearly monthly basis, and it can often feel like we are heading toward a future where every video game is published by Microsoft, Sony, Nintendo or Embracer Group.

But a new forecast says that consolidation may start to take on a different form. Bloomberg’s Lucas Shaw believes that the next big mergers will be between TV services/studios and gaming companies. As in, they will start buying one another to offer greater synergy.

Here’s what Shaw says about the potentially merged future of entertainment:

“A gaming company will buy a TV company or a TV company will buy a gaming company. Every big tech and media company is trying to sell bundled services. Apple sells one. Amazon sells one. Disney is trying to sell one. Microsoft kind of sells one. Music and video streaming serve as major components of these bundles. But, other than Microsoft, no one has really cracked the gaming component.

Entertainment companies, meanwhile, are already experimenting with interactive storytelling and commissioning TV series and movies based on video games.

It seems inevitable that these two worlds will get closer together. If Netflix or Disney can offer popular games as part of their service bundle, they can raise prices and reduce churn. The same goes for Amazon and Apple, which have thus far struggled in gaming. A gaming company could buy a TV company to leverage their IP and offer their programming within their gaming universe.”

The problem with this is that it both misunderstands the market, and does not seem to fully register the current status of some market players.

One problem is that there is a limit to what a TV or entertainment company could do if they bought a video game publisher. If the idea here is to sell “bundled services,” as in your Disney Plus subscription gets you a bunch of EA games, we are missing the core component here that it’s not like you just throw up a bunch of game tiles on Disney Plus. Something like this would have to be entirely cloud-based, technology that yes, exists, but is far from proven, currently representing a tiny chunk of the industry. Only Microsoft has really invested all that much in the cloud space, and it’s still heavily reliant on Game Pass titles being downloaded directly to PCs or the Xboxes it makes. Google Stadia just folded completely after years of attempting to break into the market and make game streaming mainstream.

The alternative is that you would have to be talking about an entirely different kind of video game, like what Netflix is starting to do with its own original games which are mostly meant to be played on iPads or phones within the app. These may be “value added,” but they are not triple A titles in any sense.

We also have already been down this road. Disney, for instance, used to publish lots of video games until they mostly removed themselves from that market, and started licensing out their IPs instead. It’s why we have Star Wars and Marvel games from a dozen different companies, where Disney is ultimately getting paid, but does not bear the responsibility of developing and releasing the games themselves. So you can’t just say “Disney should buy a game publisher and put all the Star Wars and Marvel games on Disney Plus in a bundle.” It doesn’t work like that at all.

Conversely, a gaming company buying a TV company overlooks one of the biggest players in the industry right now, Sony, which is the video game market leader with the PlayStation, and is a massive TV and film studio as well. What’s being proposed here is something Sony has already been doing, making movies like Uncharted that are box office hits, and licensing out other titles like The Last of Us for what is no doubt going to be a megahit HBO series. In this example Sony does not have their own “Sony Plus” streaming service, but they’ve been doing just fine with their current strategy.

Nintendo is starting to play more in multimedia, but again, there’s no reason for Nintendo to sell itself to some media giant or try to merge with one. They’ve licensed out Mario to Universal and that animated feature is going to make everyone a metric ton of cash. No merger required.

It may sound good in theory that you could bundle a bunch of TV shows and video games together in one subscription, but in practice, there are too many caveats to count. The foundational tech does not really exist for that to work coherently, given how cloud-reliant it would be, given that game streaming and video streaming are not the same thing. Conversely, I see little reason for gaming giants to start buying out media brands when they can simply keep licensing their characters to be made into IP. If you already exist in both worlds, like Sony, that’s great, but they are the exception, not the rule here.

The more likely scenario is tech giants buying up both media companies and gaming companies. We are already seeing this to a certain extent with Amazon, but I wouldn’t put it past Apple or Meta making a mega-purchase in either category. I do believe everything is being consolidated to a certain extent, just not really in the way being proposed here.

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