EA CEO Andrew Wilson has confirmed that the company is interested in becoming a “meaningful consolidator” in the games industry’s recent consolidation trend. Wilson anticipates more acquisitions and mergers in the entertainment industry and believes EA has the assets to achieve this. In addition, he shared the company’s view on Microsoft’s potential acquisition of Activision Blizzard and its impact on EA’s relationship with Microsoft.
EA’s Assets
EA’s assets include long-running game series such as The Sims, Battlefield, and Need for Speed, the entire EA Sports catalog, live-service games like Apex Legends, and licensed titles such as Star Wars Jedi: Survivor. The company also has a separate label called EA Originals that focuses on investing in titles from smaller studios, which includes games like It Takes Two and Wild Hearts.
EA’s Interest in Consolidation
Wilson stated during EA’s Q4 and FY 2023 earnings call that he loves the idea of EA becoming a “meaningful consolidator” in the games industry’s recent consolidation trend. He believes the company has tremendous assets with respect to the future of entertainment, which gives them the potential to become a leading player in the industry.
“Will there be industry consolidation? Will there be broader entertainment consolidation? If I was predicting the future over the long term, I would say that’s an almost certainty at some level,” Wilson said. “I would love for us to have the scale to be a meaningful consolidator in that space.”
Microsoft’s Potential Acquisition of Activision Blizzard
Wilson shared the company’s thoughts on Microsoft’s potential acquisition of Activision Blizzard, stating that the company is “indifferent” as to whether or not the deal goes through. According to Wilson, the potential purchase would likely be of little consequence to EA or the company’s long-standing relationship with Microsoft.
“Whether it goes through or not, we’ll continue to be the number one publisher on the Microsoft platform,” Wilson said.
UK’s Competition and Markets Authority (CMA) Blocks the Deal
As of right now, Microsoft’s purchase of Activision is still pending approval. The acquisition recently faced a major roadblock after the United Kingdom’s Competition and Markets Authority called to block the $68.7 billion dollar deal.
Microsoft Appeals the Decision
Microsoft Gaming CEO Phil Spencer stated that the tech company intends to appeal the decision and remains confident that the deal will eventually go through.
Consolidation Trend in the Games Industry
The games industry has recently seen a trend of consolidation, with companies like Microsoft, Sony, and Tencent acquiring other companies to expand their reach and increase their market share. For example, in 2020, Microsoft acquired Bethesda Softworks’ parent company, ZeniMax Media, for $7.5 billion, and Sony acquired Insomniac Games for an undisclosed amount.
Benefits of Consolidation
Consolidation can benefit both the acquiring and acquired companies. For the acquiring company, it can expand its portfolio of games and increase revenue. For the acquired company, it can provide additional resources and funding for game development and access to a wider audience. In addition, consolidation can help companies compete with larger players in the industry, as well as adapt to changes in the market.
Risks of Consolidation
However, there are also risks associated with consolidation. The acquired company may lose its independent spirit and creative freedom, which can lead to a decline in game quality. In addition, consolidation can create a monopolistic market, where fewer companies have a dominating presence, potentially limiting consumer choice and innovation in the industry.
Conclusion
EA’s interest in becoming a consolidator in the games industry shows its commitment to staying relevant and adapting to changes in the market. While there are risks associated with consolidation, if done properly, it can provide benefits to both the acquiring and acquired companies and help them compete with larger players in the industry. As the industry experiences more consolidation, it will be interesting to see how companies like EA navigate the changing landscape.
