NEW YORK (Reuters) - Take-Two Interactive Software (TTWO.O) Chief Executive Ben Feder said on Monday consolidation in the $40 billion video-game industry is inevitable as growth continues.
Feder, whose comment came a day after Vivendi (VIV.PA) said it would take control of Activision Inc (ATVI.O) in a $9.9 billion deal, noted the cost to develop a game was very close to the outlay for production and marketing of a Hollywood film in the early 1990s.
The advent of new gaming hardware with high-definition graphics and online capabilities has sent game production costs soaring in recent years, with top titles thought to cost $30 million or more.
“I do believe that consolidation ultimately is inevitable,” Feder said at a UBS investment conference.
“Video-game development is not getting any cheaper. It’s a capital-intensive business, and I don’t see that going away. That will drive some of the smaller competitors out.”
Shares in Take-Two, which makes the mega-hit “Grand Theft Auto” franchise, rose 8.7 percent to close at $16.28 on Monday as the Vivendi-Activision deal boosted investor optimism that other publishers could be takeover targets.
Reporting by Franklin Paul, editing by Maureen Bavdek and Braden Reddall