Are AAA’s Eating Up the Mid-Tier Market?


The last year has been nothing if not volatile. This has become especially evident within the games industry. With more people than ever staying home and playing video games- and some U.S. residents spending part of their stimulus checks on new ones- we have experienced a rapid rise in revenue across the board. This massive burst in capital has created ripples that pervade throughout every aspect of the video game industry. Moving forward into 2021, what exactly does this mean for us as an industry?

Post-Pandemic Market Expansion 

One thing is certain: we can expect to see an increase in income… a lot of it at the top. And while we would all love to see that turn into raises, bonuses, and upgrades in our workspaces, we know what the big guys really like to do with all of those extra funds: buy market shares.

If you don’t believe that’s exactly what’s going to happen, let’s take a look at what has already happened over the last 6 months. Microsoft is set to acquire Zenimax Media for $7.5 billion, acquiring rights to The Elder Scrolls, Fallout, Wolfenstein, Quake, Starfield and Doom while increasing from 15 to 23 creative studios.

Embracer Group set to purchase Gearbox for $1.3 billion, acquiring rights to Borderlands 3 while increasing its massive presence to 57 internal game development studios.

Mobile gaming giant Zynga has made several significant acquisitions over the last 8 months and continues to turn noteworthy profits, ensuring that it will prosper in 2021 whether or not a merger happens.

We can see what the big players have on their minds, and market consolidation shouldn’t be much of a surprise. But where does that leave the mid-tier and upstart development studios? Do they have a place in all of this, or are the big fish going to gobble up the competition like an Xbox Classic Feeding Frenzy remaster? 

One studio to keep a close eye on to gauge the situation is the upstart studio Mountaintop.
  

Mountaintop is unique, and its structure sets the studio apart from most other upstarts. It was founded by industry veterans from several big box gaming studios and also had the good fortune of having been funded with a nice $5.5M from private sources. But that is a good thing for everyone. Mountaintop’s primary focus is fostering an inclusive non-crunch atmosphere.

Without publishers, shareholders and investors to worry about, they might actually be able to make a nice game (they’re aiming for a PvP shooter as their first IP) without destroying the morale of their top talent.

Rebellion Developments, are another studio that are looking to break the fold of being swallowed up by a publisher or large AAA studio. They are the largest independent studio in the UK and have managed their growth by acquiring other smaller, struggling studios which currently encompasses 12 companies to harness their studio talent and IP as well as expanding their operations into TV/movie production and comic books, allowing them to generate $32 million in sales.

There are some signals that the industry is going to continue netting serious revenue increases for the foreseeable future. Privately funded upstarts like Mountaintop are providing new career opportunities. The enigmatic Intrepid Studios is slumbering in the deep waters (teaser… I look forward to bringing you an article about Steven Sharif’s bold endeavor in the near future). With all this happening, we smaller fish might just have an opportunity to make some serious progress within our industry. 

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