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Wednesday, July 6, 2022

Gaming Monthly Highlights: Market Sours on Microsoft's Activision Blizzard Deal

Game maker Activision Blizzard (NASDAQ:ATVI) is at the center of the gaming news space, as its shareholders confirmed an acquisition plan from Microsoft (NASDAQ:MSFT).

Additionally this month, console maker Sony (NASDAQ:SONY) invests heavily into the company behind Fortnite, and the new sales numbers indicate a slow down to enthusiasm surrounding gaming.

Here the Investing News Network (INN) offers a recap of April highlights in the gaming market.

​Market bets against Activision Blizzard deal going through

On Thursday (April 28) Activision Blizzard shareholders approved the plan to be acquired by Microsoft, which was announced in January.

However, the market seems to have soured on the chances of this deal actually closing.

“Shares of the gaming juggernaut are trading 25% below Microsoft’s $95 offer, indicating investors see risk the buyout won’t close as planned,” Bloomberg reported.

The downturn in sentiment is related to recent discussion surrounding antitrust regulation in corporate America as well as increased scrutiny from Senators in Washington surrounding these types of mega-acquisitions.

Following the shareholder approval, the Federal Trade Commission will embark on reviewing this proposed acquisition. The deal will also need approval from regulators in the European Union and China, according to Bloomberg.

Epic Games gets US$2 billion investment

The video game company behind gigantic hit Fortnite received a new substantial investment from Sony and Kirkbi, the family office behind Lego, with the companies investing US$1 billion each.

Thanks to this new deal, Epic’s valuation jumped to US$31.5 billion.

“We are also confident that Epic’s expertise, including their powerful game engine, combined with Sony’s technologies, will accelerate our various efforts such as the development of new digital fan experiences in sports and our virtual production initiatives,” said Kenichiro Yoshida, chairman, president and CEO of Sony.

The investment has been predominantly credited to the success of Epic Games and the metaverse opportunities that being partnered with the game maker allows.

“This investment will accelerate our engagement in the world of digital play, and we are pleased to be investing in Epic Games to support their continued growth journey, with a long-term focus toward the future metaverse,” Soren Thorup Sorensen, CEO of Kirkbi, said.

Epic Games CEO Tim Sweeney agreed with the enthusiasm for metaverse opportunities, saying these new funds will aid the company to continue expanding its business interests in the digital landscape.

In addition to its other ventures, Epic Games manages the Unreal Engine, which is a popular game development engine, and the firm also has its own online games store from which it creates purchase revenue.

​Around the INN homepage

  • Top 3 NASDAQ Gaming Stocks of 2022: In this list, INN shares some of the biggest stock gainers in the gaming marketplace trading on the NASDAQ for 2022.

​From around the web

  • In a reported opinion piece, GamesIndustry.Biz shared a critical view of the March NPD gaming sales report. “The US sales report made for sobering reading, and suggests that 2022 might not be quite the triumphant year for games a few had hoped for,” the piece noted. Besides a busy release calendar and the continued success of Bandai Namco’s (TSE:7832,OTC Pink:NCBDF) blockbuster Elden Ring, shifts in consumer trends and demand for indoor activities go to show gaming’s momentum may not be the runaway story assumed by experts.
  • Xbox saw its best performing reporting period outside of a holiday quarter. Microsoft’s gaming division is enjoying momentum from the increased availability of its next-gen machines, the Xbox Series X|S consoles. According to Daniel Ahmad, a video game analyst with Nike Partners, Xbox recorded US$3.74 billion in revenue. Despite the analytical praise, Microsoft’s chief financial officer Amy Hood said the results were “below expectations.”
  • The American division of Japanese gaming giant Nintendo (TSE:7974,OTC Pink:NTDOF) has found itself embroiled in a labor complaint. Axios reported a contractor worker filed a complaint with the National Labor Relations Board alleging they were let go for discussing unionization publicly and is claiming Nintendo and its partner hiring firm Aston Carter engaged in “concerted activities” and made “coercive actions” to block the worker’s right to organize.

​One last thought…

Where have the gamers gone? Nowhere really, the market excitement of the video game industry continues to be present and active in different ways.

But if we take the most recent NPD sales result, it is fair to see this current period as a bounce back for the gaming market at-large after a gigantic leap in sales and spending throughout the initial stages of the COVID-19 pandemic.

“First quarter 2022 spending fell 8% when compared to the same period a year ago, to $13.9 billion,” NPD analyst Mat Piscatella said as part of the most recent report.

But in addition to a change in how much consumers may want to spend on gaming in the first place, gamers are still facing an uphill battle to upgrade their machines. As the report showed Sony is lagging in the availability of its highly coveted PS5 console.

“March 2022 consumer spending across video game hardware, content, and accessories declined 15% when compared to a year ago, to $4.9 billion,” Piscatella said. “Declines were seen across all major categories of spend.”

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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