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

[iroboto]

Well I'm not sure how else to term the catastrophic screwups MS made with the transition to Xbox One:

The stupid decision to make the console a glorified cable box or maybe telling people that they can't sell their physical property anymore? What would you describe those as?

Did Sony force them to turn Xbone in to a cable box? No.

Did Sony force them to effectively ban the resale of physical games? No but they were delighted when they did.

Every console maker has had their Icarus moment. Surely WiiU and PS3 were no different. These companies had data that suggested one thing and and went another way. Nintendo saw things heading towards mobile, but it wasn't until Switch did they get it right. And Sony continues to chase VR for 2 generations now, and we're not seeing any improvement. Perhaps cloud won't work out either, but that won't stop these companies from trying.

In the end for MS, they were right about Digital anyway. Messaging was poor, but it became the outcome regardless

And how many large game publishers should MS be allowed to buy up so that they can "win"?

That's not really a fair statement. We don't make the rules of business. Nintendo and Sony are both Japanese companies that have a inherent advantage (that is their hometown, and they also happened to be the original consoles when there weren't any american consoles so they also dominated the western markets) by default from owning an extensive Japanese catalog of games that has no interest in moving their properties to Xbox. And even with that inherent advantage, Sony continues to purchase exclusivity rights of those titles too.

There's no written rule that Xbox can't shore up it's strength in the western market if the eastern markets refuse to distribute games onto their platform. Even after owning Activision, Activision alone does not make as many titles as the entire Japanese market does. There's no comparison in supply differential between the two.

 

[see colon]

I guess Ben Hymers. Mark Webley and Gary Carr weren't "talented enough" for Microsoft then.

I'm sure if you ask Sega they will tell you that the duo were successful enough to bring 5 million players to Sega with Two Point Hospital and managed a million players for Two Point Campus in a week! Not bad for the guys who developed the smash hit game Theme Park. They could even been inhouse games that would be permanently on GamePass instead of being removed.

Probably could of even created a version of those games for mobile. Oh wait, is MS even interested in Mobile games?

They also had the founders of Media Molecule working there when MS bought Lionhead. Oh well.

The Media Molecule guys left around the same time Microsoft purchased Lionhead, and it was a dire time for Lionhead. They were financially insolvent and Microsoft's purchase of them likely saved the company from closure 10 years before they were actually shuttered. And please don't twist my words to imply that the people working at Lionhead at the time of closure weren't talented. What I said was that most of their defining talent was gone and they hadn't been able to complete a game in years, with some high profile cancelations. It was clear to see that the magic was gone, and the fact that the guys who helmed the development of Theme Hospital formed a team and made a Theme Hospital clone is a great success story. But that doesn't mean that the team and culture that existed at Lionhead made it a well functioning studio. There is clear evidence that it wasn't. And the fact that Lionhead closed freed them to work on a project they were clearly passionate about. A project that Microsoft probably wouldn't have greenlit in the first place. Microsoft executives, including Spencer, have acknowledged Microsoft's failure in handling the studio.

 

[BRiT]

today's funny exchange: Phil Spencer correcting the FTC on how acquisitions work

FTC: "Now you have a $70 billion upfront payment that you're making for Activision, right?"

Phil:

https://twitter.com/x/status/1672398577006411777

 

[iceberg187]

View attachment 9119

https://twitter.com/x/status/1672398577006411777

If you've seen my previous posts, you've already know my stance on this. I'm pro-acquisition. I'm pro-acquisition because if you look at the letter of the law, there isn't anything wrong with this. This is a textbook vertical acquisition. The problem is that we have ideological activists masquerading as regulators. This has been dog ate my homework level of work from the FTC in the past two days. They didn't talk to anyone but Sony. They could not have spoken to anyone else when their own star witness blows up their points in literally five minutes on the stand in cross examination. Twice, the judge had to step in because the FTC lawyers were engaged in gotchas. That was their whole stance, let's catch someone in a gotcha. The same goes for the CMA. How can you define a market in a way that none of the market participants do? No one looks as cloud and consoles as separate markets as they play the same games. After Microsoft wins this, depending on what CAT does, I'd let the CMA know they we will still close and I'll see you in court. I'd be hellbent on making the CMA own their actions in a court of law. I couldn't sit back idly when I know I'm right. Not with this much at stake.

 

[eastmen]

Have you not read any of the responses that Shifty posted?

Even if Sony had not acquired Insomniac, Sony had the Spider-Man IP deal so you were never going to see a Sony-funded Spider-Man game on Xbox, regardless of who the developer was.

I was using an example of a studio. You can pick any of the 14 studios sony has bought in the last 4 years. Insomiac made more than just Spider-man fyi. They were a pretty prolific vr company also


Will this make you happy

if you are a Fan of Company A and they are bought by console maker 1 then you should expect going forward that all their games will be on Console maker 1's consoles and not console marker 2 and 3's consoles.

But If you are a fan of Company A and they make a game series that you love on Console 2 and you have played 4 of them on Console maker 2's console and then suddenly they enter into a deal with Console Maker 1 for the 5th installment to be exclusive but then don't have a follow up deal for another installment and its now back on console maker 2's console. However that original exclusive is never on Console maker 2's console.

Which would you rather have. I rather a company be bought and I know hey this companies games will always only be on this platform and if I want those games I need to buy that platform or in Ms's case xbox and pc. Instead of having to hope that the platform I choose not only gets the game but gets the full content.

Maybe you can actually now answer

 

[eastmen]

If you've seen my previous posts, you've already know my stance on this. I'm pro-acquisition. I'm pro-acquisition because if you look at the letter of the law, there isn't anything wrong with this. This is a textbook vertical acquisition. The problem is that we have ideological activists masquerading as regulators. This has been dog ate my homework level of work from the FTC in the past two days. They didn't talk to anyone but Sony. They could not have spoken to anyone else when their own star witness blows up their points in literally five minutes on the stand in cross examination. Twice, the judge had to step in because the FTC lawyers were engaged in gotchas. That was their whole stance, let's catch someone in a gotcha. The same goes for the CMA. How can you define a market in a way that none of the market participants do? No one looks as cloud and consoles as separate markets as they play the same games. After Microsoft wins this, depending on what CAT does, I'd let the CMA know they we will still close and I'll see you in court. I'd be hellbent on making the CMA own their actions in a court of law. I couldn't sit back idly when I know I'm right. Not with this much at stake.

This should have been done as soon as the info from Sony ceo came out saying that it would affect them and they believe MS would keep it on their platform. Then again when MS signed 10 year deals with companies and then again when Phil said in the court room that they would keep it on playstation.

The fact that this is still going on shows how far the ftc is straying from what they should be doing. There is no way that ABK+ MS = monopoly.

 

[Silent_Buddha]

I'm very much with you on getting more details, because Microsoft keep peddling this narrative that marketing deals were not viable for them which is difficult to reconcile with an almost $100bn acquisition budget between 2019 (Zenimax) to 2023 (Activision-Blizzard).

The difference is that due to Sony's market position, it is easier for them to secure exclusivity deals. The flipside is that then "presumably" (since Sony documents pertaining to this have been sealed by the court to protect Sony's interests) MS has had to offer a similar amount (actually likely more than a similar amount) of money just to attempt to get a publisher to release the title on Xbox, which would mean attempting to secure exclusivity would involve a sum of money far larger than what Sony would have to offer.

Either way, MS loses. They can pay more to secure exclusivity of said 3rd party title, but the cost would be so high that it'd likely be a pyrrhic victory where there's a chance it might help increase the Xbox install base but at the cost of losing money on the deal. So instead, it's possible that MS are just content to choose their battles WRT paying 3rd party developers/publishers to not take a Sony exclusivity deal (IE - paying to ensure it arrives on Xbox).

That should be obviously since as market leader with an almost 2:1 lead in console market share, exclusivity on PlayStation would impact revenue generated by a title far less than exclusivity on Xbox.

This isn't Phil saying that Sony are necessarily abusing their market position but just stating a fact of PlayStation's market position relative to Xbox's market position. It is far easier for Sony to secure exclusivity which makes it harder for Xbox to compete on a level playing field. Basically as the smaller market player (3rd place in consoles, a distant 2nd place if you exclude Nintendo as the CMA and FTC does) Xbox has to spend more in order to compete if they want Xbox to have access to the same 3rd party games.

It'd be nice to have court documents unsealed as I suspect that the reasons that many 3rd party formerly PlayStation only IPs and publishing houses have started to release their titles on Xbox is because Microsoft are paying them to port their games to Xbox and PC so that they can appear on Game Pass.

It's always harder for a smaller market player to compete against a larger market player regardless of how much money they have in the bank. It's why regulators in some countries allow smaller market players to engage in business practices that it frowns upon if a larger market player were to engage in them.

Regards,
SB

 

[stu11]

Every console maker has had their Icarus moment. Surely WiiU and PS3 were no different. These companies had data that suggested one thing and and went another way. Nintendo saw things heading towards mobile, but it wasn't until Switch did they get it right. And Sony continues to chase VR for 2 generations now, and we're not seeing any improvement.

The difference is that neither Nintendo or Sony felt they needed to buy up one of the largest independent game publishers in the industry. Nintendo carried on doing what they do and Sony made smart investments with new studios and IP like Media Molecule and buying studios that had already a long history of association with the Playstation brand, like Insomniac. Microsoft by contrast has doubled down on their game rental service and splashing the cash on large publishers like Bethesda and now Activision.

That's not really a fair statement. We don't make the rules of business. Nintendo and Sony are both Japanese companies that have a inherent advantage (that is their hometown, and they also happened to be the original consoles when there weren't any american consoles so they also dominated the western markets) by default from owning an extensive Japanese catalog of games that has no interest in moving their properties to Xbox. And even with that inherent advantage, Sony continues to purchase exclusivity rights of those titles too.

There's no written rule that Xbox can't shore up it's strength in the western market if the eastern markets refuse to distribute games onto their platform. Even after owning Activision, Activision alone does not make as many titles as the entire Japanese market does. There's no comparison in supply differential between the two.

From what I have seen Microsoft seems to be pushing for a lot of 3rd parties to release their games day and date on GamePass, I wonder whether sometimes those publishers want to do that, especially the Japanese ones. Is it possible that MS is a lousy negotiator? If MS is a lousy negotiator would that be Sony's fault?

Maybe MS would have been better making this purchase with a different US administration in, one that they could of utilized to threaten the Japanese government with a embargo on all Japanese goods in to the US unless MS is allowed to buy up as much of the Japanese game industry that it desires, also force Sony and Nintendo to allow gamepass on their systems and finally force Sony and Nintendo to port their exclusives to Xbox. Maybe then MS would consider that "fair" ..lol


My personal opinion is that this merger will go through, this judge seems to be in MS's corner. Maybe she will order more concessions, like preventing MS from making any Activision property that has an presence on Playstation or Nintendo exclusive to Xbox, I'm thinking of the likes of Crash Bandicoot, Diablo, Spyro etc. That would mean that any existing Activision game that did not have a presence on those systems would be free to be exclusive and of course any new IP they develop would be Xbox exclusive. But other than that I think this will eventually be allowed.

The Media Molecule guys left around the same time Microsoft purchased Lionhead, and it was a dire time for Lionhead. They were financially insolvent and Microsoft's purchase of them likely saved the company from closure 10 years before they were actually shuttered. And please don't twist my words to imply that the people working at Lionhead at the time of closure weren't talented. What I said was that most of their defining talent was gone and they hadn't been able to complete a game in years, with some high profile cancelations. It was clear to see that the magic was gone, and the fact that the guys who helmed the development of Theme Hospital formed a team and made a Theme Hospital clone is a great success story. But that doesn't mean that the team and culture that existed at Lionhead made it a well functioning studio. There is clear evidence that it wasn't. And the fact that Lionhead closed freed them to work on a project they were clearly passionate about. A project that Microsoft probably wouldn't have greenlit in the first place. Microsoft executives, including Spencer, have acknowledged Microsoft's failure in handling the studio.

Regarding the highlighted point, considering how badly MS needs games for Gamepass and how wildly successful the Two Point games have been for Sega on GamePass I find that both sad and bitterly ironic. I hope that is not Microsoft's current strategy.

 

[Shifty Geezer]

The difference is that due to Sony's market position, it is easier for them to secure exclusivity deals. The flipside is that then "presumably" (since Sony documents pertaining to this have been sealed by the court to protect Sony's interests) MS has had to offer a similar amount (actually likely more than a similar amount) of money just to attempt to get a publisher to release the title on Xbox, which would mean attempting to secure exclusivity would involve a sum of money far larger than what Sony would have to offer.

I agree this is true. However...

Either way, MS loses.

That's competition and it requires investment. Without actual numbers, we can't see if the costs are that high. And if MS has to pay those costs to secure market share, then that's what they have to spend. After investing all that, then they'll sell more consoles, then they'll be in a more balanced market position.

The whole argument here is they need to spend $70 billion to compete with Sony's lead (at least it was prior to throwing in the towel and admitting they'd lost the console war). They could have and should have been spending more the past 15 years to get a better market position. If it would have cost them $4 billion more than Sony to secure the same level of exclusive content, and that would have secured them a better 2:3 ratio, say, they should have done that. That would have decreased the costs of exclusives. We see here MS is willing to spend $70 billion to level the playing field - would Sony-style exclusives honestly have cost more than that?? Or was it a far smaller investment that would have been required but MS didn't care to? I expect the latter; I don't think Sony's exclusive content is worth $70+ billion.

So really the issue is a runner can't compete with a faster rival. Ergo they have to wake up earlier and train harder and accept more sacrifice as investment, if they really want to catch up. If they leave it too late, they'll never catch up. I've yet to see a decent argument that this isn't what MS did, fumbled a few key decisions and not committed to a recovery early enough to get a stronger position. Early into XBO, seeing their XB360 stronghold vanish, they should have made better business decisions to turn things around and get XB back to that XB360 50:50 position. Sony mananged to do just that with PS3, turning a really bad start around with excellent business recovery. MS did too little, too late, seemingly because they weren't that interested in the console space at the time.

 

[see colon]

From what I have seen Microsoft seems to be pushing for a lot of 3rd parties to release their games day and date on GamePass, I wonder whether sometimes those publishers want to do that, especially the Japanese ones. Is it possible that MS is a lousy negotiator? If MS is a lousy negotiator would that be Sony's fault?

It's my understanding that a lot of those Japanese game are ones that end up on Gamepass because they wouldn't be on the platform at all without Microsoft paying for them to appear on the platform. And that payment is negotiated in a way that allows them to also offer the game on Gamepass.

Microsoft by contrast has doubled down on their game rental service and splashing the cash on large publishers like Bethesda and now Activision.

Is it Microsoft's fault that Sony can't afford to spend money on big studios?

 

[stu11]

It's my understanding that a lot of those Japanese game are ones that end up on Gamepass because they wouldn't be on the platform at all without Microsoft paying for them to appear on the platform. And that payment is negotiated in a way that allows them to also offer the game on Gamepass.

The critical question I have is how closely does the deal that MS offers compensate the 3rd party for any lost traditional sales, if there are any. It is known that some AAA publishers do not like the GamePass model and don't really want their games on it because they will lose money vs the traditional model , we know that, ironically, Activision believes this is the case and why their big games like new releases of COD never appear on there.

Is it Microsoft's fault that Sony can't afford to spend money on big studios?

And now I think you are twisting my words, I was comparing and contrasting strategies employed by Nintendo, Sony and Microsoft respectively in how they attempted to undo their own self inflicted market failures, not assigning fault or blaming anyone.
As I have previously pointed out, Microsoft's current predicament is mostly of their own doing and as a result placing Sony in a much stronger position than they had been throughout the 7th gen, Sony recovered a lot quicker from their screwups of the 7th gen, partly because Microsoft took their eye off the prize and focussed too much on crappy Kinect "experiences", was playing Mass Effect 3 really "better with Kinect"? Bleh

If MS hadn't pivoted away to nonsense like Kinect towards the tailend of the Xbox360 period and then the "Xbone TV box" debacle we wouldn't be having this conversation and things would likely be very close right now.

Sony are obviously being quite ruthless in exploiting that situation and if you were to tell me Microsoft wouldn't be employing the same tactics if the positions were reversed I would say that is a lie. Microsoft's failure with the Xbox One threw the balance much further in the direction to making Sony much more stronger. Judging by Sony's possibly misguided push towards building up their GAAS games which may or may not pan out, maybe Sony is about to screw up and rebalance things out. Who knows.

 

[eastmen]

I agree this is true. However...

That's competition and it requires investment. Without actual numbers, we can't see if the costs are that high. And if MS has to pay those costs to secure market share, then that's what they have to spend. After investing all that, then they'll sell more consoles, then they'll be in a more balanced market position.

The whole argument here is they need to spend $70 billion to compete with Sony's lead (at least it was prior to throwing in the towel and admitting they'd lost the console war). They could have and should have been spending more the past 15 years to get a better market position. If it would have cost them $4 billion more than Sony to secure the same level of exclusive content, and that would have secured them a better 2:3 ratio, say, they should have done that. That would have decreased the costs of exclusives. We see here MS is willing to spend $70 billion to level the playing field - would Sony-style exclusives honestly have cost more than that?? Or was it a far smaller investment that would have been required but MS didn't care to? I expect the latter; I don't think Sony's exclusive content is worth $70+ billion.

The problem is everyone is focused on just COD and just Activision and blizzard. MS also wants to take King , AB and all of Microsoft's teams and create a third party app store for Iphone and IOS. So sure MS can pay $1b or whatever to Rockstar for GTA 6 exclusivity. But how does that get them an app store on ios and android ?

So for MS they purchase ABK , they get a bunch of video game ip that they can leverage for Xbox along with a bunch of development teams that can work on ip that they own and isn't being used either MS/Zenimax/ ABK or so on. They also get a ton of content to put on said 3rd party app store.

So really the issue is a runner can't compete with a faster rival. Ergo they have to wake up earlier and train harder and accept more sacrifice as investment, if they really want to catch up. If they leave it too late, they'll never catch up. I've yet to see a decent argument that this isn't what MS did, fumbled a few key decisions and not committed to a recovery early enough to get a stronger position. Early into XBO, seeing their XB360 stronghold vanish, they should have made better business decisions to turn things around and get XB back to that XB360 50:50 position. Sony mananged to do just that with PS3, turning a really bad start around with excellent business recovery. MS did too little, too late, seemingly because they weren't that interested in the console space at the time.

I mean Sony also bought Guerrilla the year before PS3 and Zipper the year they launched the ps3 and then zipper in 2007 and BigBig studios in 2007 and then Media molecule in 2010 and Sucker punch in 2011.

So part of how Sony tried to fix themselves was to buy a bunch of studios to create more content for their platform.

You know MS messed up with the xbox one and in 2014 bought Mojang and 4 years later picked up Ninja Theory , Undead Labs , Compulsion and Playground games and then Inxile and obsidian. Then in 2019 double fine and in 2020 zenimax and now in 2022 they are purchasing ABK .

MS is trying to fix itself just like Sony did. MS tried going to the small studio route but it didn't move the needle enough and now they are going a bit bigger because like you said they have to wake up earlier and train harder and accept more sacrifice as an investment to catch up. So MS is dropping 68B to wake up earlier and train harder .

Sony was lucky since they had such smashing successes with the ps1 and ps2 they were able to build a huge fan base and still outsold MS dispite all their mistakes. However MS wasn't that lucky as even their best selling generation only sold a little over half of what Sony's best generation sold and still less than sony's worse generation.

 

[mr magoo]

Email shows that Jim Ryan never worried about losing CoD on Playstation.

Jim Ryan private emails show he doesn't think Call of Duty will be made exclusive to Xbox

In private emails Sony's CEO Jim Ryan says that Sony will be 'more than okay' if the merger goes through and that he didn't believe COD would be withheld.

www.tweaktown.com

But he is so worried about protecting players ?!

https://twitter.com/x/status/1672372073484939264

 

[Deleted member 11852]

https://twitter.com/x/status/1672398577006411777

Whilst it's true the Microsoft are converting $69bn into a very bunch of assets that they will own, it's also true that will have to pay the shareholders of Activision-Blizzard $69bn - however that is presented that in a balance sheet is up to Microsoft.

But it is the same thing, acquisitions by payment is spending money but naturally Phil Spencer does not want to support the narrative that Xbox are sitting on $69bn for an acquisition whilst also trying to explain that marketing deals were too expensive, yet affordable for smaller companies like Nintendo and Sony. This is the only aspects of Microsoft's position I don't get. Unless they were terrible negotiators, why wee marketing deals so seemingly so elusive?

But it wasn't a "funny exchange", when you are giving evidence and opposition asks you what is seemingly an odd question, that isn't random, it's done to establish a point of clarity for the case. Tom Warren is a tech journalist, who I presume don't dover a lot of court cases, otherwise he would know this.

 

[Shifty Geezer]

I mean Sony also bought Guerrilla the year before PS3 and Zipper the year they launched the ps3 and then zipper in 2007 and BigBig studios in 2007 and then Media molecule in 2010 and Sucker punch in 2011.

So part of how Sony tried to fix themselves was to buy a bunch of studios to create more content for their platform.

Let's just start with the fact these acquisitions were studios who were already creating exclusive content for PS. Those acquisitions didn't change anything in the gaming landscape. And some were for PSP developers and didn't affect PS3. But even acknowledging these studios contributions, that wasn't what turned Sony's fortunes around. KZ was on PS3 when it wasn't selling; buying Guerilla didn't turn PS3's fortunes around, did it? It wasn't any Halo!

Sony successfully businessed themselves a fix. They kicked out Kutaragi and put in someone who could do a better job and not tell gamers they'd need a second job to play. They completely rebranded and marketed the shit out of that thing with a well executed campaign, "It only does everything". They took on bonkers generational losses (to the tune of $5 billion versus MS's $3 billion that gen?), wiping out all their money from PS1 and PS2...but maintaining the PS brand so they went in to PS4 strong. Most importantly, Sony always treated the world (wealthy bits at least!) as equal, whereas MS never committed to Europe. MS's lamentations about their EU position strike me as entirely self-inflicted from the launch of XB, price-gauging the EU (asking ~ $425 dollars vs. $300 in US, $260 in Japan) and only tackling a handful of countries with limited regionalisation.

Furthermore...why did MS leave it so long to secure talent and exclusives, if that's what it takes? Let's say Sony only crawled their way back because they because they bought 6 studios over 5 years (studios which weren't making games for other platforms). If that's what it'd take to compete, why weren't MS doing that too? After buying Rare, why was there zero expansion or dealing until 2018??

MS is trying to fix itself just like Sony did. MS tried going to the small studio route but it didn't move the needle enough

Doesn't that point to exclusive content not actually being the main thing, or not enough in isolation? What about all the other things Sony did?

and now they are going a bit bigger

Bit bigger?
Sony bought a few studios that were already making PS exclusive. They didn't buy up 7% of the market!

because like you said they have to wake up earlier and train harder and accept more sacrifice as an investment to catch up. So MS is dropping 68B to wake up earlier and train harder .

That's what they should have been doing. $5 billion on studios over the past 15 years. They've left it too late, can't compete on an equal footing, and are now wanting a bunch of cybernetic implants no-one else can afford to compensate. But they are only in this situation because they didn't play the game well. MS needed to emulate Sony's PS3 turnaround with XBO. Like Sony, MS managed to dig themselves a hole. Unlike Sony, they didn't manage to build themselves out of it. Or Nintendo - Wii U was a complete disaster, but N turned it around with Switch. MS haven't really Businessed XBOX to a good position other than 360.

And to be fair, I feel that whole investigation is relevant to this acquisition. I feel it needs to be shown MS tries really hard but can't compete on a fair footing, as opposed to don't try much at all and just let Sony (and Nintendo) pull ahead, to validate their story.

This isn't really about regulation at this point. It's MS's story. They keep saying they can't compete, they are behind in Europe, they lost the Console War, etc. and then point to Sony and say it's their fault and big ol' Sony is bullying MS in the industry. If that's true, I want to see the evidence of it that goes against the history I've been following for 20 years that doesn't indicate that at all.

 

[iroboto]

Whilst it's true the Microsoft are converting $69bn into a very bunch of assets that they will own, it's also true that will have to pay the shareholders of Activision-Blizzard $69bn - however that is presented that in a balance sheet is up to Microsoft.

But it is the same thing, acquisitions by payment is spending money but naturally Phil Spencer does not want to support the narrative that Xbox are sitting on $69bn for an acquisition whilst also trying to explain that marketing deals were too expensive, yet affordable for smaller companies like Nintendo and Sony. This is the only aspects of Microsoft's position I don't get. Unless they were terrible negotiators, why wee marketing deals so seemingly so elusive?

But it wasn't a "funny exchange", when you are giving evidence and opposition asks you what is seemingly an odd question, that isn't random, it's done to establish a point of clarity for the case. Tom Warren is a tech journalist, who I presume don't dover a lot of court cases, otherwise he would know this.

It’s an inefficient use of money for MS to engage in marketing and exclusivity contracts.

With Acquisition, the balance sheet largely doesn’t change, you’ve changed one asset for another; but you also gain instant annualized revenue, you have some of the best studios that can create even more revenue, and you have expertise that your current studios may be lacking and they now compete in mobile. You own a large catalog of IPs you can draw from, all of this is the price for 70B. There’s no way paying these studios individually through contracts that Xbox will net the same gain.

There’s no comparison to actually spending 70B on marketing and contracts, they won’t get what they want or need and spending money in this way will affect their balance sheet negatively.

Acquisition is absolutely hands down the better move for MS especially since they can afford it.

 

[Deleted member 11852]

It’s an inefficient use of money for MS to engage in marketing and exclusivity contracts.

How is it efficient for Nintendo and Sony but not Microsoft? What are Microsoft doing wrong?

Acquisition the balance sheet largely doesn’t change, you have instant revenue gain, you have one of the best studios that can create even more revenue, and you have expertise that your current studios may be lacking and they now compete in mobile.

Microsoft will down $69bn and now have a lot of extra running of extra running costs. How is that not going to impact the balance sheet? You know what $69bn is to Microsoft? About half of their gross profit in 2022 ($135.6bn).

 

[iroboto]

And to be fair, I feel that whole investigation is relevant to this acquisition. I feel it needs to be shown MS tries really hard but can't compete on a fair footing, as opposed to don't try much at all and just let Sony (and Nintendo) pull ahead, to validate their story.

You can’t block business on the basis of what people have done in the past. Their past is not relevant, it’s only what they do today and what their position is today.

 

[iroboto]

How is it efficient for Nintendo and Sony but not Microsoft? What are Microsoft doing wrong?


Microsoft will down $69bn and now have a lot of extra running of extra running costs. How is that not going to impact the balance sheet? You know what $69bn is to Microsoft? About half of their gross profit in 2022 ($135.6bn).

How is it inefficient? ROI is negative for MS on exclusivity contracts given their position in the market. Not only do they get less revenue share but these companies will want to be compensated for the losses on their titles on the opposing platform for the current title and future titles.

 

[Deleted member 11852]

You can’t block business on the basis of what people have done in the past. Their past is not relevant, it’s only what they do today and what their position is today.

If you cannot take into consider about past behaviours, and you cannot predict the future, what evidence do you think these processes are predicted on?

However you are wrong about this, past behaviours are absolutely relavent which is why Microsoft past decisions about IP from acquisitions was questioned by the UK CMA, the EU regulator and now the FTC. Microsoft have acquired a lot of IP over the years and of that, only Minecraft has appeared on PlayStation.

How is it inefficient? Because they have no interest in competing in mobile, cloud, and they most of these IPs are PC based. They only care about 2 Blizzard IPs and CoD. How would it be efficient?

That's really weird, because that's absolutely the opposite of what Microsoft said about this acquisition in their 2022 Annual Report:

"On January 18, 2022, we entered into a definitive agreement to acquire Activision Blizzard, Inc. (“Activision Blizzard”) for $95.00 per share in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. Activision Blizzard is a leader in game development and an interactive entertainment content publisher. The acquisition will accelerate the growth in our gaming business across mobile, PC, console, and cloud and will provide building blocks for the metaverse.

A few of these IPs are limited to PC, most are multiplatform but by all means present a list.

MS will see an increase operating costs but the increase in revenue is higher than ABKs expenses.

Minus $69bn dollars. Actvision-Blizzard net profit for 2022 was $1.513bn.

The asset portion of their balance sheet will not change. Whether you have 1 million in cash and you buy 1M in real estate, the asset portion of the balance sheet is the same.

I don't think you have seen a financial breakdown before, but assets, equities and cash are all accounted very differently. I linked to Micorosft's last annual report, you should take a look at how the company actually account for things like this and how transfers of one accountable into another are reported.

If you had 1M in cash and you pay for 1M in marketing you lose 1M out of the balance sheet. Except that 1M in marketing is doing jack all for ROI for MS.

Marketing isn't an assets, it's a cost. Please man, please stop providing your views on finances. It's painful. Again, iI refer you to Microsoft's Annual Report for how the company manages its accounts. If you think you the company are doing it wrong, you ought to reach out to them.

Why would Microsoft want to make Xbox a money pit? Shareholders would just call for it to be axed again.

It's a generally accepted strategy to eat short term losses if there are larger profits in the long term. Is this what Microsoft think? I have no idea.