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Analyst: Big Media Firms Pose Real Challenge For Pure-Play Game Publishers

Analyst: Big Media Firms Pose Real Challenge For Pure-Play Game Publishers

February 11, 2010 | By Kris Graft

February 11, 2010 | By Kris Graft
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Pure-play game publishers such as Activision Blizzard and Electronic Arts rule the packaged games business today, but large media conglomerates investing heavily in the video games space could give traditional game companies a run for their money this decade, according to analysts with Screen Digest.

The UK-based analyst firm said that five of the top global media companies spent over $3 billion over the last five years to gain a better foothold in the games market. Disney, Warner Bros, Viacom, News Corp. and NBC Universal are five media giants that are poised to take on pure-play game publishers.

"Screen Digest believes that Disney and Warner Bros. are well positioned to break into the global top 10 of boxed games publishers by 2013 and, alongside Viacom, pose a serious competitive threat to pure-play games publishers," said chief analyst Ben Keen.

Disney in particular is one company that has been aggressively ramping up its video game business through acquisitions. In recent years, Disney has acquired studios including Stubbs the Zombie house Wideload Games, Pure developer Black Rock Studios, and Warren Spector's Junction Point Studios, which is working on the highly-touted Epic Mickey.

Disney also last year acquired Marvel Entertainment for $4 billion, adding video game-friendly characters such as Spider-Man, X-Men, and a veritable army of other popular superheroes. Screen Digest admits that Disney's game business has yet to reflect the healthy sales growth of its parent company--the segment posted declining Q1 revenues recently--but long-term, Disney Interactive Studios could be formidable.

Viacom, which acquired five game companies between June 2005 and November 2006, is also building a strong based for a video games business, having spent $937 million after the completion of earn-outs, Screen Digest's report said. Viacom, owner of MTV Networks, acquired Rock Band creator Harmonix in 2006. But recently, Viacom has acknowledged softness in music game sales, although it hopes to bolster the business with further releases.

Another massive media company, Warner Bros., is levering its internally-owned slate of intellectual properties and using them in games such as Batman: Arkham Asylum. Warner is also home to the rest of the DC Comics, and in September 2009 announced the DC Entertainment division, which is aimed at further leveraging DC properties in film and video games.

NBC Universal, Screen Digest said, doesn't have such a solid basis for a boxed games business, although last decade it acquired games website IGN.com and mobile entertainment company Jamba.

Big media has attempted to break into video games in the past, with very limited success. But this time around, thanks to a more "diversified and sensible strategy," Screen Digest's Nick Gibson said "it looks like big media is here and here to stay."


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