record industry’s sales decline, it makes sense to move into gaming, a younger, faster-growing medium with plenty of cross-marketing opportunities. (Activision might raid Universal’s back catalogue for material for its music games, for example, which might in turn boost music sales.) Other media groups are going the same way. Last year Viacom, an American media giant, acquired Harmonix, the company that originally created ‘Guitar Hero’. It has been promoting its new game, ‘Rock Band’, using its MTV music channel. Viacom has also created online virtual worlds that tie in with several of its television programmes, such as Laguna Beach and Pimp My Ride. Disney bought Club Penguin, a virtual world for children, in August. And Time Warner is involved in gaming via its Warner Bros Home Entertainment division, which publishes its own titles and last month bought TT Games, the British firm behind the ‘Lego Star Wars’ games.
Time to level up
The third trend is consolidation, to plug gaps, address new markets and achieve economies of scale. Electronic Arts, for example, until last week the largest independent games-publisher (Activision Blizzard will be bigger), recently bought two studios, BioWare and Pandemic, to strengthen its position in role-playing and action games. Greater scale can help to spread costs and risk as new games become costlier to develop. A new title for Microsoft’s Xbox 360 console or Sony’s PlayStation 3 (PS3) can cost as much as $30 million, says Mr Harding-Rolls. Bigger firms can afford to develop tools that make it easy to produce different versions of the same game for different platforms, says Robbie Bach, the head of Microsoft’s entertainment and devices division. They can also make savings on distribution.
Last week’s deal shows how the software business is changing; and things are happening in hardware too. Microsoft’s Xbox 360, Sony’s PS3 and Nintendo’s Wii are fighting for supremacy. In September the Xbox 360, launched in late 2005, a year ahead of its two rivals, was overtaken by the Wii as the most popular of the present generation of consoles (see chart). Mr Bach says he is unfazed. “It’s not even a statistic I track all that closely,” he says. The Wii’s popularity stems from its low price and its innovative motion-sensitive controller, which can be pointed and waved to control the on-screen action and encourages novices to give gaming a try. But the Wii lacks the high-definition graphics of its two rivals, so