cebri.one
Member
We can all agree that buying Activision and Bethesda had three primary goals:
Now let's look back at the three goals:
This is an additional issue, because everyone in the industry know with 35M subs you cannot cover 1st party cost + 3rd party licenses + opex cost. That's why MS is going multiplatform, they tought they could spend competition into bankruptcy offering a service below the cost of revenue and it has flopped.
Opinions?
- Increase Xbox hardware sales
- Increase number of exclusives
- Increase GP subcriptions
- Activision was generating about 2.5B FCF before the acquisition. Microsoft paid around 75B for them, so they paid 30x FCF. If FCF grows at 5% a year it means they'll need at least 19 years to recover the invesment.
- For Bethesda we do not know how much FCF they were generating but we know they paid 8B dollars for them. I doubt Bethesda was generating even 20% of what activision generating, so let's say they were generating 800M FCF a year, again, highly optismic. They would need 10 years to recover the investment.
Now let's look back at the three goals:
- Increase Xbox hardware sales: Absolute Flop, not sure if more explanation is needed: https://www.kitguru.net/gaming/mustafa-mahmoud/xbox-series-xs-console-sales-fell-by-almost-50-in-2024/
- Increase number of exclusives: Gears of War, Forza Horizon, Sea of Thieves, Oblivion Remaster, Indiana Jones... Not only significant % of new games 1st party games are not exclusive, also massive exclusive franchises have gone multiplatform.
- Increase GP subcriptions: OK. Number of gamepass subs we know it has grown from 24-25 million in 2022 to 35-36 million in Q2-Q3 2024. But that growth seems to be stagnating:

This is an additional issue, because everyone in the industry know with 35M subs you cannot cover 1st party cost + 3rd party licenses + opex cost. That's why MS is going multiplatform, they tought they could spend competition into bankruptcy offering a service below the cost of revenue and it has flopped.
Opinions?
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