Conglomerate Ownership

Conglomerate Ownership

Definition

  • Conglomerate Ownership refers to a large corporation’s control over several smaller companies that operate across diverse business sectors.
  • In the context of video games industry, this can refer to major corporations owning various businesses including development studios, distribution platforms, or ancillary merchandise production.

Impact on Market

  • Conglomerate ownership has both positive and negative impacts on the video game industry.
  • On one hand, it can provide financial security and resources to smaller companies for creative endeavours.
  • Conversely, it can also lead to a concentration of power and influence, potentially stifling competition and consumer choice.

Examples

  • Some notable examples of conglomerate ownership in gaming sector includes Microsoft acquiring studios like Bethesda, Obsidian, and Ninja Theory.
  • Tencent is another example, owning stakes in companies like Riot Games (developers of League of Legends), Epic Games (Fortnite), and Supercell (Clash of Clans).

Function

  • Part of the function of conglomerate ownership is not just about production, but also distribution. This could involve owning digital distribution platforms, such as Microsoft owning Xbox Live.
  • Owning a variety of businesses allows conglomerates to cross-promote products and services, subsequently increasing profit and market control.

Issues

  • Some critics argue against conglomerate ownership, citing it as a factor for reducing innovation in the industry, as major conglomerates can be risk averse and prefer to stick to proven formulas.
  • There can also be issues of representation, where the narrative and character representation in games are influenced by the ideological views of the few, powerful corporations.

Regulation

  • Regulation and monitoring of conglomerate practices is necessary to prevent anti-competitive behaviour. This is often done by national or international authorities.
  • For example, in the UK the Competition and Markets Authority (CMA) is responsible for this regulation.

Trend Movements

  • The growth of the indie game development sector is seen as a response to conglomerate ownership, often prioritising creative, innovative game development over mass market appeal.
  • Similarly, the rise of crowd-funding platforms (like Kickstarter) allow developers to raise funds for game development independent of corporate investment.