Following the publishing of a report on the threat posed to traditional publishers by media giants such as Disney, Warner Bros and Viacom entering the games space, Screen Digest analyst Piers Harding-Rolls has said that these American companies spell "multi-faceted" competition for the industry.
"If you've got companies of that size, with that many marketing dollars, with distribution networks that they can leverage really strongly, certainly in the boxed product space, you're looking at formidable competitors moving forward," Harding-Rolls told GamesIndustry.biz.
"Having more competing companies is just natural and it means there's going to be some cannibalisation of business from those other pure-play publishers, so that's a competitive threat.
"But they also won't be licensing so much content, so that's the other flipside to it. Certain companies are quite exposed to licensing from these big media companies - certainly THQ, which has been strong in the kids space and licensed a lot from Disney.
"Progressively those licenses are going to be brought in-house, so the pure-play publishers that have those licenses are going to have to look for other ways to drive their revenue or to build up their portfolios and content moving forwards. It's not just about competing on a market level - it's about competing for the licenses as well."
"It's a multi-faceted competition. We've already seen the Lord of the Rings license come back from EA to Warner. We've seen their decision to make the next Batman game," added Harding-Rolls.
"Those guys have already felt the impact of that. Their intention is to have a long-term strategy in the games sector, so they're not going to drop away or disappear in years to come. From a competitive viewpoint having a couple of companies turning over in the range of a billion dollars in the next few years that's obviously a significant competition within the boxed space.
The three US companies Viacom, Disney and Warner Bros have already invested significantly in the games space. Viacom alone has invested $937m in companies such as Harmonix, NeoPets and xfire, which is a good indication of how seriously it is taking the games space, according to the Screen Digest report.
"I'd say these American companies are more developed in their strategies definitely and they're generating considerably more revenue from the games business compared to European companies," said Harding-Rolls, although the report points to recent moves back into gaming by the BBC and notes that other European media companies, such as ITV and Endemol, are also ramping up their games sector involvement, which indicates Europe is following their lead.
"It's no longer just about the low risk licensing opportunities of taking their IPs and leveraging it into the games space and taking a percentage share of sales from a licensing perspective. It's about engaging the consumer, which traditionally spent lots of time watching the television, or watching films, or listening to music and is now more actively playing videogames.
"So, from their perspective it's a long term investment to connect with that audience which has drifted away from its other media businesses. They've obviously invested a huge amount in development capability and have, in a way, attempted to move up the value chain. So they've gone away from just the licensing strategy which you commonly see in European market.
"The American companies have acquired quite a few development capabilities, and diversified as well, so they're looking at strategies in a whole number of different game sectors and not just the traditional boxed product sector."