, mergers and acquisitions have become commonplace in the technology sector. But in the single spot where consolidation was so rampant over the past few years -- the gaming industry -- the major players seem content to weather the slumping market on their own.
Earlier in the decade, consolidation ruled the gaming industry. It was a time marked by several major developers, including
and Activision, finding as many competitors with viable franchises as they could and acquiring them.
Over the past 10 years, Electronic Arts has been especially busy. The company acquired
in 2000 to bolster its console games, Jamdat Mobile in 2005 to improve its mobile offerings, and Playfish in 2009 to improve its social-gaming efforts.
But all those acquisitions paled in comparison to Electronic Arts' acquisition of VG Holding Corp. in 2007. The company paid $775 million to acquire major game developers Bioware and Pandemic Studios. At the time, the company said that it would help EA bolster its "open world, action-adventure" portfolio.
The move paid off. Bioware is home to several major gaming franchises, including
. Earlier this year,
Mass Effect 2
hit store shelves and subsequently sold millions of copies. Several critics say
Mass Effect 2
is the best video game to launch so far this year.
But Electronic Arts wasn't alone in its rapid consolidation.
Over the past 10 years, Activision also has been actively consolidating the gaming business. In 2003, it acquired game-developer Infinity Ward, maker of the wildly popular
Call of Duty
franchise. In 2006, the company acquired
developer RedOctane. And in 2007, Activision picked up Demonware to bolster its multiplayer services.
But it wasn't until 2008 that Activision made a big splash in the gaming business. The company announced at the time that it would merge with major developer Vivendi to become
. The merger made Activision the world's largest game developer and effectively put the market on notice: Major developers rule the day.
In response, Electronic Arts attempted to acquire
, the company behind several major franchises, including
Grand Theft Auto
. After a drawn-out battle, EA was forced to let its $2 billion bid for the company expire.
Aside from developers, the gaming-retail space also has seen consolidation. In 2005, the two biggest video-game retailers in the U.S.,
and EBGames, announced their merger. Today, all former EBGames outlets are run as part of GameStop.
In 2007, GameStop announced that it had acquired Rhino Video Games from Blockbuster. Those retail outlets are also currently run under the GameStop banner.
Today, the gaming industry looks much different. Whereas in the early 2000s, there were a slew of small developers, today the space is dominated by a handful of firms, including Electronic Arts, Activision Blizzard,
and Take-Two Interactive. And the declining number of small developers now rely upon those major companies to publish their titles.
Meanwhile, a general feeling of anti-consolidation seems to be taking over the industry.
Part of that could be due to the tough year the gaming industry has had. Electronic Arts, for example, had a $677 million loss on $3.65 billion in revenue during its last fiscal year. In 2009, it generated over $4.2 billion in revenue with a $1.08 billion loss.
Activision Blizzard generated $4.28 billion in 2010 and had a profit of $113 million, representing a significant gain over its prior year. But the company's revenue is down year over year on a quarterly basis. Last quarter, Activision Blizzard generated $967 million in revenue, down slightly from the $1.04 billion it tallied during the second quarter of 2009.
Take-Two Interactive has taken a financial hit over the past few years. The company generated $968 million in revenue and posted a $137.9 million loss during its last fiscal year. Those figures were much lower than the $1.54 billion in revenue and $97 million profit it tallied in the previous fiscal year.
All those financial issues have caused many of the leading consolidators in the gaming space to be more cautious. So far this year, there haven't been any major acquisitions in the industry. In fact, there has actually been some de-consolidation.
In July, Electronic Arts announced that it had sold off its 15% stake in French game developer Ubisoft for approximately $122 million. When it originally invested in Ubisoft in 2004, EA Vice President Jeff Brown said in an interview with
at the time that his company wanted to "be a consolidator."
Six years later, it seems that EA, like its counterparts, has no interest in that consolidation any longer.
Don Reisinger has been writing columns and blogs about the technology and video game industries for years. His work appears in some of the tech industry?s biggest publications, as well as in the
Los Angeles Times
, where he blogs about social networking. Follow Reisinger on Twitter @donreisinger.