Forty years of context may seem like overkill when it comes to examining the FTC’s attempt to block Microsoft’s acquisition of Activision, but I think it is essential for multiple reasons.
First, the video game market has proven to be extremely dynamic, particularly in terms of 3rd-party developers:
- Atari was vertically integrated
- Nintendo grew the market with strict control of 3rd-party developers
- Sony took over the market by catering to 3rd-party developers and differentiating on hardware
- Xbox’s best generation leaned into increased commodification and ease-of-development
- Sony retook the lead by leaning back into vertical integration
That is quite the round trip, and it’s worth pointing out that attempting to freeze the market in its current iteration at any point over the last forty years would have foreclosed future changes.
If I rely on Ben Thompson for one thing, it’s to distill core principles, milestones, and maneuvers from the complexities of business history into simple patterns and through lines. This piece is a shining example.
Thompson’s argument aside, “Consoles and Competition” serves as a succinct and beautiful history of the video game business.