On 2 March, the multibillion-dollar American corporation Epic Games announced it was to acquire Mediatonic, the developers of lockdown-hit Fall Guys, for an undisclosed sum. This is the latest victim of a growing trend of small and medium-sized development studios being taken over by massive American corporations.
In December, Electronic Arts (EA) acquired the renowned racing developer Codemasters, best known for the Dirt series, for £725 million. In June 2018, Microsoft acquired Ninja Theory, known for the development of Devil May Cry and Hellblade: Senua’s Sacrifice. In the same year, Microsoft also acquired Playground Games, developers of the Forza Horizon series.
The list is endless, but I wanted to end with one of the most significant acquisitions to date. In September, American megacorporation NVIDIA acquired Arm for $40 billion. While Arm is not directly related to the video games industry, its influence on the wider field of technology is astronomical.
While the focus in other articles on these acquisitions has been on the high spending in the video game market, I thought these were a sign of a more worrying trend: the destruction of the British video games industry. Am I being a little hyperbolic? Maybe. But I am concerned that Britain’s identity in the video games industry is being forcefully integrated into an American vision of how the industry should be.
The takeover of small and upcoming British studios stops them from growing into large organisations that can challenge the American megacorporation
To be clear, I am not a protectionist. Free trade is essential for the efficient running of capitalism, and the collaboration between multinational companies leads to better products and more choice for consumers. But there are limits. There are three main – but related – arguments for why these takeovers are bad for all gamers.
First, American video games companies have a long track-record of anti-consumer practices. This is the most popular argument I have seen anecdotally on social media and articles. Electronic Arts and Microsoft answer foremost to shareholders, caring about one thing: money. More specifically, publicly-traded companies are obliged to ensure that shareholders see a return on investment. That means squeezing every penny out of consumers. It is for this reason we have seen so many microtransactions in AAA video games over the past decade. Smaller indie games have been the last bastion of consumer-friendly games. The acquisition of the studios behind the most successful games threatens that.
The second argument is a bit more technical. Acquisitions and takeovers must be approved by national governments. In the UK, that rests on the Competition and Markets Authority (CMA), but the CMA can only assess the impact acquisitions have on the UK market – and not the wider industry. No such investigations have taken place surrounding the above takeovers. However, the halting of the takeover of Arm by NVIDIA has set a precedent for investigating the impact of larger foreign countries acquiring British companies has on the industry. The CMA should expand this level of scrutiny to the video games industry, especially given the growth of the sector in recent years.
Finally, the takeover of small and upcoming British studios stops them from growing into large organisations that can challenge the American megacorporation. It’s very telling that across the English Channel resides Ubisoft, one of the largest publishers in the world, while Britain has no one.
It is in the interests of the UK government to foster and promote the growth of the British video games industry. It is one of the most lucrative industries in the world, and it is time for a freshly independent UK to match its rhetoric and become a global player in the creative arts. That means we need to start treating the Americans like our competition and not our friends. Both China and India have taken such measures and are now seeing the fruits of their labour with the likes of Tencent. It’s about time Britain joins the club.