For a while, video game sales were shooting up, during COVID-19. Lot of people inside with nothing to do.

My guess is that the people acquiring studios expected the increase in sales to outlast the pandemic, that it was a permanent change. That increase did not, in fact, persist.

https://en.wikipedia.org/wiki/Impact_of_the_COVID-19_pandemic_on_the_video_game_industry

The video game industry was substantially impacted by the COVID-19 pandemic, as most industries were. The restrictions to social events and movement globally led to a sudden interest in gaming worldwide. This was credited with bolstering the success of many games, particularly games that launched in the March 2020 window, when gatherings were first restricted in many countries. A “gold rush” of video game acquisitions and investment ensued, marked by multi-billion dollar studio deals such as Microsoft’s $75bn acquisition of Activision. However, this would prove unsustainable as the rapid pandemic-era growth was temporary. Major layoffs occurred when restrictions began to ease in 2022, and it was clear that the rapid industry expansion would not be sustained.[1]

The NPD Group reported that video game sales in North America in March 2020 were up 34% from those in March 2019, and video game hardware up by 63% – which included more than twice the number of units of the Nintendo Switch console. Net spending across the first quarter of 2020 in the United States reached US$10.9 billion, up 9% in 2020 compared to 2019 according to NPD. An increase at this point, near the planned end of the eighth generation of video game consoles, was unusual and was attributed to the pandemic.[128][129] By July 2020, NPD Group reported that the total sales of video game hardware and software within the United States in the first six months of 2020 reached US$6.6 billion, the highest since 2010.[130]

Post-COVID

Towards the end of 2023 and continuing into 2024, the video game industry saw a large number of layoffs, with over 10,000 jobs lost in 2023 and at least 8,000 in 2024 by February 2024. While other factors contributed to the layoffs, such as previous acquisitions and mergers that came after 2021, the return to normalcy after COVID changed the profitability of video games, lowering market forecasts, which the inflated industry could not sustain.[300]