Revenue from mobile games accounts for more than half of the mobile gaming market. Sony is looking to diversify beyond consoles with its new dedicated PlayStation mobile gaming division.

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Sony

Sony’s PlayStation has dominated the gaming console market for a long time.

But the business model for console gaming has changed. It’s not just about selling the hardware and then hoping people buy new games. It’s about continuing to milk revenue from those games via regular updates that people spend money on and selling subscription services too.

Sony’s deal flow, particularly with the acquisition of Bungie, highlights this push.

“Their goal is to have enough content to incentivize players to buy their proprietary hardware, pay a monthly fee for the subscription service operated by PlayStation (PS Plus), and purchase the occasional digital game through the PlayStation Store, for which Sony receives approximately a 30% cut,” Tom Wijman, market lead for games at data company Newzoo, told CNBC.

“Snapping up studios is the most failsafe way to ensure exclusive content for their ecosystem — especially in reaction to the acquisition spree of Microsoft, one of Sony’s main competitors in the gaming space.”

Sony is also looking to expand 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, which has been so dominant in consoles for years.

The acquisition of Savage Game Studios, which is dedicated to mobile games, is another key part of the strategy.

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“Sony is stepping out of their comfort zone to stay competitive,” Wijman said.

Revenue from mobile gaming accounts for more than 50% of the total gaming market, whereas consoles make up about 27% of sales, according to Newzoo. So, Sony is going after an even bigger piece of the pie.

Sony’s acquisitions will help it bolster its intellectual property and library of games as it looks to expand into mobile gaming.

Tencent owns or is invested in some of the biggest gaming companies in the world, including League of Legends developer Riot Games.

NetEase’s strategy has focused on acquiring high-profile intellectual property. With the Quantic Dream acquisition, the Hangzhou-headquartered firm has access to publish an upcoming Star Wars Game. NetEase has already released mobile games based on the Harry Potter and Lord of the Rings franchises.

For the two giants, having stakes in or owning the studios behind international mega hits in the gaming world has become a key part of the strategy.

While NetEase has traditionally been less aggressive than Tencent in its deal activity, it has ramped up efforts over the last year.

Another part of the investment strategy for both companies also highlights their ambitions in the console sector. NetEase and Tencent have mostly grown by focusing on PC and mobile gaming, not consoles which were banned in China for 14 years until 2014.

But the two behemoths have begun to turn their efforts toward console gaming.

NetEase hired a console industry veteran to run its Japanese game studio earlier this year. And Tencent-owned developer TiMi Studio has opened offices in Montreal and Seattle to focus on PC and console games.

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Acquiring and investing in other gaming studios again can help both companies gain access to IP for games on consoles too.

Tighter regulation in China and the search for growth could propel NetEase and Tencent to continue their investment and acquisition strategy.

“Lastly, if the regulation from the Chinese government continues to pressure NetEase and Tencent in their home markets, I think they too will be eager to look into M&A,” Wijman said. “Their global expansion strategies have only just gotten started.”

By info