  The console gaming industry, a dominant force in the global entertainment
sector, has witnessed a wave of consolidation in recent years, epitomized by
Microsoft's high-profile acquisitions of Activision Blizzard and Zenimax. This
study investigates the repercussions of such mergers on consumer welfare and
innovation within the gaming landscape, focusing on product quality as a key
metric. Through a comprehensive analysis employing a difference-in-difference
model, the research evaluates the effects of acquisition on game review
ratings, drawing from a dataset comprising over 16,000 console games released
between 2000 and 2023. The research addresses key assumptions underlying the
difference-in-difference methodology, including parallel trends and spillover
effects, to ensure the robustness of the findings. The DID results suggest a
positive and statistically significant impact of acquisition on game review
ratings, when controlling for genre and release year. The study contributes to
the literature by offering empirical evidence on the direct consequences of
industry consolidation on consumer welfare and competition dynamics within the
gaming sector.
