Legacy Media Cos. Avoid Buying Video-Game Businesses

One wonders why legacy media companies haven’t boosted their presence in the video-gaming businesses -- a steady and growing video entertainment platform, especially around harder-to-get younger media consumers. 

One CNBC analyst muses that perhaps buying those companies have gotten too pricey for purchase.

Seeing how legacy TV companies are quickly jumping on all kinds of direct-to-consumer businesses -- with premium video apps -- video gaming might make more sense.

Globally, there are over 2 billion gamers, according to estimates. Including all related consumer purchases -- consoles, digital downloads and accessories -- total worldwide video-game spending will be $159.3 billion in 2020, according to Newzoo, up 10% from 2019.

What’s not to like about this video-related entertainment business?

Until recently, legacy media companies were trying to stick with what they knew best: Producing TV/ movie content, and getting paid for it by advertising revenues, carriage/retransmission fees, box-office tickets and theme-park entry fees.



But conditions are changing. There is the whole hardware/platform business to consider, especially with video consoles acting like set-top TV boxes.

Digital media giants continue to move. In the last few years, Amazon’s Twitch has been successful as a leading live streaming video service for video games in the U.S. Google started up Google Stadia late last year, the company's cloud-based video-game streaming platform.

Legacy TV/movie businesses are attached to video games -- but not directly. Media companies make licensing deals with other companies for their content. Disney did with two games -- 2018's "Marvel's Spider-Man" and 2019's "Star Wars Jedi: Fallen Order” -- which turned into big successes.

To a lesser degree, TV networks have programmed video-gaming competitions on their linear TV platforms.

Here’s another thing to consider for media companies: Video-game publishers and other parties are known for collecting lots of data from players. Like with TV, video-gaming companies want players (viewers) to sustain high usage and higher engagement.

We, of course, need to bring up the most obvious concern here: brand safety of content.

Existing media companies’ brand-safety protections for its brand advertisers, as it concerns all its TV/movie content, is a big deal. Even if video-game businesses could be a separate unit, having no connection to TV/movie content delivered on other distribution platforms, some may feel squeamish.

And take it one step future. Perhaps the hidden side to all this is media companies wouldn’t want to stir any governmental oversight issues -- a wave of regulation directed at violent and inappropriate content. 

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