Last week, the gaming industry saw two major developments: a 50% price hike for Xbox Game Pass and the $55 billion leveraged buyout of EA by a consortium of investors. To understand the implications, we reached out to MIDiA Research Games Analyst Brandon Sutton for his insights.
Sutton explained that the acquisition of EA by Saudi Arabia and its partners makes sense from a financial, cultural, and technological standpoint. EA owns highly profitable franchises and has strong partnerships with prominent sports and entertainment brands, making it an attractive option for new owners. Additionally, the video game industry serves as a testing ground for emerging technologies, such as generative AI, aligning with the interests of investors in this space.
Regarding the Xbox Game Pass price hike, Sutton sees it as part of a broader industry trend driven by inflation and market consolidation. While larger companies may feel emboldened to raise prices, he warned that consumers could turn to cheaper, indie alternatives if gaming becomes perceived as a luxury.
On the topic of potential layoffs or studio divestitures at EA, Sutton noted that EA had already implemented layoffs prior to the acquisition. With new ownership, the company may further cut costs, possibly through studio divestitures or the sale of IP. BioWare, in particular, could be at risk due to the underperformance of Dragon Age: Veilguard.
Regarding Microsoft’s Game Pass price increase, Sutton believes it could alienate some long-time Xbox fans, especially after the removal of Call of Duty from the Premium tier. While Microsoft may not see a significant drop in subscriptions, the combination of rising prices and diminished trust could have long-term effects on the Xbox brand, even if the company’s revenue remains steady.
Sutton explained that the acquisition of EA by Saudi Arabia and its partners makes sense from a financial, cultural, and technological standpoint. EA owns highly profitable franchises and has strong partnerships with prominent sports and entertainment brands, making it an attractive option for new owners. Additionally, the video game industry serves as a testing ground for emerging technologies, such as generative AI, aligning with the interests of investors in this space.
Regarding the Xbox Game Pass price hike, Sutton sees it as part of a broader industry trend driven by inflation and market consolidation. While larger companies may feel emboldened to raise prices, he warned that consumers could turn to cheaper, indie alternatives if gaming becomes perceived as a luxury.
On the topic of potential layoffs or studio divestitures at EA, Sutton noted that EA had already implemented layoffs prior to the acquisition. With new ownership, the company may further cut costs, possibly through studio divestitures or the sale of IP. BioWare, in particular, could be at risk due to the underperformance of Dragon Age: Veilguard.
Regarding Microsoft’s Game Pass price increase, Sutton believes it could alienate some long-time Xbox fans, especially after the removal of Call of Duty from the Premium tier. While Microsoft may not see a significant drop in subscriptions, the combination of rising prices and diminished trust could have long-term effects on the Xbox brand, even if the company’s revenue remains steady.
