The gaming console market has been dominated by Sony.
The business model for consoles has changed. It's also about trying to get people to buy games. People spend money on and sell subscription services if they get regular updates on those games.
This push is highlighted by the deal flow of Sony.
The goal is to have enough content to encourage players to buy their proprietary hardware, pay a monthly fee for the subscription service operated by PS Plus, and purchase the occasional digital game through the PS Store, for which Sony receives approximately a 30% cut.
Sony's main competitors in the gaming space are Microsoft and Nintendo, so snapping up studios is the most failsafe way to ensure exclusive content.
Sony is interested in expanding beyond consoles. Last week, the Japanese giant said it is setting up a dedicated unit to oversee the development of mobile games, a relatively new venture for the company.
The acquisition of a mobile game studio is one of the key parts of the strategy.
Sony is stepping out of their comfort zone to compete.
Revenue from mobile gaming is more than half of the total gaming market, according to Newzoo. Sony is trying to get a bigger piece of the pie.
As it looks to expand into mobile gaming, Sony's acquisitions will bolster its intellectual property and library of games.
The importance of their investment and acquisition strategies overseas has been amplified by the tougher domestic market.
The amount of time those under 18 years old could play online games in China was restricted last year. Regulators in China allow games to be released and monetized. In April, those approvals were back to normal.
Economic growth has been hurt by a resurgence of Covid-19 in China. The worst quarter of revenue growth was experienced by some of China's technology giants.
The domestic market is more challenging for NetEase and Tencent.
Tencent and NetEase have built up their gaming businesses in China. The two companies will accelerate their global expansion strategy now that their home market is becoming more regulated.
Riot Games is one of the largest gaming companies in the world.
NetEase's goal has been to acquire high-profile intellectual property. The firm has access to publish an upcoming game. The Harry Potter and Lord of the Rings franchises were the subject of NetEase's mobile games.
The studios behind international mega hits in the gaming world have become a key part of the strategy for the two giants.
NetEase has been more aggressive in its deal activity over the last year than it has been in the past.
Both companies highlight their ambitions in the console sector. While consoles were banned in China for 14 years, NetEase and Tencent focused on PC and mobile games.
The two giants have begun to focus on consoles.
The Japanese game studio was run by a veteran of the console industry. Ti Mi Studio has opened offices in Montreal and Seattle to work on PC and console games.
Both companies can gain access to intellectual property for games on consoles if they acquire and invest in other gaming studios again.
NetEase and Tencent may be able to continue their investment and acquisition strategy due to tighter regulation.
NetEase and Tencent will be eager to look into M&A if the Chinese government continues to pressure them in their home markets. Global expansion strategies have just begun.
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