Video gaming: Deal makers get ready to play in the metaverse

Opportunities exist in content, platforms, creating community, hardware, and infrastructure

Alex Paik

Alex Paik

Partner, Advisory, Financial Due Diligence, KPMG US

+1 408-367-7658

Scott Purdy

Scott Purdy

National Media Industry Leader, KPMG US

+1 212-954-4207

Paul Harris

Paul Harris

Principal, Advisory, Financial Due Diligence, KPMG LLP

+1 212-872-4494

In Q1’22, the contest to make the metaverse the next big thing helped propel deal making in the video game market. Microsoft kicked off the quarter in January with a $68.7 billion takeover bid for Activision Blizzard, the company behind popular games such as Call of Duty and Candy Crush. In announcing the deal, Microsoft Chairman and CEO Satya Nadella highlighted the key role gaming is expected to play “in the development of metaverse platforms.”1 Microsoft’s move came just a week after another blockbuster gaming merger—Take-Two Interactive’s plan to acquire Zynga for $12.7 billion—which was more focused on mobile gaming but also aimed at exploiting opportunities in metaverse-related technologies such as nonfungible tokens (NFTs).2

These deals indicate that the metaverse is moving from a concept to reality (virtual, at least). By some estimates, the market could grow to $1 trillion in annual revenue in the next few years.3

But what exactly is the metaverse, and what’s all the hype about? A dictionary definition of the metaverse is “the concept of a highly immersive virtual world where people gather to socialize, play, and work.”4 Meta/Facebook founder Mark Zuckerberg puts it this way:
“You can think about the metaverse as an embodied internet, where instead of just viewing content you are in it.“5 It’s also a way to introduce commerce into gaming and provide a new source of revenue for game publishers and platforms like Facebook.

In the metaverse, players can own, trade, and transfer assets (e.g., NFTs) that they gain in-game and across games, or even earn cryptocurrency just by playing. Such features will fundamentally alter the economic model of gaming compared to console-era games, which usually involved one-off purchases by the player from the game developer. New monetization opportunities will also be available to platforms. For example, game publisher Roblox has forged partnerships with brands like Gucci and Chipotle,
which want to reach consumers in the virtual world.

To advance their metaverse strategies against this backdrop, companies will need to offer new games, acquire necessary capabilities (e.g., blockchain capabilities), augment existing engineering, enhance platforms, and add customers. Most companies can’t do all this alone. As they update commercial strategies and business models, they will need to look at M&A and partnerships. The Microsoft-Activision Blizzard deal is only the tip of this iceberg. Expect a lot more M&A across all segments of metaverse gaming.


  1. Source: Microsoft, “Microsoft to acquire Activision Blizzard to bring the joy and community of gaming to everyone, across every device,” January 18, 2022
  2. Source: The Wall Street Journal, “Take-Two Interactive to Buy FarmVille Maker Zynga in $11 Billion Deal,” January 10, 2022
  3. Source: Grayscale Research, “The Metaverse: Web 3.0 Virtual Cloud Economies,” November 2021
  4. Source: Merriam-Webster Dictionary
  5. Source: The Verge, “Mark in the metaverse: Facebook’s CEO on why the social network is becoming ‘a metaverse company’,” July 22, 2021