opinion piece by Games Investor Consulting's Nick Gibson puts paid to 'The Consolidation Theory'

Why the industry’s future isn’t necessarily ‘inevitable’ consolidation

Read any interview or soundbyte-driven news piece with the CEO of a booming games publisher or a studio which has just sold out to a format-holder and you’ll hear constant talk of an inevitablity; that market forces are making consolidation the future for games, with less firms set to dominate the market.

These predictions, however, don’t hold much water claims our columnist Nick Gibson.

In the latest of Games Investor Consulting’s Mind Your Own Business columns Gibson writes that this long-repeated argument, which he terms The Consolidation Theory, "has never actually materialised. In fact the opposite appears true."

He says: "A quick peek at retail software sales, still the vast majority of the games market by value, reveals little evidence for Consolidation Theory. Using the US video games market as a barometer, there is not a single publisher that has consistently grown its market share during the last decade: all of the top 20 have continually swapped positions as well as lost market share during at least one year. However, most tellingly, the top five publishers’ aggregate market share has actually shrunk from around 68 per cent of the market in 1997 to 50 to 55 per cent for most of the last six years with an Activision-driven leap to 62 per cent last year."

In fact, the market is so diverse that there is more opportunity – and fragmented sectors of the market – than ever before he adds: "

Far from being dominated by a handful of major publishers, the games market over the last decade has seen a gargantuan proliferation of new games businesses fuelled by increasing geographic, demographic and business model diversification.

"Taking a holistic view, the global games pie, in particular with its network and Asian gaming ingredients, is being shared far more broadly than ever before. I believe that the top five global games publishers have actually lost even greater collective market share than the US data suggests."

To read the full opinion piece, click here.

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