Fair Trade Commission “There is no concern about restricting competition”
EU-China also decided to approve the merger this month
US-UK decision not to allow, hurdles remain
Domestic industry, pay close attention to the combination
Major countries such as Korea approved the merger between Microsoft (MS) and game company Activision Blizzard, and the 90 trillion won ‘dinosaur game company’ merger, which took 1 year and 4 months, is accelerating. If the merger of the two companies is completed, it is expected to have a ripple effect on the domestic game industry, which is expanding its console platform and expanding the global market.
The Fair Trade Commission announced on the 30th that it had unconditionally approved the business combination involving Microsoft’s acquisition of Blizzard. There were concerns that the merger of the two companies would reduce competition in the game industry, but the Fair Trade Commission determined that there was no concern that the merger would substantially limit competition in the domestic game market.
The Fair Trade Commission judged based on the fact that the combined share of games developed and distributed by MS and Blizzard in Korea is low at around 2-6%, which is not very popular, and that competitors for console and cloud games such as Sony PlayStation and Nvidia have a high market share. Cloud gaming refers to a way to enjoy games in a streaming way without downloading them.
In January of last year, Microsoft announced that it would acquire Blizzard for 68.7 billion dollars (approximately 90 trillion won). MS owns the global game console ‘Xbox’, and Blizzard is a developer that developed popular games such as ‘Call of Duty’.
It drew attention as the largest M&A in the history of the global information technology (IT) industry, but the speed of the merger was slow as competition authorities in major markets such as the United States and the United Kingdom issued a policy not to allow the merger. However, this month, major countries including Korea, the European Union (EU), and China have approved the merger, accelerating the acquisition again. The EU Commission set the conditions for the two companies to provide popular game licenses to competitors for 10 years, and the Japanese authorities decided to ‘approve unconditionally’ despite the concerns of Sony, a strong domestic competitor.
However, as the decision not to disallow the merger was made in the United States and the United Kingdom, the largest markets in the game industry, more time is expected to lead to the actual merger. In order to complete the business combination, the two companies must pass screening in 16 countries where they have entered into business.
The difference in judgment between the British and American markets and the Asian market is due to the difference in popularity of the Xbox and Blizzard game platforms. The share of Blizzard games in the domestic market is less than 5%, but it reaches up to 20% in the US and UK. The share of the Xbox console is only 5-10% in Korea and Japan, but it is about 45% in the United States. In the Asian market, MS-Blizzard has a low market share compared to the English-speaking countries, so there is less concern about monopoly in corporate mergers.
Although the Fair Trade Commission approved the game on the grounds that it has “insignificant impact on the domestic market,” domestic game companies that are seeking to advance into the global market and expand multi-platform to consoles are closely watching the combination of the two companies. An official from a domestic game company said, “(When the two companies are combined), the console or cloud game market is small in the domestic market, so there will not be a big hit right away.” Domestic game companies that want to install on the console platform will face a bigger ‘challenge’ than in the past.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.