Warner Bros. Deal Could Set Off A Wave of Mergers and Acquisitions, Says Analyst - News
by William D'Angelo , posted on 01 July 2020 / 2,556 Views
A recent report revealed AT&T is currently in discussions to sell off its gaming division Warner Bros. Interactive Entertainment. The sources say Take-Two Interactive Software, Electronic Arts and Activision Blizzard have all expressed some level of interesting in buying the gaming division. However, a deal is not assured and is not looking to be imminent.
Stephens analyst Jeff Cohen in a note sent to investors discussed the possible sale of Warner Bros. Interactive Entertainment, saying if it does happen it could lead to more mergers and acquisitions.
"In our view, this could set off a wave of M&A as publishers look to gain scale and round out their catalogues ahead of the next console generation," Cohen said.
"This has led to significantly improved profitability but has left them with light title slate years," Cohen aded. "We are not expecting publishers to start putting out 20+ SKUs again, but we do think the pendulum could swing more towards the center in the next generation. Video game publishing is a business where scale is an advantage."
Cohen "would not be surprised" if he saw ZeniMax, Gearbox, Nexon, and Bungie acquired.
He added that the Warner Bros. Interactive Entertainment deal would be a "strong acquisition" for Activision Blizzard, Electronic Arts, or Take-Two. However, he said EA would be the best fit.
"In our view, Electronic Arts would be the best fit given their ability to work with third-party IP and the need for a boost in their mobile business," Cohen said. "Activision and Take-Two would also be good fits, although both companies' management teams have spoken about the value of owning their IP internally."
Warner Bros. Interactive Entertainment owns the Mortal Kombat franchise however, many of its biggest games are based on properties based on their current parent company or other companies.
Around two-thirds of EA's revenue comes from externally licensed games, according to Cohen. This compares to around 35 percent for Take-Two and less than five percent for Activision Blizzard.
Thanks GamesIndustry.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at wdangelo@vgchartz.com or on Twitter @TrunksWD.
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Ugh. It figures that this suit who gives 0 fucks about quality games and gaming in general would say EA is the "best fit". The only thing that giant leech of a company is fit for is bankruptcy. It also surprises me a lot to hear ZeniMax being mentioned as a possible victim of a merger. I thought they were at least almost as big as Ubisoft or something. Guess not.
My dream always has been "waves of mergers" Some day, hopefully, all games will come from 2 or 3 grotesque publishers.
Please don't be EA or Activision. They both suck ass.
My bet is on Tencent swooping in.
Still want Nintendo to buy them for the troll factor. Also as a Nintendo player I'd actually get Batman games...
WBIE is worth more than SQEX though... I do hope they at least try to bid for monolith production or rocksteady.
I'm not a giant fan of Ubisoft but since S-E isn't big enough I'll take Ubi over EA and Take Two any day of the fucking week.
Sadly, there's not a lot they can say. The parent company is being bought and sold as share holders see fit. They don't care about anything unless it's making made cash for them. I just hope that the likes of Activision or EA doesn't get a hold of these IPs - they would just run them into the ground.
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