Revenue from mobile games accounts for more than half of the mobile game market. Sony is looking to diversify beyond consoles with its new dedicated PlayStation mobile gaming division.
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Sony
Sony’s PlayStation has dominated the console market for a long time.
But the business model for console games has changed. It’s not just about selling hardware and then hoping people buy new games. It’s about continuing to extract revenue from those games through regular updates where people also spend money and sell subscription services.
Sony’s deal process, especially with its acquisition of Bungie, highlights this push.
“Their goal is to have enough content to encourage players to buy their proprietary hardware, pay a monthly fee for a subscription service operated by PlayStation (PS Plus) and occasionally purchase digital games through via the PlayStation Store, for which Sony gets about a 30% cut,” Tom Wijman, head of games market at data firm Newzoo, told CNBC.
“Tapping studios is the safest way to secure exclusive content for their ecosystem – especially in response to the acquisition of Microsoft, one of Sony’s main competitors in the gaming space. play.”
Sony is also looking to expand beyond consoles. Last week, the Japanese giant said it was setting up a dedicated unit to oversee the development of mobile games, a relatively new venture for the company, which is already very dominant in the computer space. gaming for many years.
The acquisition of Savage Game Studios, the company dedicated to mobile games, is another key part of the strategy.
“Sony is stepping out of their comfort zone to stay competitive,” said Wijman.
Revenue from mobile games accounts for more than 50% of the total game market, while consoles account for about 27% of revenue, according to Newzoo. So Sony is chasing an even bigger piece of the pie.
Sony’s acquisitions will help it bolster its intellectual property and game library as it looks to expand into mobile gaming.
Tencent and NetEase
China’s two largest gaming companies Tencent and NetEase have faced a tougher domestic market, increasing the importance of their investment and acquisition strategies abroad.
Last year, Chinese regulators limit the amount of time people under the age of 18 can play online games and freeze the approval of new titles. In China, games need a green light from regulators to be released and monetized. The other things Approval only starts again in April.
Meanwhile, the resurgence of Covid-19 in China and subsequent closures in major cities in the country have affected economic growth. It leads to worst quarter of revenue growth for several Chinese tech giants, including Tencent.
With a more challenging domestic market, Tencent and NetEase have sought growth overseas through acquisitions and investments.
Wijman said: “Tencent and NetEase built their games business mainly in their home country of China. Now that their home market is increasingly regulated and difficult to operate, the two companies This will accelerate the global expansion strategy,” said Wijman.
Tencent owns or invests in some of the biggest gaming companies in the world, including League of Legends developer Riot Games.
NetEase’s strategy focuses on the acquisition of premium intellectual property. With the acquisition of Quantic Dream, the Hangzhou-based company has the rights to publish the upcoming Star Wars Game. NetEase has released a mobile game based on Harry Potter and the Lord of the Rings series.
For the two giants, having a stake in or owning the studios behind major international hits in the gaming world has become an important part of the strategy.
While NetEase has traditionally been less active than Tencent in trading, it has stepped up efforts over the past year.
Another part of both companies’ investment strategies also highlights their ambitions in the gaming console space. NetEase and Tencent mainly developed by focusing on PC and mobile games, not console games which were banned in China for 14 years until 2014.
But the two giants have begun turn their efforts to console games.
NetEase has hired a console industry veteran who runs a Japanese game studio this early year. And Tencent-owned developer TiMi Studio has opened offices in Montreal and Seattle to focus on PC and console games.
Acquiring and investing in other gaming studios could once again help both companies get IP access for console games.
Tighter regulation in China and the search for growth could spur NetEase and Tencent to further their investment and acquisition strategies.
“Ultimately, if regulation from the Chinese government continues to put pressure on NetEase and Tencent in their home markets, I think they will also be eager to consider M&A,” Wijman said. “Their global expansion strategies are just getting started.”
