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

[Nesh]

I think most of you guys ignore what MS sees. Its not just how much money they will get from COD and other Activision,/Blizzard games. Every user that will abandon PS and join XBOX to play those games wont be buying just those games. They will be bringing revenue from any game they buy on their platform.
And its a freakin huge long term plan involving a huge number of highly popular ex-multiplatform titles.

 

[Lurkmass]

@Lurkmass Activison released Call of Duty every year because it's insanely profitable. People shit on those games for being unoriginal sequels, but they sold in massive quantities. Vanguard sales are way down, but it's still probably the top selling game.

If Microsoft can get the franchise trending back towards its peak, then it's easy money, especially if they keep it multi-platform. COD makes more money than any of Microsoft's other franchises. Probably more than a lot of them put together.

Which poses the main dilemma here ...

Does Microsoft want growth even if it means not retaining exclusivity or do they want to crush their competitor even if it's detrimental to their own new studios ?

 

[eastmen]

I just had to google o365 and price increase.
https://www.microsoft.com/en-us/microsoft-365/blog/2021/08/19/new-pricing-for-microsoft-365/

"There are no changes to pricing for education and consumer products at this time."

Consumer pricing has been the same for about a decade now.

 

[iroboto]

Surely you know that this is nonsense? Once Activision-Blizzard becomes part of Microsoft, they can't just sell off the Activision-Blizzard shares because when Microsoft acquire Activision-Blizzard, the value of those shares are amortised into Microsoft shares at Microsoft's value. I'm using this acronym a lot today but.. WTF.

I'm not saying they can sell off ACTI shares once the acquisition closes. I'm saying the value isn't lost just because they spent 70B on assets. As long as that 70B converted to ACTI is gaining more profits than 70B in cash interest can generate, that's what matters.

If you want to make a debate on whether ACTI is overpriced etc. I have no rebuttal. But to say that ACTI and game pass/xbox has to make up 70B in profits for MS to break even due to this acquisition is the wrong way to look at it.

They had 70B they could release in dividends, grow interest, or reinvest. I think the latter will result in better returns for investors.

 

[Deleted member 11852]

I'm not saying they can sell off ACTI shares once the acquisition closes. I'm saying the value isn't lost just because they spent 70B on assets. As long as that 70B converted to ACTI is gaining more profits than 70B in cash interest can generate, that's what matters.

That's a big if, especially if Microsoft device to drop the biggest console platform that they sell games on. As an investor myself, I am not looking for companies to spend money on things because it brings in more money than basic interest because this is why the concept of dividends exists, but because it's absolutely the best return on any possible investment.

But again.. DIVIDENDS! As you know the last dividend payout was $0.62 per $300+ share which is borderline insulting. It's almost like they would rather spend on this money on something that might make an actual profit in 20-25 years rather than return the money to the people who it belongs to. It's just kind of nuts.

 

[iroboto]

That's a big if, especially if Microsoft device to drop the biggest console platform that they sell games on. As an investor myself, I am not looking for companies to spend money on things because it brings in more money than basic interest because this is why the concept of dividends exists, but because it's absolutely the best return on any possible investment.

But again.. DIVIDENDS! As you know the last dividend payout was $0.62 per $300+ share which is borderline insulting. It's almost like they would rather spend on this money on something that might make an actual profit in 20-25 years rather than return the money to the people who it belongs to. It's just kind of nuts.

Well. I mean that’s tech stock style. I have dividend stocks that pay 5%-10% like utilities. And then I have stocks that are purely about growth like MS and AMD.

Every investor will need to think about what’s best for them in their point in life, I am middle aged now I guess, so a long work career ahead of me, I’m okay with this type of investment. But if I were in retirement I would lean away from as much tech and focus on more certain investments that pay out dividends instead of high risk growth.
I don’t disagree it’s nuts, but in 2015 when satya took over I bought in hard and been buying since.

A large chunk of my portfolio is amd, nvidia and MS and Google and Amazon. and if it falls I will hurt bad, but right now I’m currently enjoying the benefits of when I made significant purchases.

There was a time Tesla was 50 per share in 2017 I was about to buy it. but it was just too much risk with how close they were coming to bankruptcy.

Hindsight is 20/20 of course. But I think MS is pretty good spot, so I’m okay with this as long as it results in MS stock continuing to increase further.

 

[iroboto]

Full disclosure I did purchase more MS after this announcement lol.

 

[Silent_Buddha]

Here's just something randomly interesting when looking at Activision-Blizzards Fiscal Year reports.

The Americas (North and South America) bring in more revenue than the rest of the world combined. For FY ending Dec. 31, 2020, 4.434 billion USD for the Americas, 2.68 billion USD for EMEA (Europe, Middle East and Africa) and 972 million USD for Asia Pacific. Between Activision, Blizzard and King, only Blizzard does relatively better in the rest of the world although the Americas still tops the other two regions.

So it makes at least a little more sense why MS would take risk on such a large acquisition as Activision-Blizzard is so strong in their home markets, although it potentially doesn't do quite as much as the rest of the world. That said, Activision-Blizzard sales in the rest of the world is still far higher than say a publisher like Capcom (~894 million USD total revenue for FY ending Mar. 2021). That's ~1/3 of Activision-Blizzards Operating income (2.734 billion USD) or ~2/5 of Activision-Blizzard's Net Income (2.197 billion USD) for FY ending 2020. And it's obviously absolutely dwarfed by by Activision-Blizzard's FY revenue.

While those are respectably large numbers, it's still dwarfed by the amount MS will be paying for Activision-Blizzard if the acquisition passes regulatory review.

It will be interesting to see what MS plans to do with all the studios and personnel they'll have acquired. That many studios is a lot of stuff to juggle.

BTW - I have to say it's refreshing to have a corporation (Activision-Blizzard) with a Fiscal Year that aligns with a calendar year. I wonder if that will change if the acquisition goes through in order to have it align with Microsoft's FY.

Regards,
SB

 

[orangpelupa]

They would if they believe that exclusive content is a necessary strategy, to make Square games exclusive to their platform.

But if anything, isn't Sony putting first-party games on Xbox and PC?

The era of pc gaming. Xbox exclusive comes to pc day one. Ps exclusives comes to pc a few years later.

 

[dobwal]

That's a big if, especially if Microsoft device to drop the biggest console platform that they sell games on. As an investor myself, I am not looking for companies to spend money on things because it brings in more money than basic interest because this is why the concept of dividends exists, but because it's absolutely the best return on any possible investment.

But again.. DIVIDENDS! As you know the last dividend payout was $0.62 per $300+ share which is borderline insulting. It's almost like they would rather spend on this money on something that might make an actual profit in 20-25 years rather than return the money to the people who it belongs to. It's just kind of nuts.

MS was $65 five years ago while its $303 as of today. If you have been a MS shareowner over the last five years I doubt you are all that troubled by the lack of dividend pay outs.

 

[Silent_Buddha]

MS was $65 five years ago while its $303 as of today. If you have been a MS shareowner over the last five years I doubt you are all that troubled by the lack of dividend pay outs.

Yup, for quite a long time MS stock was greatly undervalued, IMO. Despite consistently making gobs of cash, year after year after year, their stock was stuck sub 100 USD for many many years. It didn't break the 100 USD barrier until the 2nd half of 2018.

Pretty amazing for a company that I don't believe has ever posted a Fiscal Year loss. In 2012 they had their first quarterly loss but still made almost 17 billion USD in profits for the year.

Regards,
SB

 

[RobertR1]

Yup, for quite a long time MS stock was greatly undervalued, IMO. Despite consistently making gobs of cash, year after year after year, their stock was stuck sub 100 USD for many many years. It didn't break the 100 USD barrier until the 2nd half of 2018.

Pretty amazing for a company that I don't believe has ever posted a Fiscal Year loss. In 2012 they had their first quarterly loss but still made almost 17 billion USD in profits for the year.

Regards,
SB

Wasn’t that due to a charge when they wrote off a bad acquisition? Some Balmer mess if I recall vaguely.

 

[AlphaWolf]

Wasn’t that due to a charge when they wrote off a bad acquisition? Some Balmer mess if I recall vaguely.

The 2007 acquisition of aQuantive led to a writedown of over $6b.

 

[Rangers]

I think most of you guys ignore what MS sees. Its not just how much money they will get from COD and other Activision,/Blizzard games. Every user that will abandon PS and join XBOX to play those games wont be buying just those games. They will be bringing revenue from any game they buy on their platform.
And its a freakin huge long term plan involving a huge number of highly popular ex-multiplatform titles.

My prior is this wont move the needle much at all TBH. Hardware is much more important than this.

Given the timelines here it's likely yrs before the gamer on the street would even notice something, assuming antitrust would even allow the sale if MS didnt commit to COD multiplat.

I'm honestly not convinced any software acquisition matters that much. How has Zenimax panned out? Xbox is still the same 3rd place as always. Granted we have not seen Zenimax software yet, I would doubt Starfield moves the needle that much and then what? Bethesda probably fades away.

I could be wrong on this, but I need to be convinced for sure.

Btw I'm reminded that for the original Modern Warfare that started it all, at that time it was a WW2 shooter. Infinity Ward wanted a modern setting for the next iteration and the suits at Activision were opposed. We know what happened and the rest is history. How wrong were the dumb execs and how many billions profit did that decision end up making?

 

[zed]

MS was $65 five years ago while its $303 as of today. If you have been a MS shareowner over the last five years I doubt you are all that troubled by the lack of dividend pay outs.

if MS wanted to increase their shareprice with that $70 billion the most effective way would of been to do a share buyback.
Not that I condone such things, in fact buybacks should be banned, better to spend the money on something, though I would of preferred that they created something new (*) instead of just buying something that already existed

(*)like create a new building like in seattle call it game central or whatever, hire 2000 ppl, split them into say 10 groups of 200 ppl and get them working on new franchises.
i.e. go about creating a game developers mecca

 

[Nesh]

My prior is this wont move the needle much at all TBH. Hardware is much more important than this.

Given the timelines here it's likely yrs before the gamer on the street would even notice something, assuming antitrust would even allow the sale if MS didnt commit to COD multiplat.

I'm honestly not convinced any software acquisition matters that much. How has Zenimax panned out? Xbox is still the same 3rd place as always. Granted we have not seen Zenimax software yet, I would doubt Starfield moves the needle that much and then what? Bethesda probably fades away.

I could be wrong on this, but I need to be convinced for sure.

Btw I'm reminded that for the original Modern Warfare that started it all, at that time it was a WW2 shooter. Infinity Ward wanted a modern setting for the next iteration and the suits at Activision were opposed. We know what happened and the rest is history. How wrong were the dumb execs and how many billions profit did that decision end up making?

It's too early to see the results because they havent released anything yet but you will see them eventually. Especially once the popular IPs are being released under the MS ownership.

 

[iceberg187]

My prior is this wont move the needle much at all TBH. Hardware is much more important than this.

Given the timelines here it's likely yrs before the gamer on the street would even notice something, assuming antitrust would even allow the sale if MS didnt commit to COD multiplat.

I'm honestly not convinced any software acquisition matters that much. How has Zenimax panned out? Xbox is still the same 3rd place as always. Granted we have not seen Zenimax software yet, I would doubt Starfield moves the needle that much and then what? Bethesda probably fades away.

I could be wrong on this, but I need to be convinced for sure.

Btw I'm reminded that for the original Modern Warfare that started it all, at that time it was a WW2 shooter. Infinity Ward wanted a modern setting for the next iteration and the suits at Activision were opposed. We know what happened and the rest is history. How wrong were the dumb execs and how many billions profit did that decision end up making?

Microsoft doesn't even need Call of Duty to be as big as Activision needed it to be. Just like how Halo was the main attraction to Xbox for a long time. Now the Master Chief is a highly celebrated co-star, but not the featured attraction. I saw this today

This image looks fake but this collage is real man, it's real and still, everything that there is to offer from these studios isn't on this image. Content being the games. People will go where the games are. The onslaught starts next year, 2023. Yes, Forza and Starfield will maintain the fort this year. Next year is where it gets crazy.

 

[Nesh]

Microsoft doesn't even need Call of Duty to be as big as Activision needed it to be. Just like how Halo was the main attraction to Xbox for a long time. Now the Master Chief is a highly celebrated co-star, but not the featured attraction. I saw this today

This image looks fake but this collage is real man, it's real and still, everything that there is to offer from these studios isn't on this image. Content being the games. People will go where the games are. The onslaught starts next year, 2023. Yes, Forza and Starfield will maintain the fort this year. Next year is where it gets crazy.

Simply, holy fuck.

I saw this today which was funny

 

[dobwal]

$70 billion is a lot. If I know one thing is true it’s going to take MS awhile to recoup that investment. But MS doesn’t seemed bother by those types of investments as it’s made a bevy of them as of late in the gaming space with the investment into xcloud, game pass, Bethesda and now Activision.

It’s easy to question MS willingness to throw around money. But they don’t seem to be throwing it around haphazardly. MS’s purchase of Minecraft wasn’t considered an easy win but rather a questionable investment. The game had already sold 50 million copies. How many more could MS sell? Apparently, 188 million more copies with MS pulling $300-$500 million in revenue annually since 2015. I don’t know how much of that revenue is profits but Minecraft as a business is worth far more than the $2.5 billion MS paid for it.

 

[Nesh]

Ok I think we talked this before and I didnt quite get it, or I got it and now I dont remember. How does the revenue to developers work in Gamepass?
Lets say you have thousands of games. Some are played a lot, some are played less, a user pays a monthly subscription and has access to every game available on it.
How is revenue distributed back to the developers who spent tenths of hundreds of millions to produce a game? With units sold you just know and get exactly what demand really is.
But with gamepass how does it work?