Breaking: Microsoft to acquire Activision-Blizzard in near 70$ billion deal
- Thread starter Draugoth
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IntentionalPun
Ask me about my wife's perfect butthole
This is rather silly; MS believes cloud will be bigger than console userbases. So they believe removing Activision games from Playstation will be more than made up for.
It's a gamble for sure; and I personally don't think cloud will be big enough, but that's the ROI they are looking for.
Either way, Activision still exists.. the companies, the IPs.. as does each individual studio. These are things worth value, you don't have to make $70 billion "back" on that value to get ROI because these are now assets of MS to sell off if they want to. Also potentially will result in an increase in their market cap. If MS stock over time goes up by 3% because of this, they already have $70 billion more market cap.. and MS is owned by that market.
Hendrick's
If only my penis was as big as my GamerScore!
What are you confused by? In the near future, gaming will be like TV, where you have a bunch of subscription services and content is king. They are trying to get as much talent and IP as they can before some other large entity does. Sony isn't even playing the same game.
sainraja
Member
You are making the same point he is making lol. Do you not see that?
StreetsofBeige
Gold Member
Totally.
MS bought Linkedin for $26 billion. The website is still up.
Who knew video game forum users are all chartered accountants calling the shots for corporations.
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OmegaSupreme
advanced basic bitch
Oh yes. The all streaming future. Sure jan.
James Sawyer Ford
Banned
The risk is that the 70B they paid is more like 20B or less due to brain drain, IP stagnation and erosion.
Yes they "own" Activision, but Activison's worth isn't guaranteed to be anywhere close to what they paid for it if they decided to flip it
AJUMP23
Parody of actual AJUMP23
I do wonder what they could sell Linkedin for today? If they wanted to spin it off what would it be valued as.
El Pistolero
Banned
Yep. Nevermind them acquiring Bungie before their game could hit the Macs of the world, shelling out hundreds of millions for Rare, and trying to buy both Nintendo and Squaresoft.
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Dr Bass
Member
Activision Blizzard wanted to sell, so it approached Microsoft
Activision Blizzard had no obvious vector for growth after tapping out Call of Duty and failing to maintain World of Warcraft.venturebeat.com
This makes tons of sense and is something I've echoed many times when discussing why these huge acquisitions are often not as important as they seem and are essentially "buying the past."
If this article is true it's clearly explaining this effect. People leaving to do other things, work on other titles, etc. Microsoft can't buy people, and indeed MS as a company simply attract the best talent in the industry. They don't want to work there (this is a software engineer thing). So when these buyouts occur not only do they now have studios to support, they have to get those studios to regularly produce content, and they can't stop people from just leaving and going to do something else. It happens all the time in software acquisitions. If Activision wanted to sell they simply didn't see much of a future for themselves. So it's right there in black and white. Activision themselves saw no way forward. They wanted to sell. So MS just engaged in the largest buyout ever for a company that actually saw no future for itself, i.e. bought the past. It's very simple. If Activision saw no real future for themselves, how is MS spending a cool 70 bil smart, and how are they going to actually turn that around?
I'm definitely looking forward to seeing how this turns out. I really think it's going to be yet another Skype, Nokia, etc.
Though I have to actually laugh at Grubb writing that Activision engaged in "civil rights violations" of its employees. Good grief.
assurdum
Banned
Something Stadia something
OmegaSupreme
advanced basic bitch
That thing sure is doing gangbusters isn't it?
fart town usa
Banned
I do agree with this.
I'm not upset over it cause I don't play Bethesda games or Activision games but it's just lousy to simply buy up assets to fight against the competition. It is what it is, clearly MS has the capital to do these things but it just seems so uninspired and lazy.
Consolidation usually leads to a lack in quality but maybe this time will be different. It'd be awesome if being under the MS umbrella allowed these studios to make truly amazing games but only time will tell.
IntentionalPun
Ask me about my wife's perfect butthole
For sure; just explaining you don't start from 0 and have to "make back" the purchase of a company, which people seem to believe here. They said the same of Bethesda. "Well they wont be profitable for ages!"
That's just not how buying companies work; there are actual assets being bought generally (often buildings, computers, all kinds of shit) that get categorized one way, their are IPs which you could guess a value on, and their are all kinds of intangibles.
That $70 billion purchase will get amortized over many years (by law) and then you will start getting Activisions revenue.. which includes a back catalog that is still selling well on Playstation, and you can put on Gamepass, increasing subs, etc.,etc.
Yes this purchase is likely based on an ROI that includes MS being a huge player in cloud gaming, not just console/PC.. and that cloud gaming, that "gaming gone Netflix style" actually becomes a massive market.
It'll be a decade before we really know if this stuff pans out.. and even if cloud doesn't, MS could still be sitting on a hugely profitable gaming business that has made huge comebacks in the console market. We just dont' know.
But buying a successful company for under their market cap from a year ago, where they only lost that market cap due to a scandal, is not illogical... it's a booming business, and a right place/right time/right CEO/right bank account size scenario IMO.
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StreetsofBeige
Gold Member
I've explained this to people too, but some people dont get it.
To them, if a company buys an office building for $10 million, it means they just blew $10 million and the building is worth zero going forward. And then they got to make enough profits to pay off the $10 million. They dont understand asset value. Now if someone wants to debate how valuable that asset is really worth, go ahead, but many think it goes to zero the second someone buys something.
That's how you can tell who owns a house and who doesn't. Because nobody buying a home earning equity on it (or even better fully owning it with no mortgage) would equate buying a $1M house meaning the house is worth $0 the second you walk in the door.
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James Sawyer Ford
Banned
Businesses can crater almost overnight. There are real risks in businesses. Book value is of little importance to the 70B valuation in Activision - it's mostly the IP and secondly the employees.
I'm not saying it is necessarily a bad deal, but it is enormously risky not knowing their strategy for 50% of the userbases long term or the long term appeal of the CoD brand
The company was "on sale" for a reason, companies with vibrant futures generally don't sell out. There's some truth to that Grubb tweet. The risk is that MS is buying a falling knife, it happens all the time in business.
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IntentionalPun
Ask me about my wife's perfect butthole
And for publicly traded companies, the biggest thing that matters is that market cap and revenue/profit numbers which for MS are a massive bucket of several massive businesses, and a number that has just steadily climbed.
MS needs to keep those numbers climbing, that's how being a high value blue-chip "I'm in everyone's portfolio" stock works.
Up/up/up.. their 20 year chart looks roughly the same.
It's what is sort of gross about publicly traded companies TBH.. "must.. grow numbers"... can't just continue to profit, have to get bigger and bigger.
IntentionalPun
Ask me about my wife's perfect butthole
$8 billion a year in revenue is not of "little importance" to this purchase.
The company was on sale largely because of a scandal that has little to do with the businesses profitability.
James Sawyer Ford
Banned
Revenues aren't static. They can crater, especially if a big IP falls out of favor. Most of the valuation is wrapped up in that IP
The scandal is a scapegoat. Truth is Kotick had no confidence from the board, who in turn were gravely concerned about the future prospects of growing the revenue, hence why selling out at a premium seemed like the best path
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lastmessiah
Member
So your prediction is that Activision revenue is going to crater following the acquisition? That's an interesting take.
yurinka
Member
PS4 not only sold more exclusives, sold also way more total games, 2X the consoles of Xbox and 2X the game subscriptions than Xbox. Plus generate way more total revenue and profits.
>90% of the PS4 userbase doesn't seem to buy CoD. So even if all of them leave -something that obviously won't happen- it wouldn't be that huge.
First, we have to see if CoD goes exclusive. If it's the case, or maybe even if it's multi but they prefer to play it on Gamepass, they wouldn't need to leave the console because of that if they also have an Xbox or PC.
PS4 owners bought on average over 14 games, which means they not only buy CoD, and they not only buy exclusives. We also know many top multiplatform games/publishers have PS as their leading platform, CoD isn't the only one.
There are multiple reasons of why people buy a console and there are multiple games they buy for it.
I only said that until now Sony exclusives were selling more than the Xbox ones, and that this generation Sony released many of them that already sold more than what a CoD sells on PS, let's say >15M or are in track to achieve that or at least a somewhat similar number: TLOU, Uncharted 4, Spider-Man, Horizon, God of War, TLOU2 and who knows if GoT, Days Gone, Horizon 2 and Ragnarok plus some other one I may miss.
And remember, there are almost 120M now (many of them were released with a way smaller userbase).
Yes, there are lots. In the case of CoD, this people and their friends would be included in a group of ~10-12M or less, around 10% or less of the PS4 userbase. The other 90%+ don't play CoD. They (and the ones who play CoD) play other games: FIFA, Fortnite, GTA, exclusives and so on. There's a huge and diverse library, a ton of games sold for the console and each player buys over a dozen games.
It depends:
-First, if they lose CoD.
-Second, if they also play more games on it (which is the case of the average player).
-Third, if they only buy games at launch price (at least on Steam, where we have numbers, on average over half of units are sold when discounted/after price drops).
-Fourth, if these prices aren't also applied on the next gen games of the other platforms (already started to happen).
-Fift, if they don't have appealing alternatives to play on PS (there are many other top multiplayer and shooters, plus other coming like the ones the CoD BO guys are making for Sony).
-Sixth, if they played CoD because they are huge fans or only because they saw cool stuff in some Sony ads or store featuring, or because didn't care about the game and it's just bought what their friend is playing
Not going to happen.
PS4 is the console with more games sold for it in gaming history, and launch aligned in hardware has been the best selling console ever or very close depending on the point of the lifetime. PS5 is on track to highly outsell it once they get rid of chips issues.
I didn't say that Sony won't be affected, I said that the impact will be minimal and that very likely Sony will compensate it. Because they have a growth, and because they have a huge and wide catalog with include many multiplatform supersellers, some exclusive supersellers (not only 3, I mentioned some above) plus tons of less selling games that cover many niches.
Regarding to their reaction, they will do many things that may seem to be it but really won't, because they were already planned before hand: game subs and game streaming overhaul, PSVR2 release, acquisitions or big 1st, 2nd or 3rd party exclusive announcements.
It's partly untrue, even the opposite.
Sony said back in 2014 when they announced PS Now that their long term plan was going to expand it too to computers, tvs and mobile devices, and that they aimed to include tons of games from all PS platorms. But yes, even if MS came later they implemented all these things before, so now it seems Sony is the one reacting.
And it was like 2-3 years ago when Sony mentioned to their investors that they planned to implement some of this things (plus some more they already did or will do as to continue expanding the supported countries, reviewing their business plan etc) more or less now, as their next gen PS Now improvements.
Plus this PS Now overhaul/push is also made in the context of a corporate wide goal for this FY, where they mentioned that they want to push hard this year their services/POS (not only this one, but also in other areas outside gaming).
There's one part that can be reaction to GP because obviously they have to check out the competition and learn from them, but also is a common sense thing: to add a download only (so pretty likely cheaper), PS Now tier that since doesn't include streaming they would be able to release it worldwide.
I assume:
- To enter as a key player on mobile, China+Korea and eSports via Blizzard & King
- To get more IPs and dev teams, specially for Gamepass
- To improve their revenue of their gaming division
- To climb in the ranking of biggest gaming companies becoming 3rd only behind Tencent and Sony
- To remove a PC store competitor
- To continue improving their positioning as 3rd party publisher on PlayStation & PC as part of their slow transition into a multiplatform 3rd party publisher
- To 'reevaluate their relationship with ABK' and maybe their now dozens of millons richer CEO too, fighting for inclusion, metaverse and some other PR buzzwords more
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twilo99
Member
Just to spend some money out of boredom I think..
Kacho
Gold Member
Yeah it's a total mystery.
saintjules
Gold Member
lawl
Dr Bass
Member
It's pretty easy to see Microsoft has never made the money in videogames that it's sinking into them. Is the Xbox division even profitable over it's twenty year history? They spent many, many years losing billions, and they refuse to even talk about profit and loss at this point. Seriously, does it make money at all? It's like that old joke "We lose money on every sale to you, the customer. So how do we make it up? Volume."
They are essentially, still to this day, trying to buy their way into the industry as opposed to creating something from scratch that people want. I mean look at what Apple did when Steve Jobs returned. Created a whole new product catalogue that is the most successful consumer success story in the computing industry by a landslide. They didn't just try to purchase their way in. The MS gaming division basically takes money from Microsoft's more successful ventures to subsidize its habit, much like an adult that still lives at home and survives off of not paying rent. This is obviously not the case for Sony and Nintendo, where they both make very solid profits off their gaming ventures. And they report it.
If Xbox were spun off into being entirely independent and could NOT access the rest of MS' capital, what do you think would happen? Be honest here. Think about this. What do you think Xbox would do in terms of games if that happened? Yeah that is open ended question, but for a reason.
Again I don't understand the thinking of MS here, if this is indeed the case. Where is this huge user base of people clamoring to play games that have existed for decades that haven't done so yet? Netflix has 200 million subscribers or so, charges up to 20 dollars a month and still isn't turning a profit. It's literally an order of magnitude larger than the GP subscriber base, charges up to double, and content is likely cheaper to acquire and produce. So if MS thinks streaming a game is going to be what people want, where the experience is noticeably inferior than having it installed on a device, and people are going to clamor to sign up for that .. I think they have another thing coming. You can't beat physics when it comes to games. The streaming experience will always be much worse for a good portion of games (maybe point and click/turn based games dont matter as much). So, again, who are these current undiscovered gamers dying to spend 10 dollars a month, plus however they pay for Xbox live, to play streaming games on mobile devices with no physical controls? This is the untapped "cloud" market? Meanwhile they want to yank content from the far more lucrative player base that shows it is willing to spend from hundreds to, potentially, a thousand+ dollars a year, on individual games? And Phil says he just wants everyone to play and be happy and he doesn't engage in warring?
I don't think even Apple Arcade is a big deal and that's only five dollars a month on the most successful consumer device of all time. So now the industry is going to be taken over by a more expensive service, from a far less popular company that is currently last in the competition? Can anyone explain this again?
BTW market cap is not cash. Maybe you're making the argument they've "recovered" shareholder value in that sense, but if they hadn't spent the money they would have more shareholder value still and ... 70 billion dollars. This deal is not making their market cap go up unless it actually creates revenue/earnings growth, which again, relies on the assumption that Activision is such an important player in the market that it's going to cause serious movement. It would take an independent Activision more than ten years at it's current run rate to hit even 70 billion in revenue, much less profit (i.e. the free cash to cover the purchase). This goes back to the above quote about Xbox basically living off of it's "parent's money." Xbox could not be doing what it's doing, in any sense, without Windows/Office money floating around. And Activision felt so confident about their future they were pulling the rip cord to get out.
assurdum
Banned
Kotick is an evil genius as always. Look how COD sales release starts slowdown every years compared the previous releases. He already smell it and sell the company at the higher price possible. I'm more surprised to the people surprise about such move but he definitely know his shit and how to gain the maximum from the actual state of the company.
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Thought it sold the best on PlayStation. Seems contradictory. Idk after this part it just seems like your pretending this won't have any affect on the gaming industry and for whatever reason have even less affect on Sony. Don't think there's a conversation to be had if all the Xbox "success" with this aqusition is followed by "but only", "if, but, maybe" like I'm pretty sure Sony is concerned with this. We've seen what having marketing rights to COD can literally help you shift your place in the market since ain't AND MS have both done it and have both had success with that.
End of the day it's COD, casuals will flock to wherever it's available.
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Hendrick's
If only my penis was as big as my GamerScore!
Where did I say streaming?
ResilientBanana
Member
To obtain the #1 selling games in the entire market and profit from it? Why else? COD alone has been the #1 selling game on all platforms 13 years in a row. Not to mention the rest of the repertoire. Not to also mention, they now own MLG in this deal.
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SportsFan581
Member
CoD sells best with whoever is paying to have all the special perks and is marketing it. In the 360 days, and even early in last-gen, the games were selling best on Xbox when MS was getting the perks and marketing the title.
I'm on my phone it's hard as hell to reply but lol I basically said the same thing. Whomever holds the rights to the marketing ALWAYS gets a huge sales boost. So this guy saying it won't do anything, and an ACTUAL EXCLUSIVE is straight up denial lol.
NickFire
Member
Do you really believe that is why?
Your guess is as good as mine, but to me that feels like making a correlation out of coincidences. I think its much more likely caused by uncertainty in industry trends and cashing out before the shoes start dropping. I am not implying that they were in the red or anywhere close to be clear. Rather, I am referring to what you pointed out about growth, in that the leadership stops looking successful if they do not keep growing. Just in the last few months alone, I've seen stories about changes to WoW that suggested (to me) they are chasing a trend that their existing fans aren't so fond of. And COD, as much as I enjoy this version's gameplay, has turned off a ton of people chasing that same trend.
Again, I'm not saying they were in bad shape financially. I just think they weren't going to keep growing certain franchises as much as shareholders would like to see after focusing outside their core audience. If the scandal was even a slight concern, it could have been easily remedied with a sacrificial firing with six million puff pieces following in the news about how great they were for firing him. This was a money decision and nothing more IMO.
Billbofet
Member
If Sony did this, it would be the most calculated and shrewd move of all time.
Sony just seems to acquire studios that are already somewhat captive to them. MS takes big swings and disrupts the industry.
For good or bad, I think it's exciting to see how this plays out as I don't pledge allegiance to a plastic box with a logo on it.
Sony just seems to acquire studios that are already somewhat captive to them. MS takes big swings and disrupts the industry.
For good or bad, I think it's exciting to see how this plays out as I don't pledge allegiance to a plastic box with a logo on it.
poodaddy
Gold Member
SportsFan581
Member
Absolutely, now if the current-gen results in a similar hardware split, there comes a point where sheer numbers becomes a factor. But the core group following the game finds real value in the early access things and the extra content, that alone will move the needle. With that said, MS is never clear with their language on these acquisitions. They use that verbiage about maintaining existing communities, but that could literally just mean they are not pulling already released titles like with Skyrim (where they have already hinted that ES6 will be platform exclusive like Starfield). We'll just have to see on a release by release basis where everything ends up.
Kerotan
Member
The more I read about this the more I realise sony need to spend big in the next year. If it takes 30BN to take over Take 2, capcom and Ubisoft they should. They'll be making 15BN in profits this year and next. They made 12BN last year. It's absolutely worth it and if they don't strike now while MS is refueling it will be MS that end up buying them.
The biggest leverage Sony have over MS atm is their Azure deal. That's big bucks for MS cloud gaming sector. If they threaten to pull cod from playstation sony could threaten to move to Amazon's cloud services instead. Crazy times ahead but what is clear sony need to buy leverage. They need to buy a publisher.
The biggest leverage Sony have over MS atm is their Azure deal. That's big bucks for MS cloud gaming sector. If they threaten to pull cod from playstation sony could threaten to move to Amazon's cloud services instead. Crazy times ahead but what is clear sony need to buy leverage. They need to buy a publisher.
StreetsofBeige
Gold Member
More importantly to the $8B is that Activision profits are around $3B trailing 12 month reports, so the margin Activision makes is solid.
yurinka
Member
It isn't contradictory.
CoD gets released on PS, Xbox and PC and each one of the last ten or so sold consistently 20-30M copies on all platforms combined. As a random guess -I think being generous- that around half of the units sold in the 3 platforms -which means PS is the best selling platform- are sold in PS.
So I estimate that each CoD sells pretty consistently around 10-15M on PS (probably less, and some may be on PS3 or PS5 instead of PS5). There are almost 120M PS4 sold, 12M would be 10% of the PS4 owners, and there would be around 90% of the PS4 owners who don't buy CoD.
Over 1700M games have been sold for PS, over 14 games per console. Even if CoD is huge, people doesn't only buy CoD on PS4, and in fact most PS4 owners don't buy CoD.
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OmegaSupreme
advanced basic bitch
Then what are you referring too? Do you think your tv will natively be able to play cod?
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I think your forgetting the fact they sell 10-15 mill EVERY YEAR. Most ps owners so I'm fact buy cod. Your saying it sells 10-15 out of 140 million people is straight up wrong because it does that YEARLY. An let's not get started about the warzone numbers that game pulls alone. Like, what? You missed so many basic elements for your back of the napkin math lol.
That's like saying COD is a failure because Minecraft has more players and more sales… well no shit it does there's only ONE Minecraft and like 8 cod games in a single gen….
Kagey K
Banned
Yeah on a 7 year generation you are looking at 70 - 105 million copies of CoD sold on PS (based on the math laid out above)
Not 10 - 15m and that's it.
IntentionalPun
Ask me about my wife's perfect butthole
I think it's a huge part of it. Activision's revenue growth has been fairly steady over the years, they are incredibly financially healthy, and their stock price dumping this year can be directly attributed to scandal stories.
And I have no clue why anyone would think the board had lost confidence in Kotick
James Sawyer Ford
, outside of the scandal situation.They beat their earnings estimates every quarter this FY, for 2 quarters by nearly 10%, and outdid their 2020 earnings which a lot of companies haven't done.
The reason MS paid a bit over typical M&A premiums is likely largely due to their financial results not matching their stock price.. the stock price took a dump, during a bunch of great earnings results. It's no mystery why.
MS made those investors "almost whole" compared to the stock price pre-scandal. I completely agree this was a "money situation"
NickFire
I just have no clue how you can separate the scandal from the "money situation." The only "money" that matters is the stock price, and the scandal continuously caused it to drop off... if you fire your CEO you are still "Activision", the brand has a stink to it.. the brand is now gone.
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BootsLoader
Banned
I don't think that a Japanese company will sell itself to a foreign company. Japanese tend to have their companies inside their country. Do you remember what happened when MS approached Nintendo to buy them?
OmegaSupreme
advanced basic bitch
a multicultural team of v
Member
Yeah but how many of those are repeats? Each year its probably 10 million that bought COD last year and 4 million that buy it occasionally. I mean it is obviously still a ton of copies but its not like over the course of a generation 105 million people will have owned COD.
They also have to actually make a COD game every year, which costs a lot of money since they are working on 3 year dev cycles - it isn't like a Skyrim or Minecraft where they make it once and just coast on it for multiple generations. They have to put real money into COD every single year to keep the machine going.
That all said it still makes a ridiculous amount of money lol
PlayedStation
Member
It would be cool if Microsoft came up with a way to stream PC games like WoW through x-consoles via gamepass.