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Weekend at Dave’s – Episode 7: Should Video Game Industry Consolidation Worry Us?
Will Consolidation Hurt the Video Game Industry?
A new week, a new Weekend at Dave’s! This episode brings us some juicy subject matter, as we delve into Gearbox, stonks, and video game industry consolidation.
Catch the full episode here:
Download MP3 | Spotify | Apple Podcasts
(Note: Despite the acquisition, 2K shared that it will continue to publish the Borderlands games.)
Episode Transcript
(00:29) Hi everyone! My name’s David Silbert, and you’re listening to Weekend at Dave’s. Each week, we dig deep into a topic in the entertainment industry—usually to do with games.
(00:39) This week’s discussion is particularly spicy, and comes hot on the heels of the announcement that Gearbox Entertainment—the makers of Borderlands—will be acquired by Embracer Group in a deal worth 1.3 billion dollars.
(00:51) If you’re unfamiliar with Embracer Group, they’re a Swedish holding company, meaning they hold majority stakes in a bunch of other companies. Their subsidiaries include THQ Nordic, Koch Media, Saber Interactive… and now Gearbox. (Side note: There are some bizarro policies that come along with holding these subsidiaries—case in point.)
(01:04) The finer details of the deal are pretty complex, but the long and short of it is that a major game company just got bigger. And when you consider this is just the latest in a string of industry M&As—Microsoft buying Bethesda, EA buying Codemasters, etc.—it begs the question:
(01:19) Should consolidation in the video game industry concern us?
(01:23) There’s a case to be made that it certainly should. In a piece for GamesIndustry.biz, Simon Carless of GameDiscoverCo related these consolidation moves to the ongoing stock market bubble. As institutional and retail investors fixate on deep value stocks—to the moon!—the speculative value of these game companies is getting further and further removed from reality.
(01:44) Carless used the examples of Unity (NYSE: U), which launched an initial public offering (IPO) in August 2020, and Roblox (NYSE: RBLX), which is gearing up for an IPO of its own. Based on current valuations, Roblox would be worth more than Unity, despite the fact that it’s less established and currently operating at a loss.
(02:00) I encourage you to read the full article, as it raises some great points. That said, given I’m certainly not a financial expert, I’d like to focus on a different piece of this discussion entirely. And that’s the impact of consolidation on game makers and players.
(02:13) Consolidation has always been a part of this industry. Think back to 2007, when Activision and Vivendi (the owner of Blizzard) announced they’d be joining forces. If you’re an RPG lover, think even further back to the days of Squaresoft, Enix, and the subsequent merger.
(02:29) No matter where you look, publishers and studios are always changing hands,
View all episodes
By David SilbertWill Consolidation Hurt the Video Game Industry?
A new week, a new Weekend at Dave’s! This episode brings us some juicy subject matter, as we delve into Gearbox, stonks, and video game industry consolidation.
Catch the full episode here:
Download MP3 | Spotify | Apple Podcasts
(Note: Despite the acquisition, 2K shared that it will continue to publish the Borderlands games.)
Episode Transcript
(00:29) Hi everyone! My name’s David Silbert, and you’re listening to Weekend at Dave’s. Each week, we dig deep into a topic in the entertainment industry—usually to do with games.
(00:39) This week’s discussion is particularly spicy, and comes hot on the heels of the announcement that Gearbox Entertainment—the makers of Borderlands—will be acquired by Embracer Group in a deal worth 1.3 billion dollars.
(00:51) If you’re unfamiliar with Embracer Group, they’re a Swedish holding company, meaning they hold majority stakes in a bunch of other companies. Their subsidiaries include THQ Nordic, Koch Media, Saber Interactive… and now Gearbox. (Side note: There are some bizarro policies that come along with holding these subsidiaries—case in point.)
(01:04) The finer details of the deal are pretty complex, but the long and short of it is that a major game company just got bigger. And when you consider this is just the latest in a string of industry M&As—Microsoft buying Bethesda, EA buying Codemasters, etc.—it begs the question:
(01:19) Should consolidation in the video game industry concern us?
(01:23) There’s a case to be made that it certainly should. In a piece for GamesIndustry.biz, Simon Carless of GameDiscoverCo related these consolidation moves to the ongoing stock market bubble. As institutional and retail investors fixate on deep value stocks—to the moon!—the speculative value of these game companies is getting further and further removed from reality.
(01:44) Carless used the examples of Unity (NYSE: U), which launched an initial public offering (IPO) in August 2020, and Roblox (NYSE: RBLX), which is gearing up for an IPO of its own. Based on current valuations, Roblox would be worth more than Unity, despite the fact that it’s less established and currently operating at a loss.
(02:00) I encourage you to read the full article, as it raises some great points. That said, given I’m certainly not a financial expert, I’d like to focus on a different piece of this discussion entirely. And that’s the impact of consolidation on game makers and players.
(02:13) Consolidation has always been a part of this industry. Think back to 2007, when Activision and Vivendi (the owner of Blizzard) announced they’d be joining forces. If you’re an RPG lover, think even further back to the days of Squaresoft, Enix, and the subsequent merger.
(02:29) No matter where you look, publishers and studios are always changing hands,