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State of Play: Gaming Industry Investments 2022

State of Play: Gaming Industry Investments 2022

The gaming industry started 2022 with a bang of epic proportions as Microsoft announced they would be acquiring Activision Blizzard, one of the largest gaming companies in the world. Shortly after, Take-Two announced their intended purchase of mobile gaming giant Zynga. Then, January concluded with Sony’s acquisition of Bungie, the studio behind Halo and Destiny.

With so many movements and yet more to come, the state of play in the gaming industry will look very different once these acquisitions are finalised. In anticipation of this, Repair Outlet has analysed the world’s largest gaming companies and their holdings to understand who owns what in the land of gaming.

Key stats

  • Microsoft is now the largest gaming company in the world, with total revenue of $168bn, $12bn of this coming from subsidiaries.
  • Take-Two makes the second-most from its subsidiaries, thanks to its ownership of Zynga and Rockstar.
  • Chinese conglomerate Tencent is third with total subsidiary revenue totalling $2.4bn, spanning consoles, PC and mobile gaming.
  • If Activision Blizzard wasn’t acquired by Microsoft, it would be the largest company, with revenue totalling $9.1bn.

Gaming giants and their investments

Globally, the gaming industry is worth over $173 billion, with a number of leading players in console, mobile and PC gaming, many of which are household names across the world. 

While these huge conglomerates generate billions on their own through hardware and services, the biggest names have majority or total ownership of many of the studios that create the games sold for Xbox, Playstation and PC. 

To understand how their subsidiaries contribute to the revenue of their parents and what the latest industry moves mean for each business’ standing, the below hierarchy chart represents the revenue contributed to each business by its holdings. The totals are calculated with percentage ownership taken into account so are a proportional representation of each company’s investments.

 

 

What is a subsidiary?

Subsidiaries are independent companies that are more than 50% owned by another company. This means that many studios are still able to produce or distribute games through their own teams but with influence from members of the parent company who sit on their board.

Many of the companies in this dataset are 100% owned, which makes them wholly-owned subsidiaries. A number of companies have been absorbed by larger gaming entities over the years and become extensions of their parent company. Because of this, we’ve only included those that are still identified as separate studios.

Snapshot: Microsoft

microsoft's gaming investments by revenue

Creators of the Xbox and masters in the PC world, US company Microsoft is the largest company in the gaming industry. The company’s total revenue in 2021 was $168bn, though this includes all their products and isn’t exclusive to their gaming offering.

The Xbox division alone generated $16.3bn, representing 10% of the tech giant’s overall revenue. This was a record-breaking total for Xbox, thanks to the sale of Xbox Series X/S which now total over 12 million units.

In 2014, Microsoft acquired Mojang Studios, the company behind the world’s biggest-selling game, Minecraft. Since its release in 2011, Minecraft has sold 238 m copies across all platforms.

Following the acquisition of Activision Blizzard, Microsoft now has total ownership of some of the world’s biggest gaming franchises, including World of Warcraft, Overwatch and Call of Duty.

Snapshot: Tencent

Tencent's gaming investments by revenue

Tencent is a Chinese conglomerate and holding company with businesses across tech, electronics and gaming, giving them a total revenue in 2021 of $76bn. Their subsidiaries contribute at least $2.4bn. Their holdings revenue is likely much higher but they did not announce the percentage stake of a number of their subsidiaries at the time of acquisition, so these businesses have not been included in the final total.

Though free to play, Fortnite is one of Tencent’s biggest earners, having acquired Riot Games in 2011. The game was released in 2017 and now boasts over 78m players.

though they don’t have a unique product like Microsoft and Sony, Tencent’s ownership of such franchises as League of Legends and Clash of Clans means their gaming investments are some of the most lucrative in the world.

Snapshot: Sony

Sony's gaming investments by revenue

Though the release of their latest console, the PS5, has been plagued with shortages thanks to an international lack of PS5 parts, Japanese electronics giant Sony is still one of the most widely recognised and loved in the gaming industry. 

The PS5 has sold over 17m units worldwide, 42% more than the Xbox Series X/S, and demand is still sky-high around the world, particularly in the UK, France and the US.

While their own revenue is higher than that of Tencent’s, at $78bn, their revenue derived from subsidiaries is $812m, placing them fourth behind Microsoft, Take-Two and Tencent. 

With decades of history in the gaming industry, Sony has ownership of some of the most memorable franchises. These include Crash Bandicoot, Spyro and Ratchet & Clank, as well as more recent series like God of War, Horizon Zero Dawn, The Last of Us and the visually stunning Ghost of Tsushima.

How microtransactions have transformed gaming revenue

In addition to buying physical or digital copies of games, one of the most lucrative revenue streams for gaming companies is microtransactions. In-game purchases are most popular on free-to-play and mobile games but can be found in most of the world’s most popular games in loot boxes or exclusive skins and weapons.

The most lucrative games for microtransactions

According to research by SuperData, the top 10 highest-earning free-to-play (FTP) games in the world generated around $18.9bn and Fortnite didn’t even make the top 10.

Tencent is still well-represented, with three games in the top 10 owned by the conglomerate: Honor of Kings, Peacekeeper Elite and League of Legends. 

Though Pokemon Go and its creator Niantic are, in part, owned by the original creators of Pokemon, Nintendo, Niantic was excluded from Nintendo’s subsidiaries data as Nintendo’s percentage of ownership is unknown.

The future of the gaming industry

The gaming industry is highly lucrative and will only continue to grow as new technologies and modes of play are expanded. For example, while forays into VR technology have come and gone many times over the years, nearly 7m of Facebook/Meta’s Oculus VR headsets were sold in 2021. Though the technology isn’t necessarily part of the mainstream, its anticipated use in the rollout fo the metaverse could suggest that the technology will soon advance and become a more prolific part of the digital environment of the future.

Additionally, many big names in the gaming industry, such as Square Enix, Ubisoft and EA have voiced interest in how the world of gaming will combine with the crypto world. Whether it’s through NFTs, web3 or the metaverse, there is clearly a huge appetite among business leaders for a kind of gaming that isn’t so different from work, as a play-to-earn model concept is being toyed with by a number of studios. 

However, as NFTs and the play-to-earn model currently look, this won’t go down so well with users. The NFT/crypto model is seen as similar to microtransactions, which many gamers have been resisting for years and games that have included NFTs in their marketing have not seen much interest or success from their attempts.

Whatever the future holds for the gaming industry, it has already come so far in just a few years from the traditional disk and console gaming of the nineties and noughties, so it would be unwise to underestimate how much it will change in the near future.

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