A brief history of the 40-year-old video game industry, the rise of Nintendo, the dominance of Sony, and what Microsoft's Activision deal means for competition
The first video game was a 1952 research product called OXO — tic-tac-toe played on a computer the size of a large room:
Context & Ripple Effects
This retrospective lands at the end of a year when the industry's ownership map was redrawn: Take-Two bought Zynga, Sony bought Bungie, and Microsoft moved for Activision Blizzard — a wave Stratechery had already framed as an evolution extending far beyond gaming. The piece supplies the historical spine behind that wave, running from OXO through Nintendo's rise and Sony's dominance to today's platform contest.
The history also reframes Microsoft's position: the company that entered consoles with an over-budget first Xbox, per the Bloomberg oral history of the original Xbox team, is now betting that owned content, not hardware alone, decides who competes. Nintendo's playbook — leveraging franchises like Tetris and Pokémon to win North America, per the Game Boy anniversary account — is the template every acquirer is chasing.
First-order effects
- Microsoft's pending Activision acquisition puts one of gaming's largest content libraries under a platform holder, directly changing what Sony and Nintendo can offer exclusively and forcing both to weigh their own IP positions.
- Activision's studios and franchises shift from an independent publisher serving all platforms to an asset inside Microsoft's ecosystem, altering licensing terms for rival consoles.
Second-order effects
- The deal validates the acquisition path taken by Take-Two with Zynga and Sony with Bungie, pressuring remaining independent publishers to either sell or argue their independence is a competitive asset.
- Regulators evaluating the deal must decide whether content exclusivity or multi-platform reach defines competition in gaming — a ruling that sets the terms for any future platform-holder purchase.
Third-order effects
- If the pattern holds, the console market structurally consolidates around a few companies that own both hardware and flagship content, narrowing the space for mid-sized independent publishers.
- Nintendo's decades-long franchise durability, traced through its history of weathering crises, suggests the enduring winners are those holding irreplaceable IP rather than any single hardware generation.
The trend: Video games are consolidating into a content-ownership arms race among a handful of platform holders, with Microsoft's Activision bid as the largest data point yet.