Microsoft acquired Activision Blizzard King for $69 Billion on 2023-10-13

[Silent_Buddha]

WOW!

Microsoft did their magic!

Edit: Sony is in a bad spot, even if they aren't in the immediate. They simply can't fight Microsoft at this level, plain and simple. BUT, it will be interesting to see the moves they'll make going forward that's for sure.

How are they in a bad spot? Literally the only thing that potentially changes in the next 10 years (and likely beyond) is that they lose exclusivity to COD content. They'll still get the content, it just won't be exclusive to PlayStation anymore.

I guess the other thing that changes for both Sony (if they want it Microsoft can't deny them the ability to stream it to owners of COD) and MS is that COD can now appear on their streaming services.

The only thing that changes for MS really is that they gain content parity with Sony for COD and COD can now appear on Game Pass. ABK were never going to let Sony (or MS) put COD on a subscription service so that doesn't change for Sony (I doubt MS would sign a deal for COD to appear on Sony's subscription gaming service outside of owners being able to stream it).

Well, MS also get all the ABK revenue and profits. Sony still gets the same revenue from ABK titles as they have in the past. Although I could certainly see them taking a larger share of each game purchase. I believe part of their exclusivity deal with ABK involved Sony taking a smaller cut of each sale compared to other titles sold on the platform.

Regards,
SB

 

[eastmen]

Keep in mind that the ABK entity itself has value (as you've noted). So for people not paying attention, if, for example, ABK is worth say 60 billion USD, then at 4-6 billion USD a year, you'd break even in about 2.5 - 3.5 years. Of course, the value of something could appreciate or depreciate over time, so the calculations are never that simple.

Basically, they key here is that Microsoft isn't losing much if any "value" with this purchase. It's not likely they are taking out a loan in order to finance the deal with interest on the loan being a deficit that has to be made up.

A lot of people fail to take into account the value of what is being purchased.

As well, it's important to note (as you did) that this is an investment that pays dividends to both the corporation (potentially increased revenue and profits) as well as shareholders (potentially higher stock value, potentially larger dividends in the futures).

As noted, is there a better way to invest 70 billion USD? At a profit of 4-6 billion USD a year, that'd be a yearly ROI of between 5.7 and 8.6 percent a year.

Also, it's important to note that Microsoft's plans for ABK include expanding the market for their products onto other consoles and devices. That potentially increases future profits generated by ABK above and beyond what they have historically generated. If that happens, then the ROI gets better and better.

Of course, as with everything, nothing is guaranteed. It's certainly also possible that ABK could start failing in a massive way after the acquisition.

Regards,
SB

Yes and to add to that any traffic so to say that goes into the xbox store or a mobile ms store is just more money for MS for a knock on effect. MS gets 15-30% of each sale on xbox/xbox pc and the future mobile app. So for them the ROI can be extremely quick.

I will be interested to see how fast WOW gets a xbox series port for one thing. I think that is a good way to drive in more subscriptions to Wow. There are a lot of wow players out there on older hardware that may find purchasing a $300-$500 console over a laptop or pc to continue playing. That will of course mean more gamers that have an xbox and will make more purchases of other games through it.

The other question is what does ABK have outside of COD/Diablo/Overwatch/Wow in development that can drive more users to xbox for MS.

After that I'd be interested to see how they leverage King for a mobile store front. I spoke in my previous post about some of the stuff I heard they are working on outside of this purchase to improve their store fronts.

 

[Silent_Buddha]

Also, one of the key points in the Judge's dissemination of their ruling was pointing out that the FTC failed to show how this deal would harm consumers and in fact it appears the deal would greatly benefit consumers.

The judge also points out that the FTC failed to show evidence that the deal would actually harm competition even if MS were to remove COD from PlayStation which the judge did not believe would happen considering that even Sony do not believe that Microsoft would remove COD from PlayStation. Hence, why Sony could afford to not sign a 10 year deal guaranteeing it would appear on PlayStation. Why sign a deal to avoid something you know the competition can't afford to do?

But at the very base level, it's that the FTC failed to show how this could in any way, shape or form harm consumers. They couldn't even show how it would harm competition which could theoretically then be used as evidence of a hypothetical ability to harm consumers if intent to harm could then be proved assuming the harm to competition would lead to a dominating influence in the market (which would also have to be proved).

BTW - the judge presiding over the case was a Biden appointee. So, people can't claim political favoritism or bias.

Regards,
SB

 

[Nesh]

Dark times in gaming that possibly wont stop there

 

[eastmen]

Also, one of the key points in the Judge's dissemination of their ruling was pointing out that the FTC failed to show how this deal would harm consumers and in fact it appears the deal would greatly benefit consumers.

The judge also points out that the FTC failed to show evidence that the deal would actually harm competition even if MS were to remove COD from PlayStation which the judge did not believe would happen considering that even Sony do not believe that Microsoft would remove COD from PlayStation. Hence, why Sony could afford to not sign a 10 year deal guaranteeing it would appear on PlayStation. Why sign a deal to avoid something you know the competition can't afford to do?

But at the very base level, it's that the FTC failed to show how this could in any way, shape or form harm consumers. They couldn't even show how it would harm competition which could theoretically then be used as evidence of a hypothetical ability to harm consumers if intent to harm could then be proved assuming the harm to competition would lead to a dominating influence in the market (which would also have to be proved).

BTW - the judge presiding over the case was a Biden appointee. So, people can't claim political favoritism or bias.

Regards,
SB

They are already doing so. Her son works at Microsoft (which she disclosed and there were no objections)

The issue is that her ruling is sound and there really isn't much in the way of an appeal path for the FTC. The contracts offered were likely a large reason why.

Now we see if Sony takes the contract or not.

 

[AzBat]

What should msft do is release now custom operator skin to COD

Need that new special Christmas character. LOL

Matt Stoller on Twitter seems a bit upset. Other than that I haven't seen a lot negative response. Kinda disappointing. LOL

 

[Inuhanyou]

some people are asking for Jim Ryan's head. I mean Sony's fans. 'Cos according to them, he presented weak arguments and excuses to the case that they hope cost him his position at Sony.

even for a kinda MS fanboy like myself, I gotta admit that the spectacle both companies gave was lamentable.

I actually agree that MS could have lost this case. I don't know the rationale for going all in on call of duty as an IP as opposed the the general idea of publisher consolidation by first parties being bad for the industry

 

[Inuhanyou]

Square Enix needs to stay independent anyhow. Sony needs to concentrate more on smaller/medium studios with great IPs who need serious capital to grow.

That being said, I wouldn't be surprise if they're arming up for bigger game studios and/or publishers, which is just going to escalate this new era of game studio/publisher consolidation.

What I meant was that I fully expect Sony to try to buy SE to regain initiative and use the same argument as MS if Nintendo complains (ie they are majority of Japanese market and global sales)

I can only hope a lot of pubs don't want to sell but I am unfortunately feeling this is just the beginning.

I was hoping for Sony and MS and Nintendo to do what you suggested. But now it's no way to win or even stay relevant at the scale MS is trying to escalate.

Does this ruling mean that these companies no longer have any legal boundary to just swallow up any company they want regardless of size? How many publishers must be absorbed before it is considered enough for stable "competition"or does that just no longer apply?

 

[eastmen]

What I meant was that I fully expect Sony to try to buy SE to regain initiative and use the same argument as MS if Nintendo complains (ie they are majority of Japanese market and global sales)

I can only hope a lot of pubs don't want to sell but I am unfortunately feeling this is just the beginning.

I was hoping for Sony and MS and Nintendo to do what you suggested. But now it's no way to win or even stay relevant at the scale MS is trying to escalate.

Does this ruling mean that these companies no longer have any legal boundary to just swallow up any company they want regardless of size? How many publishers must be absorbed before it is considered enough for stable "competition"or does that just no longer apply?

MS had to offer 10 year contracts to everyone for COD. Do you think Sony will have to offer 10 year contracts to steam/ms/nintendo and all those streaming companies for FF ?

 

[Silent_Buddha]

What I meant was that I fully expect Sony to try to buy SE to regain initiative and use the same argument as MS if Nintendo complains (ie they are majority of Japanese market and global sales)

Sony (or MS) could try all they want to buy Square-Enix, but if Square-Enix doesn't want to be acquired by anyone that it doesn't matter what Sony (or MS) want.

Currently, Square-Enix don't want to be acquired. That's despite them being not entirely financially sound (it's why they sold off Eidos). Their financial instability is also why they've been willing to sell exclusivity to Sony, despite that limiting the sales of their games. Obviously they'd also be willing to sell exclusivity of their games to Microsoft, but it would cost Microsoft at least double what it would cost Sony to secure exclusivity of titles (relative install bases = relative loss of sales which exclusivity buyout must account for).

Everyone needs to remember that these deals only happen if someone wants to be acquired. And usually that doesn't happen unless they are in financial trouble or they forecast that it may not be possible for them to stay financially solvent in the future with escalating development costs.

ABK was a special case where many things collided to make share owning investors skittish about ABKs ability to [1] avoid increased legal scrutiny and perhaps more legal battles due to the actions of some of their upper management and employees and [2] ability to maintain or increase revenue in the face of bad public opinion and [3] escalating development costs for the current generation of consoles and [4] a pending huge exodus of development talent due to what was happening within ABK.

ABK not only wanted to be acquired it could be argued that they needed to be acquired. Microsoft and ABK announcing their agreement for ABK to be acquired by Microsoft almost immediately put a stop of much of the legal issues that ABK were going to be facing as well as almost immediately stopping the exodus of key development talent as they believed that conditions would improve under Microsoft.

Now, if we look at Square-Enix, we would first have to determine if they want to be acquired or if they feel they need to be acquired.

Regards,
SB

 

[see colon]

I believe Fallout 76 got updated last month to take advantage of both PS5 and Xbox Series. Don't think they're native, though.

I'm not sure. I only looked at titles listed as "PS5" on Playstation.com. I'm not sure if just being Gen9 aware counts.

Bummer. Their case was weak, but I was still hoping the FTC would win anyways. Having all of Activision/Blizzard under Microsoft is not a good thing for the future.

That's because the FTC decided the outcome before they looked at the facts. We know they had contact with the CMA, and every other regulatory body who approved the deal published their findings. You would think they would have spent a few hours reading those decisions and figuring out why they wanted the deal blocked, instead of trying to block it without a case prepared for the inevitable trial.

I will be interested to see how fast WOW gets a xbox series port for one thing. I think that is a good way to drive in more subscriptions to Wow.

Honestly I'm surprised it hasn't happened already. I thought for sure Xbox One and PS4 would get a WOW port. Perhaps Sony's crossplay policies and Xbox's small install base prevented that from being a reality.

Regarding Subscriptions, I think WOW subs just get included with Gamepass Ultimate.

 

[eastmen]

I'm not sure. I only looked at titles listed as "PS5" on Playstation.com. I'm not sure if just being Gen9 aware counts.

That's because the FTC decided the outcome before they looked at the facts. We know they had contact with the CMA, and every other regulatory body who approved the deal published their findings. You would think they would have spent a few hours reading those decisions and figuring out why they wanted the deal blocked, instead of trying to block it without a case prepared for the inevitable trial.

Honestly I'm surprised it hasn't happened already. I thought for sure Xbox One and PS4 would get a WOW port. Perhaps Sony's crossplay policies and Xbox's small install base prevented that from being a reality.

Regarding Subscriptions, I think WOW subs just get included with Gamepass Ultimate.

Battle.net had what up to 20m wow subsribers at one point. Why would ABK want to give up all that to allow sony or ms to take 30% of the sub and transactions ? Ms doesn't have that issue with putting it on xbox , the money is all theirs anyway

 

[see colon]

Battle.net had what up to 20m wow subsribers at one point. Why would ABK want to give up all that to allow sony or ms to take 30% of the sub and transactions ? Ms doesn't have that issue with putting it on xbox , the money is all theirs anyway

It's not just the 30%. Details of Sony's crossplay policy were made public during the Epic v Apple trial

As part of recent new developments in the Epic vs. Apple Lawsuit, it has come out that Sony actually charges developers royalties for crossplay at a certain point. Once the proportion of the game's revenue share divided by the PS4 gameplay share hits below 85%, developers are charged the missing percentage to offset the difference.

In the confidential leaked image, there is an example of how Sony's payment system works. During one month of a game's release, if the total revenue equals out to $1 million and Sony makes about 90% of the total profits over the competitors and 95% of the gameplay share, the developers are not charged. In the second month, if the game makes the same amount of money and has the same percentage of gameplay share, but Sony only makes 60% of the shared revenue, Sony subtracts its revenue share from its overall gameplay share and multiples that amount by 15%. Which, in the example, comes out to around $52,500 that the studio will have to pay Sony out of pocket.

With WOW's existing PC userbase, there's no way a PS4 version gets to 85% of the revenue. And I don't think a console only version of WOW, with no crossplay, is attractive to gamers.

 

[Johnny Awesome]

Why would Sony bother buying SE? They're getting everything they want from them right now anyway.

 

[stu11]

Why would Sony bother buying SE? They're getting everything they want from them right now anyway.

Right so Sony will leave them so that MS can swallow them up instead, along with Sega/Capcom/Namco etc. Pretty much any company that Sony tries to make exclusive deals with is an MS acquisition target now. That is pretty much what they have said.

 

[see colon]

Right so Sony will leave them so that MS can swallow them up instead, along with Sega/Capcom/Namco etc. Pretty much any company that Sony tries to make exclusive deals with is an MS acquisition target now. That is pretty much what they have said.

Except that Japan has laws to prevent foreign acquisitions, so Square Enix might be off the table for Microsoft. But I'm sure they would try to buy them if they could.

 

[Silent_Buddha]

Except that Japan has laws to prevent foreign acquisitions, so Square Enix might be off the table for Microsoft. But I'm sure they would try to buy them if they could.

Laws make it difficult, not impossible, unless they are one of the protected companies and none of the Japanese game/console corporations are protected.

They are under the category of sale has to be reported after the sale has gone through, not under a category that requires government approval.

This doesn't mean that the gov't can't intervene if they wish, just that there is no requirement for the gov't to approve the sale of those companies.

Regards,
SB

 

[eastmen]

It's not just the 30%. Details of Sony's crossplay policy were made public during the Epic v Apple trial


With WOW's existing PC userbase, there's no way a PS4 version gets to 85% of the revenue. And I don't think a console only version of WOW, with no crossplay, is attractive to gamers.

Yea that is kinda crazy. This cements it in my mind that wow would be xbox/pc only.

 

[Deleted member 11852]

Except that Japan has laws to prevent foreign acquisitions, so Square Enix might be off the table for Microsoft. But I'm sure they would try to buy them if they could.

Yup, whilst many Western countries have introduced regulation to regulate foreign investment, mostly it's been done to protection assets related to national security and for genuine commercial acquisitions, trying to strike a balance between inviting foreign investment without building a wall of economic protectionism.

Japan's regulations are purely about protecting Japan's economy and organisations of cultural distinction. Not all Japanese companies have protected status but SEGA and Square-Enix are listed. Whilst there is a presumption of denial for foreign investment, it's not impossible for an acquisition to get approval place, but it would be subject to a level of scrutiny far beyond what we're seeing with the Zenimax and Activision-Blizzard acquisitions.

 

[eastmen]

Except that Japan has laws to prevent foreign acquisitions, so Square Enix might be off the table for Microsoft. But I'm sure they would try to buy them if they could.

Laws make it difficult, not impossible, unless they are one of the protected companies and none of the Japanese game/console corporations are protected.

They are under the category of sale has to be reported after the sale has gone through, not under a category that requires government approval.

This doesn't mean that the gov't can't intervene if they wish, just that there is no requirement for the gov't to approve the sale of those companies.

Regards,
SB

It be more likely for MS to just buy a stake in Square than it would be to purchase them. Like what sony did with From Software or Epic