TL;DR – We explore the increasing Oligopolization of the Video Game Industry
The Oligopolization of the Video Game Industry
Overnight on the 22 of September (at time of writing) we were greeted to the news that Microsoft had purchased video game publisher ZeniMax. While the name ZeniMax might be unfamiliar to many, they own some of the most popular game development studios in the business. This includes Bethesda Softworks the home of the Elder Scrolls and Fallout and one of the original grand studios of the industry Id Software creators of Quake and Wolfenstein . While the focus will likely be on the alleged $7.5 billion price tag for the publisher, this is also a chance to explore a troubling trend within global media and specifically the video games industry.
So let’s start by exploring that big world in the title and what it means. Oligopolization is the process in which a hand full of players gains control of an industry. You might be more familiar with an oligarchy which is a political system run by a handful of powerful players, but this can also happen in industry as well. We see examples of this across the media landscape. In Australia “News Australia, Fairfax Media, Seven West Media and APN News and Media, are estimated to account for over 90% of industry revenue”. Also in 2018, Disney purchased then 20th Century Fox for $71 billion . While this has been happening in news and media organisations, it is also occurring in the video game industry.
The question is then why is this important? Well from a business perspective, video games have never been more popular with the industry heading towards $300 billion in revenue in the coming years , with one of the biggest games in the industry Fortnite making $2.5 billion in 2018 alone . It is also crucial because this concentration of power on both the publishing and distribution ends of the industry has started to lead to industrial conflict with the current dispute between Epic Games and Apple being a key example . All of this is showing why it is essential to explore and understand how concentrated the industry is becoming.
With this, we wanted to create a diagram to give a visual perspective as too how this Oligopolization manifests in the video games industry. The starting point used data from Newzoo  as collating a list of the key players. This was then substituted data from open-source sites like Wikipedia to get the most up to date relationship analysis possible. This aim is to use these eight companies Tencent, Sony, Microsoft, Nintendo, Activision Blizzard, Electronic Arts, Take-Two, and Ubisoft, as an example to show the increasing conglomeration of the industry.
The Oligopolization of the Video Game Industry
By Brian MacNamara: You can follow Brian on Twitter Here, when he’s not chatting about Movies and TV, he’ll be talking about International Relations, or the Solar System.
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1 – Brown, Fraser 2020 ‘Microsoft now owns The Elder Scrolls, Fallout and Doom’ PCGamer. Accessed the 22 of September 2020. https://www.pcgamer.com/au/microsoft-now-owns-the-elder-scrolls-fallout-and-doom/
2 – Dwyer, Tim. 2016 ‘FactCheck: is Australia’s level of media ownership concentration one of the highest in the world?’ The Conversation. Accessed the 22 of September 2020. https://theconversation.com/factcheck-is-australias-level-of-media-ownership-concentration-one-of-the-highest-in-the-world-68437
3 – Schwartz, Matthew S. 2019 ‘Disney Officially Owns 21st Century Fox’ NPR Accessed the 22 of September 2020. https://www.npr.org/2019/03/20/705009029/disney-officially-owns-21st-century-fox
4 – Lanier, Liz 2019 ‘Video Games Could Be a $300 Billion Industry by 2025’ Variety Accessed the 22 of September 2020. https://variety.com/2019/gaming/news/video-games-300-billion-industry-2025-report-1203202672/
5 – Gilbert, Ben 2019 ‘How much money is ‘Fortnite’ making?’ Business Insider Accessed the 22 of September 2020. https://www.businessinsider.com.au/how-much-money-does-fortnite-make-2019-1?r=US&IR=T
6 – Bolding, Jonathan 2020 ‘Apple says Epic is ‘marketing’ with Fortnite lawsuit, Epic hits back’ PCGamer. Accessed the 22 of September 2020. https://www.pcgamer.com/apple-says-epic-is-marketing-with-fortnite-lawsuit-epic-hits-back/
7 – Newzoo 2020 ‘Top 25 Public Companies by Game Revenues’ Newzoo Accessed the 22 of September 2020. https://newzoo.com/insights/rankings/top-25-companies-game-revenues/