Microsoft / Activision Deal Approval Watch |OT| (MS/ABK close)
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PaintTinJr
Member
Thanks for the fun reply. Very well explained with a pictureObviously billions were spent researching the upgrades:
LOL. Yeah, they didn't change it all that much from outward appearances, reduced the size a bit, added the texture to the back, and included the share button, but it is still a new revision. It makes sense for them to build a controller that can support all of its features via a bluetooth connection, you start adding a bunch on top of the basics and now you need a cable on anything other than the console.
- so my substantive point wouldn't need changed then if it is a revision with less R&D than the difference between a GC pad and a wavebird?
SportsFan581
Member
Thanks for the fun reply. Very well explained with a picture
It's a basic statement of fact that it is an iteration of what they had before, it's a wild leap to assume they wanted to do something else but were somehow limited in funds and needed to hold back. LOL
Edit: I also noticed that I left out the biggest upgrade from a gameplay perspective in my first reply, the d-pad improvement. And I call myself a green rat.
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R3claimer117
Member
Lol
you guys like hysteria for no reason. How many times must it be said the FTC cannot approve deals. Barring them suing to block it which is the only thing they can do it’s going through. I’m pretty sure everyone has concerns doesn’t mean the FTC is suing to block it. Can’t wait for these virtual signaling to be over with so this closes and the world can move on from this.
Gavon West
Spread's Cheeks for Intrusive Ads
Agreed. What else is on FFS...Lol
3liteDragon
Member
Jimbo on his way to Washington, D.C. next
remember_spinal
Banned
DeepEnigma
Gold Member
solidus12
Member
Yeah yeah Xbox is winning blah blah blah
DenchDeckard
Moderated wildly
I tell you one thing, Microsoft and Sony are saving these "reporters" careers right now with this drama because their doesn't really seem like there's been anything actually games wise to talk about.
MOTM
Banned
You just woke him up from his wet dream.Lol
Pelta88
Member
Ok. This is significant news.
Given that Microsoft has a literal army of lobbyists and has been giving generous campaign donations to both Republican and Democrat house/senate races, I thought the FTC would rubber stamp this. I mean this with absolutely no disrespect to my US gaming brethren... But the FTC outside the US doesn't have the best reputation.
To see that they've not rubber-stamped this from a European perspective is kinda weird. Especially when reports outside the US made it seem like the FTC decision was a foregone conclusion.
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FTC are largely separate from the legislature and especially lobbying. The commissioners are voted in by the Senate but that's pretty much it.
Any discrepancies between the FTC and CMA/EU commission that stand out?
Suspect that you might have been reading biased sources, this is a 70bn deal under the most aggressive FTC in decades. It was always going to be scrutinised.
I would also remind people that FTC isn't that unified in terms of thinking see the case of Illumina.
Pelta88
Member
It might be aggressive now but not so much previously. To the point where whenever this merger has been brought up in business circles here in the UK, the FTC is pretty much an afterthought. Even on the BBC one of their top business analysts insisted that the FTC wouldn't be a hurdle.
To be clear this isn't a UK/US thing. Our perspective is that the FTC goes wherever the money is. If that's wrong then it's something that literally got lost in political translation.
It's really not, the FTC is dominated by the commissioners; they get nominated by the president and confirmed by the Senate. Lina Khan has been very aggressive (Amazon obviously dislikes her with a vengeance) and thats in part why she was nominated. I suspect the dems will hold on the Senate and therefore this FTC will be largely untouched until the next Presidential Election. If the Dem's lose the Senate, it might benefit MS and Big Tech. (hopefully thats ok re politics)
That BBC guy (also in the UK btw) got it wrong imo. I am expecting most of the regulators to putting forward consent-decrees/concessions (someone blocking the deal outright still seems personally unlikely) but the real question is what they are and how MS deals with it.
p.s i do think the MS website is a bit weird, not sure that would be the strategy i would go with and maybe does highlight some weakening of confidence.
The_Mike
I cry about SonyGaf from my chair in Redmond, WA
What the hell. This take right here. What are you on about lol.
"Sony can't afford to buy software like Microsoft, so now Sony are the hardware provider for Microsoft".
Why on earth should Sony get Microsoft exclusives? And what happened to the Xbox in your calculation? Forgot it existed? Lol.
They can't compete with Microsoft ecosystem, while you straight up ignore the ecosystem.
What an insane and out of touch with reality check.
hmmm... MS/Xbox doesn't need that much hardware from Sony. Most of the stuff is from other HW OEM's.
Wrong take in general
Topher
Identifies as young
Lol
Hysteria? He just posted a link and quoted the article.
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Pelta88
Member
Are you from/in the UK?
London born and bred, yeah
PaintTinJr
Member
Maybe in of itself you might consider it a wild leap, but they do want to do something else, and do so with the hundreds of pounds Elite controllers, which you surely need to pick a side on. Either they are just a shameless shakedown - while offering nothing better than the base controller - or they represent something better that they would include as the pack-in controller if finances weren't "limited". Which is it for you?
You also have to acknowledge that this isn't the only area where the design choice/strategy is less favourable to show the console in the best light - with costs at the heart of the decision, which I think shows a pattern.
The GPU setup of only supporting Texturing or BVH traversal at any specific time looks like the only justification is to save money and run old games without BVH traversal needs. And in conjunction with not using BVH, the GPU CU grouping cache configuration is poor for xbox running games traditionally, but is a great design for running multiple copies of an X1/X1X/XsS game on the XsX xcloud hardware, which again is consistent with the idea that xcloud project is paying the tab for the XsX hardware.
https://www.neogaf.com/threads/priject-xcloud-gets-upgrade-to-xbox-series-x.1549329/
It is also a "basic statement of fact" that in the Epic case an MSFT employee stated that they have never made a profit on any of the +150M xbox consoles - meaning it is a money pit which they will want to arrest cost. So against that backdrop is it really a leap to suggest the lack of controller R&D for console launch - which is a marketing own goal compared to the competition - looks like penny pinching cost reduction?
The further backdrop is that their entire game division was only making $2.6B in profit - call it $4B if the person quoting said they had a ~60% gain on that, since going by pre acquisition, $200M of that profit is from Minecraft and $2.5-3b of that $4b is from Bethesda.
That leaves just around $1b - $800M to equate for all the Windows store classic game MTX money(Freecell, Minesweep, Mahjong,etc) from all Windows OS users, and smartphone windows store related game monies on Nokia, and the same from the AppStore and GooglePlay Store, +30M Gamepass subs (even at $10 a year average profit that's $300M/yr), which are all MSFT game profits , not Xbox. Considering the number of PCs/devices that figure should be at least 2-4x that size.
So, if xbox was profitable - which going by those numbers, it can't be - that $700-$500m($1b - $800M -$300M) remaining would also account for all the Xbox profits too.
Surely going by those reasonable estimated numbers, it is more likely that xbox runs at a couple of billion dollars loss each year - bringing the gaming division profits down - and that spending on controller R&D for a console platform launch they might have internally put on life support already, say compared to the new gamepass/xcloud project, which would gain from making all games on the service work on anything from the 2001 Xbox OG pad to maximise the potential reach of the service makes sense to you also, no?
Source?
Also is that profit or revenue?
Also is that annually?
Cause if its profit, Bethesda should been valued much more than 7bn or had a stupid level of debt. Also if profit, what's the revenue?
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drganon
Member
PaintTinJr
Member
Not sure, it was a quick googling figure - repeated process for Minecraft, but looking again I think the first bethesda number I used is nonsense and multitudes smaller in reality - feel free to correct the number. Which if the case, would maybe make it touch and go if Xbox breaks even or loses money using the other figures if that puts another $2.5b into the equation, again.
/edit I didn't quiz the number because a 60% gain on the Epic profits number post-acquisition looked consistent.
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Chukhopops
Member
I applaud your patience arguing with someone who keeps throwing random numbers out of nowhere.
adamsapple
Or is it just one of Phil's balls in my throat?
Bernd Lauert
Banned
I've never seen a worse estimate of anything, ever. Bethesda made $3B in profits in one year? One year of Gamepass is 10 dollars in profit for the entire year? Xbox loses several billion dollars every year? And that's why they can't afford R&D for a game controller?
I am just getting a feeling that there is a lot of speculation here which is okay but it's good to highlight and try and give sources behind figures when you do. That 2.5bn number, as you came to, doesn't make sense for profits. It could be revenue.
I think there is a probably a fundamental issue here about definitions of segments (very subjective especially when you have R&D that doesn't have a division or has applications for multiple divisions) that we won't be able to resolve.
Chukhopops
Member
Bethesda making 3B profit a year would put them at a higher yearly profit than Activision Blizzard (2.5B in 2021) lmao.I've never seen a worse estimate of anything, ever. Bethesda made $3B in profits in one year? One year of Gamepass is 10 dollars in profit for the entire year? Xbox loses several billion dollars every year? And that's why they can't afford R&D for a game controller?
Also I love the part where GamePass subscription profit is not Xbox profit but MSFT profit for some reason.
PaintTinJr
Member
I'm in no way defending the exact number. But if those numbers were correct, is there a problem with the methodology - that you can replace or enhance?
I'd happily have you or apple do the numbers and methodology if you feel it will be a reasonable estimate. I'm genuinely triggered by this question not having a reasonably acceptable known answer.
Chukhopops
Member
The thing is you’re trying to somehow prove that MS gaming division is losing money so you have to manipulate and twist the data to reach that conclusion.
That’s the flaw in your methodology and why you ignore for example the 30% cut MS takes on all Xbox digital transactions: FIFA stuff, CoD stuff, Fortnite stuff and instead focus on Freecell / Solitaire MTX which is likely to be contributing a lot less money.
The most reasonable thing to do when estimating MS gaming profit is to take the profit margin of their competitors and apply it to MS revenue, which will give you some kind of ceiling value (since I’m confident MS has lower profit margin compared to Sony or Nintendo) to start working with. If you’re trying to solve the equation for 0 profit or a loss you’ll have to invent numbers.
adamsapple
Or is it just one of Phil's balls in my throat?
I thought you were taking a mickey here but yep they really said that.
Why is game pass subs not Xbox revenue, it falls under the Xbox games division. This is some weird mental gymnastics to try and prove some kind of a point.
SportsFan581
Member
Your question - So against that backdrop is it really a leap to suggest the lack of controller R&D for console launch - which is a marketing own goal compared to the competition - looks like penny pinching cost reduction?
Answer - Yes, and it always will be a yes regardless of the context you put around it. A competitor adding gimmicks to their product does not force a company to follow in the same direction. Just because Sony did something MS didn't does not equate to MS not having the R&D funds to match that product. It's just a ridiculous position to take.
They don't include the Elite controller in the box because they don't feel the average buyer values the features enough to validate the production cost increase. Including it would raise the price of the consoles and lower the value to most buyers. The Elite controller is a product for a small niche of gamers that are willing to pay a premium for a premium product. Just like the audio headsets and all other accessories. There is a market for high-end, high-priced options, but the majority is going to go with a better value option.
Also, I don't think you understand the business of selling game consoles. LOL
The purpose is to sell the razors for as little as possible (you don't make money on these - there was a time when money was lost on these) in order to sell the blades. MS saying they don't turn a profit on the hardware != MS saying they make no profit from the Xbox ecosystem as a whole. The profit comes from software and services, like it always has. Nintendo and Sony have started to prioritize hardware profits, but that's not good for me or gamers in general. It's better for purchasers when the hardware vendors break-even or lose money on hardware, as that ensures a better deal for us. It's not rocket science.
The lunacy of those other numbers I'm not even going to touch on. Put down whatever it is you are smoking, you've had enough.
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PaintTinJr
Member
I was trying to be as fair as possible to classic xbox division, because going by a reddit thread there was a DF interview that said gamepass was still in the user acquisition phase, so if it isn't profitable, attributing those profits to xbox would also mean attributing the net loss for the service too, which isn't really the crux of the discussion when knowing whether xbox was/is profitable in its business model of classic "xbox" pre-gamepass, was really the point in discussion.
Yet again, if you think you can do a fairer segmentation to show a long term profit or loss - say if Epic, Steam or Nintendo had been paying for Xbox, rather than MSFT with its ability to attribute costs elsewhere to profitable departments - then I'm happy for you to show me a fairer way to get a good estimated answer to: "is xbox profitable?".
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DarkMage619
$MSFT
I am not really following your logic. You haven't substantiated your claims about Xbox not being profitable but let's accept your premise. Should regulators refuse to let MS purchase Activision because Xbox isn't profitable? I didn't realize that was part of the criteria. It was already proven MS isn't the biggest player in the games space why shouldn't the smaller less profitable business be allowed to make this acquisition?
SportsFan581
Member
IKR, I'm not sure how that would even hurt their case at all.
But, it's already been proven by the Epic trial that the gaming division turns a substantial profit. Especially with the revenue gains they've shown since 2019. Point seems moot all around.
PaintTinJr
Member
Maybe a little more attention to reading posts and a little less childish emoji-lolling would have already reveal that answer to you
.But obviously, a failure for the Xbox part of the MSFT gaming division to be "competition" to Nintendo or PlayStation by being an actual viable platform - without eating billions per year for 22years - would maybe look to a regulator that MSFT were doing what they have been observed doing in other markets, that is met with regulator distain. And their entire argument to buy Activision might look pretty dubious IMO.
Gaming division is not the Xbox platform in supposed "competition" to Nintendo and PlayStation. So, much like when they wrapped xbox in the zune media division while they were in an investment stage, any profit or loses by xbox was completely masked and opaque to all observers.
A lame duck operating in feigned competition is not goood for a market, because as a fundamental rule of thumb, necessity is the root of all invention, so without "necessity" (to be profitable) the innovation is hampered, and the market stagnates if they get to be market leader by indirect means.
As gamers we choose, and we get rewarded by creative games by our chosen champions to keep them viable. Is that not how you see it?
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Negotiator101
Member
So what are you actually trying to get across?Maybe a little more attention to reading posts and a little less childish emoji-lolling would have already reveal that answer to you
But obviously, a failure for the Xbox part of the MSFT gaming division to be "competition" to Nintendo or PlayStation by being an actual viable platform - without eating billions per year for 22years - would maybe look to a regulator that MSFT were doing what they have been observed doing in other markets, that is met with regulator distain. And their entire argument to buy Activision might look pretty dubious IMO.
Gaming division is not the Xbox platform in supposed "competition" to Nintendo and PlayStation. So, much like when they wrapped xbox in the zune media division while they were in an investment stage, any profit or loses by xbox was completely masked and opaque to all observers.
A lame duck operating in feigned competition is no go for a market, because as a fundamental rule of thumb, necessity is the root of all invention, so without "necessity" (to be profitable) the innovation is hampered, and the market stagnates if they get to be market leader by indirect means.
As gamers we choose, and we get rewarded by creative games by our chosen champions to keep them viable. Is that not how you see it?
onesvenus
Member
Brasil has approved the acquisition
Here is the link to their website
It's funny seeing them clarifying that they are protecting Brazilian consumers and not some specific competitors
Here is the link to their website
It's funny seeing them clarifying that they are protecting Brazilian consumers and not some specific competitors
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Pelta88
Member
I'm actually in the stock and this news hasn't moved the stock price whatsoever, which translates to Brasil's regulatory board having little to no impact on the deal.
In fact the stock price sank a little when this news broke. But that's the stock market for you.
Bergoglio
Member
Here comes an avalanche!
The_Mike
I cry about SonyGaf from my chair in Redmond, WA
onesvenus
Member
I don't know what you say has to do with anything
Brazil was one of the harshest countries regarding the Disney acquisition and demanded some concessions. That this one has been approved without any is interesting
HoofHearted
Member
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adamsapple
Or is it just one of Phil's balls in my throat?
Draugoth
Gold Member
Brazilian regulator approves Microsoft’s proposed Activision Blizzard deal | VGC
Brazil’s CADE approved the acquisition with no restrictions on Wednesday…
www.videogameschronicle.com
Brazil/CADE reasons for approval
1.- Regarding the horizontal overlaps verified in the markets of game publishing, game distribution, online advertising, and licensing for merchandising products, the analysis carried out indicated that the Operation would not be able to promote significant changes in their respective offer structures, in any of the scenarios considered - either because the concentration generated was less than 20%, or because the low variation of the HHI pointed to the inexistence of a causal link between this AC and possible possibility of exercising market power, according to parameters defined in Resolution No. 33, of April 14, 2022, from Cade.
2.- With regard to possible vertical effects, an attempt was made to assess whether, as a result of the Transaction, Microsoft would have the ability or incentives to close any of the vertically related or complementary markets.
3.- As for the possibility of closing the game publishing market (upstream), it was found that, despite Microsoft having control of a relevant portion of the console and digital game distribution markets (downstream), the company would not have incentives to make it difficult for publishers competing with Activision Blizzard to access its platforms, as this would necessarily imply a reduction in quantity and variety of the catalog of games available in the Xbox ecosystem, making the company's products and services less attractive to consumers.
4.- With regard to the possibility of closing downstream markets, the analysis pointed out that, despite their relevance and popularity, Activision Blizzard games – and in particular the Call of Duty series– would not be essential assets to the performance of Microsoft's current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital stores and multiple game subscription services for PC and consoles). Thus, even if the Activision Blizzard game catalog were to become exclusive to the Microsoft ecosystem after the Transaction, SG/Cade considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
5.- Furthermore, it is important to highlight that the central objective of CADE's activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors. After all, one cannot lose sight of the fact that the holder of the legal assets protected by Law No. 12,529/2011 is the collectivity, and not the competitor/economic agent as an individual entity. In this sense, although it is recognized that part of the users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision Blizzard games - and especially Call of Duty– become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.
6.- Finally, in relation to the existing complementarity between the activities of Microsoft and Activision Blizzard in the game publishing markets - and especially in the mobile games segment - and online advertising, it was found that the shares held by the Parties in these segments, in all scenarios examined, are well below the minimum percentage considered for the purpose of presumption of the possibility of closing the market, as defined in article 8, IV of CADE Resolution No. 33/2022.
It is concluded, therefore, that the possible vertical integrations and complementarities that may be generated or reinforced by the Transaction do not give rise to significant risks to competition, since no elements were identified that allow inferring the closure of any of the vertically related markets.
In view of the foregoing, it is concluded that the present merger is approved without restrictions.
1.- Regarding the horizontal overlaps verified in the markets of game publishing, game distribution, online advertising, and licensing for merchandising products, the analysis carried out indicated that the Operation would not be able to promote significant changes in their respective offer structures, in any of the scenarios considered - either because the concentration generated was less than 20%, or because the low variation of the HHI pointed to the inexistence of a causal link between this AC and possible possibility of exercising market power, according to parameters defined in Resolution No. 33, of April 14, 2022, from Cade.
2.- With regard to possible vertical effects, an attempt was made to assess whether, as a result of the Transaction, Microsoft would have the ability or incentives to close any of the vertically related or complementary markets.
3.- As for the possibility of closing the game publishing market (upstream), it was found that, despite Microsoft having control of a relevant portion of the console and digital game distribution markets (downstream), the company would not have incentives to make it difficult for publishers competing with Activision Blizzard to access its platforms, as this would necessarily imply a reduction in quantity and variety of the catalog of games available in the Xbox ecosystem, making the company's products and services less attractive to consumers.
4.- With regard to the possibility of closing downstream markets, the analysis pointed out that, despite their relevance and popularity, Activision Blizzard games – and in particular the Call of Duty series– would not be essential assets to the performance of Microsoft's current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital stores and multiple game subscription services for PC and consoles). Thus, even if the Activision Blizzard game catalog were to become exclusive to the Microsoft ecosystem after the Transaction, SG/Cade considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
5.- Furthermore, it is important to highlight that the central objective of CADE's activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors. After all, one cannot lose sight of the fact that the holder of the legal assets protected by Law No. 12,529/2011 is the collectivity, and not the competitor/economic agent as an individual entity. In this sense, although it is recognized that part of the users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision Blizzard games - and especially Call of Duty– become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.
6.- Finally, in relation to the existing complementarity between the activities of Microsoft and Activision Blizzard in the game publishing markets - and especially in the mobile games segment - and online advertising, it was found that the shares held by the Parties in these segments, in all scenarios examined, are well below the minimum percentage considered for the purpose of presumption of the possibility of closing the market, as defined in article 8, IV of CADE Resolution No. 33/2022.
It is concluded, therefore, that the possible vertical integrations and complementarities that may be generated or reinforced by the Transaction do not give rise to significant risks to competition, since no elements were identified that allow inferring the closure of any of the vertically related markets.
In view of the foregoing, it is concluded that the present merger is approved without restrictions.
adamsapple
Or is it just one of Phil's balls in my throat?
Some key points from CADE's ruling.
They do not believe the Activision catalog becoming exclusive to MS will result in a reduction in competition.
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