Microsoft / Activision Deal Approval Watch |OT| (MS/ABK close)
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splattered
Member
That's pretty great but the senator should have had Phil's face like Jim is on Raiden
Sleepwalker
Member
He does, but the AI I used isn't that great or I guess Phil looks like the senator lmao. I wish I could've done the hair but it's way past my skill level atm
Here's a before and after:
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splattered
Member
Sleepwalker
Member
Explains everything, Phil is the senator.
Heisenberg007
Gold Journalism
Yes, $1.85 billion, which means their operating expenses were $25 billion.Except that Phil said they are profitable. We don't have to guess.
Edit: also PlayStation made 1.85 billion last year. Look it up.
PlayStation delivers record $26.9 billion revenue, operating profit drops 40%
Sony's PlayStation games division made a record-breaking $26.9 billion in revenues throughout FY 2022, but high expenses caused operating income to slide.www.tweaktown.com
If PlayStation needs $25 billion per year to simply break even, how do you think Xbox is making profits with just $16.2 billion when it's now bigger than PlayStation?
(Please don't say, "Phil said". Phil says a lot of things. We are way past believing Phil at this point).
Varteras
Gold Member
After this hearing, I don't know how anyone can say, "Phil said" without feeling like a tool. Sorry, but you gotta be pretty shameless to keep standing by his word.
GHG
Member
I actually can't stop laughing.
Bobby is like finally I can tap that ass without the fear of being judged by the fragile gaming community.
Heisenberg007
Gold Journalism
Does anyone know where this graph is from, or if it's even legit?
It looks legit, and I'm willing to believe it, because if that's actual Game Pass revenue for 2022...
lol this is fanmade.
Heisenberg007
Gold Journalism
A "safe approach" is actually not to hide numbers and show operating revenue, expenditures, and profits to the public every quarter -- like every other confident company does.
They haven't even shared Xbox GP subscriber numbers since January 2022 lol.
ulantan
Member
Sony could have not purchased them so it was up to them.
1. Sony isnt breaking even. They're making nearly 2 billion dollars. Assuming Xbox's profit per revenue is similar to Sonys, Xbox would make about 1.2 billion in profit.
2. Xbox isn't bigger than PlayStation.
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Heisenberg007
Gold Journalism
Sony is making $1.85 billion profit only if they have $26.9 billion in revenue. They need $25 billion revenue to break even. Xbox is not making $1.2 billion in profit because their revenue is only $16.2 billion.
So either Xbox's operating expenditures are nearly 40% lower than PlayStation's (how?!) or Xbox is losing up to $8-9 billion every year.
There is no other explanation.
Varteras
Gold Member
I think a big reason why they bought them was because Microsoft was looking to buy them as well. But it sounds like the deal wasn't satisfactory to them, whereas Sony agreed to the terms.
This seems to be something people like to overlook. Microsoft was trying to buy Bungie but didn't like what Bungie proposed. They likely either wanted exclusivity at a $3+ billion pricetag or wanted a lower price if Bungie was to remain multiplatform. Whatever the case, the reality is, Sony was willing to do what Microsoft wasn't. Which meant Bungie staying multiplatform at that price.
Do I think that will stay that way? No. I'm pretty confident that by the next generation, we'll start getting PlayStation exclusive Bungie games. Destiny and Marathon will likely stay put. Whatever Matter is, that's already rumored to be console exclusive to PlayStation. Even if that rumor is bogus, I feel it's only a matter of time. No pun intended.
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Why are you taking my post out of context?
I'm talking about posters like you guessing at Xbox's profitability, not Microsoft's financial disclosure details. And you're ignoring the information Microsoft has released.
As a publicly traded company Microsoft does disclose revenue, profit, etc. Its true they don't breakdown details for Xbox. I wish they did. But this is not unique to Xbox. Sony used to do the same thing in the ps3 era when their sales were poor.
I assume Microsoft is doing the same.
Why is Sony Hiding PS3 Sales Figures?
NPD Sales results for the month of April were just released. For the second month in a row, Sony has asked the NPD not to publicly release the actual number of PS3 units sold. Sony has commented on the sales figures, saying these results show year-to-year sales of the PS3...
controversy.typepad.com
Do you not understand basic math? It doesn't require a set amount of money to make a profit. There are some set costs. But typically you spend x amount of money to generate y amount of revenue to get z amount of income.
So z = y- x which is your income.
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Heisenberg007
Gold Journalism
Yes, because Sony was hiding their losses. Why do you think Microsoft hides Xbox P&L?
Heisenberg007
Gold Journalism
Everybody knows here how profit is calculated. Why are you even explaining it when that's not the discussion? lol.
I'm asking you a very simple question:
- We know that PlayStation's operating expenses are $25 billion.
- Xbox's entire annual revenue is only $16.2 billion.
- If you suggest that Xbox makes $1.2 billion in profit, that means their operating expenses would be $15 billion, right?
How did Nintendo make 5 billion dollars on 15 billion in revenue? According to you that's not possible.
Nintendo FY22 hits $14.7 billion net sales, third highest of all time
Nintendo's Fiscal Year 2022 delivered the third-highest yearly net sales and the second-highest operating profit and net profit.
www.tweaktown.com
Heisenberg007
Gold Journalism
Because Nintendo doesn't make as many AAAs, their game development cost is cheap, their first-party games sales 20+ million copies for fun, and they don't bear up to $200 hardware loss for each Nintendo Switch sold.How did Nintendo make 5 billion dollars on 15 billion in revenue? According to you that's not possible.
Nintendo FY22 hits $14.7 billion net sales, third highest of all time
Nintendo's Fiscal Year 2022 delivered the third-highest yearly net sales and the second-highest operating profit and net profit.
Why are you even bringing up Nintendo? Do you think Nintendo is a more direct competitor to Xbox than PlayStation is?
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Varteras
Gold Member
How did Nintendo make 5 billion dollars on 15 billion in revenue? According to you that's not possible.
Nintendo FY22 hits $14.7 billion net sales, third highest of all time
Nintendo's Fiscal Year 2022 delivered the third-highest yearly net sales and the second-highest operating profit and net profit.
Nintendo isn't selling high end hardware at losses or just breaking even. They are also not spending tons of money to get Day 1 games on a sub service. They don't even run a comparable sub service to PS+ or GamePass. They likely are not spending nearly the kind of money to make their games either. No one believes that Super Mario Odyssey was a $200 million game. Probably not even $100 million. They also clearly don't spend much on their online infrastructure. They have been keeping their operating costs low for a while now. They have, historically now, shown a disinterest in spending the kind of money the other platform holders do to provide devices at that level of power, with online services anything like theirs, and the games that require the kind of expenditure that studios like Naughty Dog or Bethesda would ask for. And it shows.
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And Xbox isn't making 5 billion dollars.
They are just making some profit.
Microsoft would like to remind you the Xbox definitely makes money
Xbox consoles are sold at a loss
www.theverge.com
You know why. I explained why.
And here's an older non phil(unfortunately unnamed) source of profitability.
Microsoft would like to remind you the Xbox definitely makes money
Xbox consoles are sold at a loss
www.theverge.com
Unknown Soldier
Member
I'm starting to think we ought to just lock this thread until the decision is handed down judging from the circular conversations you guys have been having the last 10 pages
Here's another older source from same court case. 1.6- 2.3 in 2019.You know why. I explained why.
And here's an older non phil(unfortunately unnamed) source of profitability.
Microsoft would like to remind you the Xbox definitely makes money
Xbox consoles are sold at a loss
Edit: I have no idea how he knows blocked out portion.
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Varteras
Gold Member
And Xbox isn't making 5 billion dollars.
They are just making some profit.
Microsoft would like to remind you the Xbox definitely makes money
Xbox consoles are sold at a loss
Whatever Microsoft is or is not making, Nintendo is not a good example comparatively.
Alex Scott
Member
Wrong. Daniel Ahmad reported that after you take out the expenses PS profit goes to about 2 billion and Xbox profit goes down and could be in negative range.
Ass of Can Whooping
Member
Those numbers are just profit from software and services. Doesn't factor in losses from hardware
Heisenberg007
Gold Journalism
Both of these services talk profitability of games and services, not the entire division.
Games & services make profit, but hardware loses money. So what is the end net result? Is the net result a profit or a loss? Also, what about other expenses, such as admin, marketing, etc.?
By the way, you still haven't answered my question, which was about Xbox having an operating expenditure of merely $15 billion and how it's possible.
Unless I see actual, published data from Microsoft, I don't believe they make a profit. Because, again, one doesn't hide the financials of a profitable business, say that the business is not going strong, and suggest shutting it down.
Varteras
Gold Member
Doesn't Microsoft also like to obfuscate their Xbox numbers by rolling it under other divisions when talking financial numbers?
ToadMan
Member
They do.
But should this acquisition close I don't see how MS can justify not reporting on their gaming division as a standalone entity.
Any knowledgeable investor should demand to know how $69bn of invested cash plus the other assets already in that division are performing, in order to make good investment decisions.
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POKEYCLYDE
Member
Why are we talking about the profitability of the platform holders? Is there any relevance to the acquisition at hand that we need to argue if Microsoft is or is not making money from the Xbox division?
Heisenberg007
Gold Journalism
No relevance. There was already this conversation going in when I joined.
dotnotbot
Member
Predatory pricing is illegal in theory.
Heisenberg007
Gold Journalism
A very real possibility that the appeal deadline falls after July 18, 2022. Even the Gamers' Lawsuit got 20 days for appeal.
Assuming FTC fails to get the PI, does anyone know for sure if Microsoft will be able to close over FTC (let's ignore the CMA for a second) before the appeal period is over for the FTC?
Astray
Member
Yes. That's why the FTC needs a federal injunction at this stage, otherwise them putting their internal court date in August would have killed or at least heavily altered the deal on its own
Heisenberg007
Gold Journalism
No, my question is:
- If the FTC fails to get a PI, but
- The court gives them, say, 30 days to file an appeal against the Judge's decision, e.g., the FTC has until July 30 to file an appeal.
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Astray
Member
I still think yes.
This is what they were talking about when it comes to equities etc. Whether it's easy enough to just pull the two companies apart on appeal after they merge.
Varteras
Gold Member
If they appeal, they could request a hold on the original decision until a higher court has looked over the appeal. Which could include a temporary bar on the acquisition being legal. But those are just possibilities and there are multiple factors at play there which could work for or against the FTC. Including the perceived strength of the argument. The judge's comment at the end of the hearing saying that her decision will be hard could be an indication that the FTC, in her view, made a fairly good argument all in all. Either by their own words or the multiple reveals of Microsoft's internal workings. She also congratulated them on working against a stacked deck. The FTC MAY be able to seize on those words in an appeal.
In the end, though, this really boils down to the CMA and if Microsoft is willing to risk more or less going to war with UK authorities. It also requires ABK to agree to the acquisition despite contractual obligations not being met. Especially since their stock price is higher than it was for the majority of the process. Definitely holding much higher than it was pre-deal announcement. Their share price was in the mid-60s after having fallen into the 50s. Their stock price has been holding in the low to mid 80's now. If I'm an ABK shareholder, I'm watching that price go up and asking if it's even worth selling now. Considering the deal is worth $95 per share.
Silent Viper
Banned
Lot can happen in 10 years, what if CoD is not even thing? Popularity is already declining, maybe it will just die in 10 years ?
We cant start blocking mergers or stop growth of a company based on what will happen in 20 years ago.
Again, lot of what if or maybe, by everyone here. World dont work like that. What's the immediate harm to market with merger and that FTC failed to prove that in court.
Silent Viper
Banned
We went lot back n forth over his. Now i want to ask you. Honest question, what do you think will be the decision?
Approve with concessions or blocked for good? If approved then what concessions will MS will be asked to give to sony?
The parts can still submit stuff until tomorrow.
I wouldn't expect a verdict until next week.
Then of course there is the possibility to appeal from both sides so it will be interesting to see what happens.
Mr.Phoenix
Member
I don't know man... but I am currently inclined to believe that MS is lying about Xbox being profitable. It wouldn't surprise me if they are using some sort of weird MS math to calculate profitability.
It's just common sense, MS has more studios, sells fewer games on their platform, and pays God knows what to get games on gamepass...etc.
But for me, the biggest giveaway is that they are not outright disclosing what those profits are. Who knows, maybe they aren't lying... they could be making a $10 (yes, ten dollars) profit on that $16B revenue and technically be telling the truth that they are profitable. So there's that.
Varteras
Gold Member
No matter what, they only have 12 days left to convince ABK to renegotiate a new deadline, which will cost Microsoft more now, or to agree to allow the sale despite contractual obligations not being met. ABK's share price is almost $20 higher now than it was before the deal was announced. Meaning, at this rate, they'll be getting an extra $10 per share instead of the $30 it was then. ABK shareholders might decide the sale is no longer worth it if it looks like they can get back to their shares being worth $90 to $100. Meaning they could actually end up losing money on the deal or simply breaking even while losing control of the company.
FlyyGOD
Member
They don't need Microsoft to put games on cloud but Activision wasn't going to do it and definitely not on Nintendo . If they were they have yet to commit to it like Microsoft has.
zapper
Member
I think no...? I thought that winning this appeal with the ftc would allow microsoft to quickly renegotiate with activision before 18 july, in order to eliminate the approval of the cma and try to close the deal with changes to the original contract.
what is the point of closing in usa if the main agreement signed in january 2022 is not satisfied? also for this reason I couldn't explain the intervention of the ftc when the august case was almost there...
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Heisenberg007
Gold Journalism
I still think the FTC may get the PI (although I can see it's very 50:50), which will put an end to the acquisition. Even if the FTC doesn't get the injunction, MS wouldn't be able to close because of the UK.
I think there is a less than 5% chance of this deal passing through. We have only 12 days left before the deal expires and so far, ABK shareholders have not amended the contract or renegotiated the deal.
That's where I am right now, but let's see what actually happens.
Varteras
Gold Member
Kottick admitted that skipping Nintendo was a mistake born out of his belief that the Switch would fail. By the time it became clear it was a huge hit, their production pipelines couldn't afford adding a platform that would require a lot of retooling. Considering just how different of a platform it is. Someone like him would not miss a chance to make money if he can. He said he's looking into supporting Nintendo's next console.
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