Dmitriy raises an interesting question - when does consolidation in gaming go too far?

Thank you Dmitriy for bringing this article to our attention. Basically the article asks if EA's takeover bid of Take-Two, which is likely to go ahead with or without Take-Two's approval, is a step too far. Is this takeover part of a wider trend towards industry consolidation that might spell the end for video gaming creativity? Or will it strengthen the ability of video games to go further?

Undoubtedly the creation of a duopoly could be bad for creativity and for consumers in general, assuming that such a duopoly (i.e. EA and Activision) is able to inflate barriers to entry so as to prevent competition. Yet it is hard to see how EA and Activision would be able to create sustainable barriers to entry - unlike Microsoft which was able to dominate the PC market for so long by owning the operating software. Video games can still be created by anyone. The consolidation that is occurring gives EA and Activision an advantage in the creation and distribution of mulitmillion dollar hits such as Halo 3. This is in fact a reflection of increasing economies of scale, and means that games should get better. If the investment of millions doesn't lead to equivalent sales, there is nothing EA and Activision can do to force the market to repay it. So we should not worry about consolidation following its natural course, so long as this does not create significant barriers to entry.

The article is here:

http://www.news.com/8301-13772_3-9878724-52.html?part=rss&subj=news&tag=2547-1_3-0-5