Are you ready for the metaverse? It might not be quite a reality yet, but it has certainly caught the attention of technology companies that are positioning themselves for growth in the industry. While the metaverse might be difficult to define, there is no doubt that technology companies view video games as an important strategy for growth and customer acquisition for the metaverse.
So far this year three companies have been on a buying binge:
- Microsoft will pay $69 billion for Activision Blizzard.
- Sony will buy Bungie for $3.6 billion.
- Take Two Interactive is paying $11 billion for Zynga.
Whew – that’s a lot of activity and investment at more than $84 billion!
Activision makes some of the most popular game titles such as Candy Crush and Call of Duty. However, Activision has been accused by employees of discrimination and sexual harassment, making the purchase by Microsoft rife with potential employee issues.
Microsoft was also the previous owner of Bungie, buying the company in 2000 for $20 million for the top multiplayer shooter games – Destiny and Halo. In 2007, Bungie split from Microsoft and became a privately-held company. Bungie’s most popular game currently is Destiny 2 (which is available on multiple platforms including Xbox and Playstation.
All of these acquisitions are predicated on the assumption that people will be spending more time in the digital metaverse, including augmented and virtual reality.
We have already seen an increase in gaming during the pandemic as people look for new entertainment options. According to MarketWatch, video games are a bigger industry than movies and sports combined. According to IDC Group, global video game revenue was roughly $180 billion in 2020, with mobile platforms showing the most growth.
What will you do in the metaverse?
Group Activities and Discussion Questions:
- Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
- Which strategy are Microsoft and Sony using?
- Discuss with class: Why did Microsoft and Sony buy game makers?
- Show websites: Activision: https://www.activision.com/
- Bungie: https://www.bungie.net/
- Zynga: https://www.zynga.com/
- Check out Nielsen’s list of top video games: https://www.nielsen.com/us/en/top-ten/
- What are the risks and rewards that will be faced by the acquiring companies?
- Which competitors will be most pressed by these acquisitions? Why?
Source: Tilley, A., Lombardo, C., Gring, K. (January 18, 2022). Microsoft to buy Activision Blizzard, Wall Street Journal; Metz, C. (January 31, 2022). Sony to buy game maker Bungie in $.6 billion deal, New York Times; other news sources.