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

[wco81]

I'm with you on this The whole idea that a company like Rockstar can spent hundreds of millions of dollars on a product, gambling that it will sell and make money, and the people in-between you and them take 30% of what the customer pays still blows my mind.

And what percentage of sales do Sony, MS and Nintendo get from Rockstar and other third-party developers?

 

[Silent_Buddha]

And yet when the CMA advised Microsoft to remove Call of Duty to get an approval, Microsoft and Activision refused. A weird decision for something not important according to Microsoft.

How would you explain that?

There's a difference between,

MS - This deal doesn't make any sense without COD due to the revenue that it generates.
Sony - We'll cease to be able to compete in the console space and might have to exit the console space if we lose access to COD.

For MS that means that the 70 billion price for ABK doesn't make sense without the revenue from COD ... and here's the important part ... on existing platforms plus more platforms.

Which then makes Sony's statement kind of irrelevant since the ABK deal makes absolutely zero financial sense if MS removed it from PlayStation and didn't seek to have it accessible on other platforms where it currently doesn't exist. And Sony knows this which is why they could play hardball and refuse the guaranteed 10 year deal for COD because they knew that even if the merger went through, MS would still keep COD on PlayStation. What'd they'd end up losing is exclusivity of COD content and that's all they would lose.

Likewise with the CMA stating that a market segment that is basically statistical noise WRT to it's impact on gaming and game spending is absolutely essential to determining whether this deal would stifle competition because COD is the one and only thing that determines whether or not a cloud gaming provider would be able to compete in a market that doesn't really exist.

Let's also ignore that ABK without being acquired by MS are 100% opposed to having their games streamed over the cloud. Although it wouldn't surprise me if the deal falls though that ABK ends up giving MS 100% exclusivity for streaming COD.

Regards,
SB

 

[eastmen]

The CMA believed that Activision Blizzard would've offered their content on cloud gaming platforms regardless if they got big enough ...

Offering COD for 10 years on other streaming platforms isn't 'de-risking' since there's a strong possibility of Microsoft keeping COD permanently on their own platforms after that. A 'de-risking' move to the CMA would've been divesting COD to a 3rd party where there's a real open chance of keeping COD available to other parties for 10+ years (or indefinitely). The CMA knows very well that big businesses can just cheat the system by running down the timer and they absolutely do NOT want that at all so they prefer structural remedies because it makes it harder for them cheat since they come out with less control than otherwise ...

The CMA countered that the success behind Nintendo platforms are independent from titles like COD because Nintendo platforms have far less overlap in content with other platforms. Cloud gaming platforms right now have much more overlap with current generation consoles so it's not out of the realm of possibility that COD could be an important input for cloud gaming ...

You are making the assumption that these smaller streaming services would even make it to some future date that AB would want to put it on their streaming platform. Also what is to stop the bigger players like sony who already has a marketing deal for exclusive cod benefits from making the next marketing contract include exclusive streaming on playstations streaming platform? Or MS , as if this purchase doesn't go through they could just as easily go and out bid Sony for the COD marketing rights and as part of it get exclusive COD streaming on xcloud ? IF COD was that important than none of the smaller companies would even have a chance at growing. With MS purchasing and offering a 10 year deal not just for COD but all AB and MS titles that gives all these companies 10 years of growth before they would loose anything vs right away

 

[iroboto]

With MS purchasing and offering a 10 year deal not just for COD but all AB and MS titles that gives all these companies 10 years of growth before they would loose anything vs right away

I'm not saying the CMA is making the wrong choice so don't get up in my business about foreclosing competition, but this is important point for everyone to read if you're saying 10 years is not enough. Most B2B terms are between 1 to 5 years. 7 years for compliance services. Business to Government is the only time I see contracts extending well beyond 10+ years, like up to 100 years and that's usually for land or real-estate, mining rights etc.

But when it comes to business you're thinking about some weird 4D chess. Business is about money. Let's do some trivially cheap napkin math, like a phone line. Let's say it's $1.25 per month today. You make an agreement with that company B2B for 5000 employees. That's 1.25 * 5000 * 12 * 10 = $750,000 dollars for that contract for 10 years. No one is ever going to sign a 10 year deal like that, because you know the price will drop each year eventually, so you're going to sign shorter contracts to get a better deal over time, or maybe switch providers if a better technology out in that time frame and cuts that price in half further. Only a dummy would lock themselves in for 10 years at the speed at which technology is moving at.

Let's use that example and think about what MS is offering to these cloud providers.
The cloud provider will receive The latest COD franchise games
And the terms will be
12 months * 10 years * some rate * users. And the companies are literally fighting for this deal now that it's blocked. Think about how cheap this deal is that they would be willing to sign this now for 10 years.
Compared to the alternative of trying to get COD onto their platform for 1 year let alone 10.

You see, as a business, you don't care about COD in 10 years time as a cloud provider. You need to stay in business today. Getting the latest COD franchise on your platform streaming today, and for the next 10 years at a super cheap rate is going to help your company survive for 10 years. And if it still happens to be that COD is this critical input, perhaps your business has grown sufficiently enough to pay an increased rate for COD. But if COD is dead by then, who cares, as a cloud provider you got yours. That's a risk, almost everyone except the market leader would be willing to take.

So all this talk about 10+ or 20+ years is insanity. All of these ABK titles could very well be obsolete by then, and MS being forced to hand them out like candy on Halloween, you'd be insane not to sign. Hell I'd consider starting a cloud gaming company to get in on this deal if it's cheap enough. If there are really that many people that want to play COD and don't want to buy hardware, and I can arbitrage MS' rate right now, hell, cloud providers should be lining up to do it. That's solid income for 10 years.

like seriously, if we should form a B3D Cloud Corp today, start licensing some gaming hardware on the cloud and get in on this deal. If it's really this crazy critical input that everyone says it is, and MS is giving out this very generous 10 year rate. We should do it. For 10 years. If it's going to provide me a ROI of greater 10% and the business case is solid? Why not.

But we know it's not reality; we'd be dead after the first 6 months when no one signs up. That's Cloud gaming today.

MS is offering rates on COD today, that you'd likely not be able to get until the market was so mature and so competitive that they would be forced to this low price point. I think that's the truth of MS' offer here. Because where cloud gaming is today, the number of people signing up and the cost of a COD license on a cloud platform, not even MS could afford. Good luck.

 

[Lurkmass]

You are making the assumption that these smaller streaming services would even make it to some future date that AB would want to put it on their streaming platform. Also what is to stop the bigger players like sony who already has a marketing deal for exclusive cod benefits from making the next marketing contract include exclusive streaming on playstations streaming platform? Or MS , as if this purchase doesn't go through they could just as easily go and out bid Sony for the COD marketing rights and as part of it get exclusive COD streaming on xcloud ? IF COD was that important than none of the smaller companies would even have a chance at growing. With MS purchasing and offering a 10 year deal not just for COD but all AB and MS titles that gives all these companies 10 years of growth before they would loose anything vs right away

If smaller game streaming services don't make it then that's fine. The CMA's criteria specifically is to see ABK content being indefinitely available on platforms other than ones controlled by Microsoft's. Delaying anti-competitive tactics with temporary growth benefits for other competitors doesn't meet this criteria obviously ...

Hence why their 10 year deals aren't solving any problems raised by the CMA. The CMA makes it clear that they don't want to just wait for a solution, they want to see a solution IMMEDIATELY ...

 

[eastmen]

If smaller game streaming services don't make it then that's fine. The CMA's criteria specifically is to see ABK content being indefinitely available on platforms other than ones controlled by Microsoft's. Delaying anti-competitive tactics with temporary growth benefits for other competitors doesn't meet this criteria obviously ...

Hence why their 10 year deals aren't solving any problems raised by the CMA. The CMA makes it clear that they don't want to just wait for a solution, they want to see a solution IMMEDIATELY ...

except there is no guarantee of that since Ms can just keep on resigning exclusivity deals with activison over and over again until there are no other cloud competitors.

the CMA wants a solution immediately to a tiny market that hasn't grown in ten years and instead of allowing a large amount of content both MS and AB's content on multiple platforms now MS content will stay on MS platforms and AB content wont be on any platform. or perhaps MS will bid on it and keep it for themselves.

But hey a few weeks and we get the EU's approval or non approval. If They approve then MS will fight the ftc in court and win. Then the CMA will stand alone and MS may choose to close the deal anyway without the CMA

 

[wco81]

So what recourse does MS have?

Some kind of appeal process for CMA rulings?

Or could they sue in UK courts to reverse the ruling?

Otherwise they would have to make some kind of concessions?

 

[eastmen]

I'm not saying the CMA is making the wrong choice so don't get up in my business about foreclosing competition, but this is important point for everyone to read if you're saying 10 years is not enough. Most B2B terms are between 1 to 5 years. 7 years for compliance services. Business to Government is the only time I see contracts extending well beyond 10+ years, like up to 100 years and that's usually for land or real-estate, mining rights etc.

But when it comes to business you're thinking about some weird 4D chess. Business is about money. Let's do some trivially cheap napkin math, like a phone line. Let's say it's $1.25 per month today. You make an agreement with that company B2B for 5000 employees. That's 1.25 * 5000 * 12 * 10 = $750,000 dollars for that contract for 10 years. No one is ever going to sign a 10 year deal like that, because you know the price will drop each year eventually, so you're going to sign shorter contracts to get a better deal over time, or maybe switch providers if a better technology out in that time frame and cuts that price in half further. Only a dummy would lock themselves in for 10 years at the speed at which technology is moving at.

Let's use that example and think about what MS is offering to these cloud providers.
The cloud provider will receive The latest COD franchise games
And the terms will be
12 months * 10 years * some rate * users. And the companies are literally fighting for this deal now that it's blocked. Think about how cheap this deal is that they would be willing to sign this now for 10 years.
Compared to the alternative of trying to get COD onto their platform for 1 year let alone 10.

You see, as a business, you don't care about COD in 10 years time as a cloud provider. You need to stay in business today. Getting the latest COD franchise on your platform streaming today, and for the next 10 years at a super cheap rate is going to help your company survive for 10 years. And if it still happens to be that COD is this critical input, perhaps your business has grown sufficiently enough to pay an increased rate for COD. But if COD is dead by then, who cares, as a cloud provider you got yours. That's a risk, almost everyone except the market leader would be willing to take.

So all this talk about 10+ or 20+ years is insanity. All of these ABK titles could very well be obsolete by then, and MS being forced to hand them out like candy on Halloween, you'd be insane not to sign. Hell I'd consider starting a cloud gaming company to get in on this deal if it's cheap enough. If there are really that many people that want to play COD and don't want to buy hardware, and I can arbitrage MS' rate right now, hell, cloud providers should be lining up to do it. That's solid income for 10 years.

like seriously, if we should form a B3D Cloud Corp today, start licensing some gaming hardware on the cloud and get in on this deal. If it's really this crazy critical input that everyone says it is, and MS is giving out this very generous 10 year rate. We should do it. For 10 years. If it's going to provide me a ROI of greater 10% and the business case is solid? Why not.

But we know it's not reality; we'd be dead after the first 6 months when no one signs up. That's Cloud gaming today.

MS is offering rates on COD today, that you'd likely not be able to get until the market was so mature and so competitive that they would be forced to this low price point. I think that's the truth of MS' offer here. Because where cloud gaming is today, the number of people signing up and the cost of a COD license on a cloud platform, not even MS could afford. Good luck.

And yet I still think MS + AB liscensing out their content for 10 years is still preferred for these small companies vs competiting against Xcloud with MS's titles exclusive to that platform. Consolidation is still happening in this market. Sony just bought another studio and you can bet if this fails ms will buy other companies and tencent and epic and nintendo and so on. These small companies only chance of being here in 10 years is to get content on their platform and offer a niche their competitors don't. MS is only doing xcloud with the xbox series x. If this deal went through someone could decide to play COD on xcloud or perhaps one of these companies will offer it using 4090s or 5090s next year with 240fps options and so on. But if they can't get the content they wont even have a chance of finding a niche. It's not like Activison has any reason to partner with a small company, not when Sony or MS or another large company would offer them money for exclusivity. Not only that but with xcloud MS handles getting it all working and just mails the game devs checks and i'm sure that is how it is with Sony.

So regardless of if this deal goes through or not the majority of these companies wont survive. So its not like CMA is actually saving any market and that is likeyl what these other countries have settled on also.

 

[eastmen]

So what recourse does MS have?

Some kind of appeal process for CMA rulings?

Or could they sue in UK courts to reverse the ruling?

Otherwise they would have to make some kind of concessions?

The CMA is above the law in the UK largely free of any democatic process

#UnblockABK: How Microsoft can/will acquire Activision Blizzard despite the UK Competition & Market Authority's abusive and arbitrary ruling

Sarah Cardell, the recently-appointed CEO and former long-time General Counsel of the UK Competition & Markets Authority (CMA), made the mis...

www.fosspatents.com

If MS and AB are inclined to continue fighting it they would have a long fight ahead of them. First to appeal with the CAT and then see what the CMA says after its kicked back to them. If there was collusion with the FTC (apparently there is a Kotick interview where he said the CMA was receptive and constructive until they met with the FTC) that could be one way for this to pass. A judge could grant some type of order letting it through . He also claims Brad smith stated there is a case for a ministerial override since MS gives a lot to non-profits and is part of the defense of the nation against cyber attacks so it might rise to the level o fletting a minister intervein

The other option is just to go Yolo and close it anyway. If they decided to go ahead anyway the CMA could impose fines but they would be subjected to judicial review. Apparently Apple lawyers tol a UK judge once that they might leave the market. So if MS was to do the same the CMA wouldn't actually be able to fine them. My own conjecture is if every other country approves and MS wins in court against the FTC then the CMA and UK will blink first. If they are blocking this deal solely on the video game cloud market which is basicly non existent in the UK why would they risk MS pulling out of the market . For MS thy would still continue to sell windows to companies they would just sell them to the companies branches in other countries . I'd assume if every one else approves and ms wins against the ftc then the CMA and MS would come to happy agreement where MS would I dunno extend the 10 year contract to 15 years with countries who already signed it or if there are still more cloud gaming companies out there MS can sign more like the one they did yesterday and then the CMA can say oh well that was enough to statisfy us.

"Total bullshit" by CMA, says Deliveroo founder after agency killed 30% of jobs for no reason; UK tech scene raises alarm; games-specialized journalists disagree on cloud streaming

The UK Competition & Markets Authority (CMA) gives antitrust enforcement a bad name. Reasonable competition enforcers in other jurisdiction...

www.fosspatents.com

This is interesting

mazon was just buying 13% of the company's stock with no special rights. I repeat: with no special rights.

But the CMA has its own approach to numbers: in its provisional findings in the Microsoft-ABK case, they compared five years of benefits to one year of costs. In the final decision they said Microsoft had a 60-70% share of the cloud gaming market by simply counting every subscriber to Microsoft's multi-game subscription service Game Pass Ultimate as a cloud gamer when in reality most of those users play locally on PCs or consoles (and in many countries, xCloud is not even available as I explained in my previous post).

• The process lasted 18 months though in the end the CMA had to clear the transaction. 18 months.
• The problem is that at the time (a few years back), Deliveroo needed cash urgently. They were investing in growth and needed outside funding. Due to the CMA's baseless obstruction, the money couldn't be made available to Deliveroo.
• They had to lay off 30% of their staff. Only because the CMA held up the investment for 18 months and no reason.
• In light of that, it's understandable that Mr. Shu minces no words: he calls this "total bullshit" and describes it as "killing companies." He even uses the F-word in the podcast.

It's not just that Kotaku, which is neutral about this case (it's not an Xbox-focused publication), disagrees. There's a website named GamesIndustry.biz that has bought some of Sony's talking points that had nothing to do with merger law stnadards and is pretty overtly against the transaction. Hell appears to be freezing over because even a GamesIndustry.biz columnist, Mr. Fahey, wrote the following after the CMA ruling:

"To be blunt, I remain a cloud streaming skeptic – at least in the short to medium term – and from that perspective, I think this deal should probably have been approved. Microsoft being more robust competition to Sony's market dominance would be a good thing for consumers, and relatively light-touch remedies would have made the Activision Blizzard perfectly palatable for the console market."

 

[B-Nice]

that's a reductionist answer.

With all due respect, that’s not my answer. It’s yours(not you personally). It’s pasted all over this thread by those defending the deal.

Essentially thats the entirety of the argument.

How do you know if MS put out 5 bangers a year the positions would flip with Sony or they would suddenly break the market 50/50 ?

You don’t, but you take the risk, put in the time and investment and hope to be fruitful. A recent example would be the 360 launch.

Anything else is just entitlement. I have cash so I’m owed success.

It wouldn't and you are just assuming this would happen. Sony owns 75% of the market, why would someone who is invested in Sony suddenly buy a second console to play games on Xbox when they are perfectly happy playing games on their PlayStation?

How much market share did Sony have when they started making consoles? Who did they go up against? How did they do it?

You really seem to lost your way on why people buy Videogames console. If it’s not the games, wth are we doing here other than championing our favourite corporations.

Put out compelling ’GAMES’ and people will buy.

 

[B-Nice]

Who is ranting? This was my answer btw. But yeah keep repeating "still ranting?" this really elevates the discussion.

You asking me about my stock options is elevating a discussion about making games?

Ok.

 

[B-Nice]

If we let this merger through we are all switching to 3 shells

What does the third one do again?

 

[eastmen]

With all due respect, that’s not my answer. It’s yours(not you personally). It’s pasted all over this thread by those defending the deal.

Essentially thats the entirety of the argument.

You don’t, but you take the risk, put in the time and investment and hope to be fruitful. A recent example would be the 360 launch.

Anything else is just entitlement. I have cash so I’m owed success.

How much market share did Sony have when they started making consoles? Who did they go up against? How did they do it?

You really seem to lost your way on why people buy Videogames console. If it’s not the games, wth are we doing here other than championing our favourite corporations.

Put out compelling ’GAMES’ and people will buy.

How successful would sony be right now if it wasn't for the studios sony bought ?

Would we all be complaining that its jsut God of war and Gran Turismo like people complain that Ms is halo , gears and forza ?

How would sony look if they didn't buy Gurilla back in 2005 ? Would we have seen all those killzone games come out on the ps3 ?

What would Sony look like without Naughty Dog and uncharted and the last of us ?

Sure you can say they might have kept making games for sony as a 3rd party studio but they also could have just as likely made games for other companies

How many sony built studios are left ? They just closed down that studio that made astro right ? So is it just 2 ? Sony and its fans already know that is easier to go out and buy companies making popular games and have them make popular games for you as you.


We can get back into how sony entered the market and about how they used their cd technology to get into the market and started buying content and studios / publishers. We can talk about the multiple proprietary technology they pushed onto the market like dvd or bluray or memory stick or whatever the vita had. We could get into all of that . But in the end people will just say oh well it was different when sony did something vs when MS did something.

But I wonder if we went back to the launch of the PS1 if there wouldn't be people saying oh sony is just being entitled , they have a lot of cash from their other endeavors and now using their connections and their tech from other endeavors to come in buy up publishers and developers and sign exclusivity deals to gain market share

 

[Scott_Arm]

...

Anything else is just entitlement. I have cash so I’m owed success.

How much market share did Sony have when they started making consoles? Who did they go up against? How did they do it?

You really seem to lost your way on why people buy Videogames console. If it’s not the games, wth are we doing here other than championing our favourite corporations.

Put out compelling ’GAMES’ and people will buy.

Sony used their position as historically one of the largest and most successful electronics companies to enter the market and then selectively paid for exclusivity (at least timed) on franchises on their platform, like Resident Evil, Grand Theft Auto. Basically they made a good product and used their financial resources to secure a position and market it. Same as everyone else.

 

[mr magoo]

Since this process started how many studios Sony acquired 3-4? But for some reason there is this common bias that Sony is some form of rain forest that needs to be protected from hostile activity.
They earned leader position and shouldn’t be challenged.
Personally I would love if Amazon went 100% in and make high end console. Make some high profile acquisitions and suddenly we have much more interesting market.

 

[wco81]

I don't see MS abandoning the UK market. It's got to be one of their largest outside the US, though maybe after Brexit, that is no longer the case.

So they have to find an accommodation with the CMA or get some higher-up in the UK govt. to somehow overrule the CMA, if that's even possible. The ruling govt. there isn't popular now and them overruling to make a $70 billion deal possible when the nation is struggling economically probably won't go over too well politically.

So my question was whether they could try to litigate to the highest UK court but nobody here seems to know.

 

[Scott_Arm]

Since this process started how many studios Sony acquired 3-4? But for some reason there is this common bias that Sony is some form of rain forest that needs to be protected from hostile activity.
They earned leader position and shouldn’t be challenged.
Personally I would love if Amazon went 100% in and make high end console. Make some high profile acquisitions and suddenly we have much more interesting market.

If Microsoft exits consoles, it'll be bad for gamers. It would be nice if there were one or two more players, even if it's somewhat tangential. Apple making an AppleTV that competitive in gaming the same way as Switch would be great. Amazon or Google would be good. I doubt Tencent would ever enter the console space, but they could easily be a big player in cloud if that ever takes off (though people seem to forget they are in the cloud business). Maybe Valve could make a home console, though I'm not sure that'd make any sense since it's more like pc with fixed settings.

 

[DavidGraham]

Microsoft strategy to open their game catalog to other platforms should have been in place way before the Activision bribes. Maybe then I'd have more confidence in what happens after 10 years.

That's why I don't trust Microsoft. In my opinion, Microsoft ruined PC gaming several times already, just look at their failed attempt for over a decade and a half to create a PC gaming app, first there was the dreaded Games for Windows Live (GFWL), then the Windows Store, then Microsoft Store, then the Xbox PC app, then finally the revised Xbox PC app, and all of them are a failure and a mess. Meanwhile their competitors Steam and others are doing a much more wonderful job.

There is also their delay in fixing or releasing proper APIs for PC gaming, whether DirectStorage, DirectX 12, DirectML, not to mention their broken Windows HDR, and so many other gripes that I care to remember.

It's best if the deal doesn't go through, Microsoft is known for their complacency and doing the bare minimum work, their best effort in the previous console cycle has been nothing but Gears/Forza/Halo, and a bunch of live services games that were quickly forgotten. To make things worse they completely ruined Halo now (with Halo Infinite), they almost did the same for Gears with Gears 5, and in the current console cycle they some how performed even worse. I see no reason to trust them, and I see no sign for the end of their complacency.

 

[Scott_Arm]

@DavidGraham Microsoft ironically has shit the bed developing gaming software more than they have hardware. Xbox One hardware had some mistakes with that weird memory, but if they'd just released games it would have been fine. Launched with a disaster console OS, that they slowly improved over time, but the games just dried up mid-gen and they've still dried up. Windows game development seems to have only become more of a disaster. Here comes the king of the cloud, if they're still relevant in gaming ten years from now. Xbox would be obliterated by now if Sony could actually produce PS5s fast enough. We may end up back in a situation where games stop coming out on Xbox as the cost of development won't be worth the small install base, and Sony will have exclusives by default like the PS2 era.

I would happily switch to Linux for gaming at this point, if they get the anti-cheat and things sorted. Gaming was the only reason I even built a pc, and I get more and more annoying with Windows. I'm probably going to go back to a combo of macos and windows, but I'd rather that was macos and linux.

 

[Lurkmass]

except there is no guarantee of that since Ms can just keep on resigning exclusivity deals with activison over and over again until there are no other cloud competitors.

the CMA wants a solution immediately to a tiny market that hasn't grown in ten years and instead of allowing a large amount of content both MS and AB's content on multiple platforms now MS content will stay on MS platforms and AB content wont be on any platform. or perhaps MS will bid on it and keep it for themselves.

But hey a few weeks and we get the EU's approval or non approval. If They approve then MS will fight the ftc in court and win. Then the CMA will stand alone and MS may choose to close the deal anyway without the CMA

Most regulatory bodies are fine with "exclusivity deals" since they aren't inherently anti-competitive. Bidding wars for an upstream resource are permitted and can be seen as competitive ...

It's fine if Microsoft chooses to do exclusivity deals with Activision Blizzard. What doesn't sit well with the CMA is the eventuality of Microsoft having total control over the process where Activision Blizzard content can or can not appear. Structural remedies are needed to to take this capacity over control of Activision Blizzard content away ...

If Microsoft are content with not participating in the UK market then they're free to clear the deal regardless if they wish ...