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

[Deleted member 11852]

Eh, this is Nintendo's core business and they are the longest surviving console brand from the 80s, and Xbox is still a rounding percentage by comparison to the rest of MS.

Xbox One outsold Wii U, which was also Nintendo's core business. I'm not sure where you're coming from here, there than blindly defending Microsoft's almost zero effort to compete at anywhere near the same level at their competitors but whilst still expecting to sell as many devices. No company can operate in a fraction of the markets as their competitors, not engage in marketing in most of these markets, and actually compete commercially.

That is not realistic.

Nintendo also has their distribution and logistics sorted pretty well.

Yeah, and that did't happen over night. It didn't happen overnight for Sony either. Are Microsoft too lazy to put the work in because I don't get it. When you look at what Nintendo take in revenue, spend in costs and make in profit, all of their numbers are a fraction of Microsoft. Nintendo don't have magic cost-less facilities around the world so how can a company 32th of Microsoft afford what Microsoft cannot?

You can't be the second largest company in the world, spend so little relative to the competition then complain that the rest of the market is stacked against you. All three console manufacturers have their kit made in China, shipped to a regional distribution site then through national hubs. To be clear, that's a warehouse and some folks to deal with customer service issues like returns and repairs, as well as managing sales. How can Nintendo spend a fraction of what Microsoft does on regional sales and support and operate effectively in more countries than Microsoft?

When somebody as small as Nintendo, with their massively limited resources, and relatively low revenue, is kicking your arse, you're doing something wrong. Either your product is bad (Xbox isn't), the marketing is bad (it's non-existent) or you're just not really trying and from my perspective of somebody who travels a lot - Europa, Asia, North America and the Middle East - it's largely the last two that are why Microsoft struggle. Xbox and GamePass are good products and services but Microsoft seem to have some entitled view that they don't need to exist in as many markets as their competitors, nor market their products.

 

[iroboto]

I'm not sure where you're coming from here, there than blindly defending Microsoft's almost zero effort to compete at anywhere near the same level at their competitors but whilst still expecting to sell as many devices.

How can Nintendo spend a fraction of what Microsoft does on regional sales and support and operate effectively in more countries than Microsoft?

When somebody as small as Nintendo, with their massively limited resources, and relatively low revenue, is kicking your arse, you're doing something wrong.

Hold up.
I'm not blindly defending Microsoft here. I'm just assuming them being as large as they are, are clearly having problem that either don't apply to the other two, or for whatever reason cannot. We assume they are going to take the path of least resistance here, and they didn't get to their size having no clue how to do business.

Instead of me blindly defending MS, I'm taking the assumption that if it were so easy to outpace Nintendo and Sony on all these logistical fronts that they would have.
So instead of asking why I'm blindly defending MS, I would ask why you are blindly attacking MS thinking it's so straight forward cut and dry. If you have no understanding of the problem and everything is so trivial, would they not have accomplished this? It's clear they have data that would suggest otherwise.

Yelling around saying they're doing something wrong is not representative of reality, I've no idea why they make the decisions that they do, but I'm going to assume that this is currently the best that they can do within the situation that they are in otherwise the entire executive leadership team right across the board should be fired.

 

[Silent_Buddha]

Hold up.
I'm not blindly defending Microsoft here. I'm just assuming them being as large as they are, are clearly having problem that either don't apply to the other two, or for whatever reason cannot. We assume they are going to take the path of least resistance here, and they didn't get to their size having no clue how to do business.

Investors. Sony obviously also have investors but PlayStation has historically been profitable so when the PS3 happened they had leeway. MS up until after Phil Spencer took over had historically always had investors that were actively hostile towards the Xbox division. Prior to him taking over and altering Microsoft's approach WRT Xbox as a brand, it was always an uphill battle to try to appease investors in such a way that they could forstall closing down the Xbox division. That obviously limits to an extent how much MS would be willing to invest and lose on the division in order to gain market share.

Investors didn't become supportive of the Xbox division until MS basically abandoned attempts to gain market share through loss generation strategies (IE paying more for exclusives than you can ever hope to recoup over the life of the exclusivity deal, which is what they would have to do with PlayStation being in such a dominant position). So, now their strategy is profit focused rather than market share focused (which is predicated on attaining a dominant market position so that you could then make profits comparable to other MS divisions). I mean it's still market share focused, but market share in terms of gaming overall and not the console space specifically. So consoles remain a key part of the strategy, but consoles aren't the most important part of the strategy.

Nintendo have been a profit focused company for the past couple of decades. It's why their hardware has been less "robust" than either Sony or Microsoft. Whereas Microsoft is seeking profits via expanding the reach of their games beyond just the Xbox console or even PC, Nintendo have been focused on profitable hardware and leveraging the strongest 1st party IP lineup of any console maker. No other console maker comes even close to the strength of Nintendo's IP portfolio. Even during the disasterous Wii-U, Nintendo IP was regularly outselling by a long shot any other console maker's IP. And it certainly didn't hurt that they could lean on the 2DS and 3DS during that time frame as well.

Regards,
SB

 

[Deleted member 11852]

Hold up. I'm not blindly defending Microsoft here. I'm just assuming them being as large as they are, are clearly having problem that either don't apply to the other two, or for whatever reason cannot. We assume they are going to take the path of least resistance here, and they didn't get to their size having no clue how to do business.

You use the word "assume" a hell of a lot in your post. You say you're not blindly defending Microsoft but your entire post in predicated on baseless assumptions that Microsoft has mysterious but undefinable challenges to market their products that much smaller companies have seemingly solved without issue. Apart from Apple, all companies are smaller than Microsoft and almost all have solved these problems. How is this?

What is the challenge that you see? In an earlier post you said you didn't want to get into it, you still haven't. You declare it like a fact but you're done nothing to explain what this challenge is.

So instead of asking why I'm blindly defending MS, I would ask why you are blindly attacking MS thinking it's so straight forward cut and dry.

Distribution and sales is not a complicated problem. It's been solved by seemingly everybody. How can much smaller companies have sales and distributions in smaller markets and Microsoft cannot not? What is the explanation for why Microsoft have no presence in so many markets, what is the explanation for Microsoft market so little in so many markets? Do you really think these two things are not related to Xbox's relative commercial success?

If you have no understanding of the problem and everything is so trivial, would they not have accomplished this?

Because they have made no effort to try? If you think I am wrong, what has Microsoft don't to improve their presence in growing markets? If you look back at the makers that Microsoft supports in the 360 era, and the Xbox One era, it's barely grown at all. What can possible explain why Microsoft have invested so little in expansion their sales and marketing footprint?

Again, what is the challenge?

 

[iroboto]

Again, what is the challenge?

Respectfully, after 21 years of running a console business, the only American console company to make it as far as this has hasn't figured out what their challenges are?
I've said it repeatedly, Xbox is NOT the core business of MS, having a bottomless pit of money does not change that reality.
They may compete in the gaming space, but the objectives set for Xbox as a division of MS, are likely entirely different than those set for Sony or Nintendo.

If MS has no interest in pursuing gaming outside of the regions that they are currently in, than that is that. You make it seem like some competency problem, all I've looked at are some possible reasons why they may not want to venture that path. If it's profitability at all costs, then that's why you don't see them marketing and pushing consoles in particular regions, the ROI is just not high enough for them to want to do it.

 

[stu11]

Microsoft explored buying Sega, Bungie and IO Interactive​

SUPERGIANT, NIANTIC AND ZYNGA HAVE ALSO APPEARED ON THE XBOX MAKER’S M&A WATCHLIST IN RECENT YEARS

In November 2020, Xbox boss Phil Spencer emailed Microsoft CEO Satya Nadella and the company’s CFO Amy Hood, requesting approval to approach Sega Sammy with a view to acquiring its gaming studios.

“We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console,” he wrote of the Japanese company in an email seen by The Verge.

Spencer added: “Sega is the most attractive next acquisition target due to its global PC catalog, presence on mobile in Asia, and global brand affinity on console through its classic IP.”

I guess they went for Bethesda and Activision instead and Sony got Bungie.

 

[stu11]

So that email about MS wanting to spend Sony out of business is real after all.

“We (Microsoft) are in a very unique position to be able to go spend Sony out of business,” said Booty, referencing spending $2 billion or $3 billion in 2020 to avoid competitors getting ahead in content at a later date.
“It is practically impossible for anyone to start a new video streaming service at scale at this point,” said Booty, referencing competitors like Google, Amazon, and Sony. Booty described content as a moat and that only Sony could really compete with Game Pass:

Added image of email as well.

 

[Dr. Nick]

Microsoft sacrificed Xbox Series X sales for ‘long term ambition’ in the cloud

The one thing that caught my interest was that the Series X was supposed to be 56 CU instead of 52.

 

[Dr. Nick]

So that email about MS wanting to spend Sony out of business is real after all.


Added image of email as well.

View attachment 9136

It was real but sent in 2019 not relevant to the current deal. I don't think Activision was even on their radar at the time.

 

[stu11]

It was real but sent in 2019 not relevant to the current deal. I don't think Activision was even on their radar at the time.

I'm not so sure, it shows that there was intent by people within MS to use the sheer financial strength of Microsoft to push smaller (financially speaking) competitors out of the market. Which is one of the fears that many who oppose this deal. If they were to reignite this plan to buy up content and keep it off of competitors systems, then I would say it could end up being relevant. As has been pointed out before Sony can't outspend a 2.2 + trillion dollar company like Microsoft.

 

[see colon]

I'm not so sure, it shows that there was intent by people within MS to use the sheer financial strength of Microsoft to push smaller (financially speaking) competitors out of the market. Which is one of the fears that many who oppose this deal. If they were to reignite this plan to buy up content and keep it off of competitors systems, then I would say it could end up being relevant. As has been pointed out before Sony can't outspend a 2.2 + trillion dollar company like Microsoft.

I don't read it as nefarious as that. He's saying that they are basically the only ones who can compete with Sony in terms of content, even if they have to lose money doing it. This isn't exactly saying they are going to bankrupt Sony, just that they are prepared to invest in the market because the see how the content war in streaming has turned out, and Google, Amazon etc. aren't currently in a position that allows them to compete right now.

Because they have made no effort to try? If you think I am wrong, what has Microsoft don't to improve their presence in growing markets? If you look back at the makers that Microsoft supports in the 360 era, and the Xbox One era, it's barely grown at all. What can possible explain why Microsoft have invested so little in expansion their sales and marketing footprint?

Xcloud.

 

[Dr. Nick]

It seem like people are just taking 6 words out of the whole thing and saying it is smoking gun. Please read the whole thing. He is saying that it would be better to take a loss to prevent a competitor from locking down the market to such an extent that it would be impossible for anyone else to gain any marketshare and that Microsoft cannot afford so to speak to abandon 1 day first party releases on Gamepass. It's really the main thing that Gamepass has going for it.

 

[stu11]

I don't read it as nefarious as that. He's saying that they are basically the only ones who can compete with Sony in terms of content, even if they have to lose money doing it. This isn't exactly saying they are going to bankrupt Sony, just that they are prepared to invest in the market because the see how the content war in streaming has turned out, and Google, Amazon etc. aren't currently in a position that allows them to compete right now.

Xcloud.

It seem like people are just taking 6 words out of the whole thing and saying it is smoking gun. Please read the whole thing. He is saying that it would be better to take a loss to prevent a competitor from locking down the market to such an extent that it would be impossible for anyone else to gain any marketshare and that Microsoft cannot afford so to speak to abandon 1 day first party releases on Gamepass. It's really the main thing that Gamepass has going for it.

The problem is that, privately an Xbox employee is sending an email in which he expresses a "personal wish" to "spend Sony out of business" and that Sony is the "only other player who is able to compete with GamePass", then not more than 2 months later the Boss of Xbox publicly declares that "Nintendo and Sony no longer our main rivals" and that Amazon and Google are now their main competitors.

"When you talk about Nintendo and Sony, we have a tonne of respect for them, but we see Amazon and Google as the main competitors going forward," he told Protocol, a new technology news website.
"That's not to disrespect Nintendo and Sony but the traditional gaming companies are somewhat out of position."

So which is it? Either Sony is the "only company possible to rival GamePass's content' or they are not a rival. A lot of disconnects between what Microsoft employees say internally and what the corporate mouthpieces are saying to the press and presumably saying in this court case.

It would be interesting to see what Tim Stuart replied to Matt Booty and what his feelings were, but of course, that was probably redacted and is inaccessible for us to read.

 

[chris1515]

https://twitter.com/x/status/1673453703989174272

The Matt booty email, the first phrase is bery clear.

 

[Johnny Awesome]

Btw, I think the reason MS is not trying to take Spain by storm is that their market research says that prying marketshare from Sony there would be as difficult as trying to get corporate America to ditch all their Windows PCs for Macs. The brand isn't strong enough for that yet.

Maybe later when Xbox Game Studios is putting out AAA games every 3 months on GP like clockwork.

Are we going to call Apple incompetent because they haven't achieved even 33% marketshare on the desktop. After all, they're bigger than MS! They've had 40 years! Those fools! What are they waiting for?!?

 

[Silent_Buddha]

So that email about MS wanting to spend Sony out of business is real after all.


Added image of email as well.

View attachment 9136

Context matters. That e-mail isn't about the console business of which Sony is dominant and no amount of spending by MS is likely to change that.

That e-mail is in reference to a fledgling and almost non-existent streaming games market. They are saying that they are the only company capable of challenging Sony there as they not only have an established catalog (a really important thing that Amazon and Google lack) but they also have more cash to spend in order to get game streaming up and running with a large catalogue of games. IE - they can afford to pay companies to allow them to stream their games if they were willing to just toss money and generate significant losses in order to ensure that they are on top in streaming gaming services.

I'm going to guess that the e-mail he's replying to also contains content implying that Tim Stuart possibly would like Microsoft to not do day and date releases of games onto Xcloud. Keep in mind this is back when Xcloud was still very much in beta and MS were still hashing out how they wanted to handle game releases on Xcloud.

Regards,
SB

 

[Deleted member 11852]

've said it repeatedly, Xbox is NOT the core business of MS, having a bottomless pit of money does not change that reality.

So what you're saying is, Xbox simply isn't important to Microsoft to setup global sales and distribution for it? That is, I think, probably the truth. And this is why they sell and market in less counties and this is why they sell less consoles. Not the indomintance entrenchment of Sony which is what you have been claiming.

Nintendo and Sony didn't do this to Microsoft, Microsoft did this to Microsoft. Like in earlyier generations when Microsoft gutted their first party development teams, that was an own goal.

They may compete in the gaming space, but the objectives set for Xbox as a division of MS, are likely entirely different than those set for Sony or Nintendo.

This is the first time we've been in agreement in this whole thread. This is what objectivity is. When you previously said I was attacking Microsoft, I wasn't, I was attacking the assertion that Microsoft were in this position because Sony were some dominant masterful manipulator of the console market space.

If MS has no interest in pursuing gaming outside of the regions that they are currently in, than that is that. You make it seem like some competency problem, all I've looked at are some possible reasons why they may not want to venture that path. If it's profitability at all costs, then that's why you don't see them marketing and pushing consoles in particular regions, the ROI is just not high enough for them to want to do it.

It's either competence or laziness but its unfair to compare Microsoft's success to that of Nintendo and Sony ignoring some unwelcome facts that Microsoft sell in far fewer counties and in most of those counties, have no marketing where their competitors do. That is the biggest reason why Microsoft have a smaller market than their competitors.

 

[Nesh]

It was real but sent in 2019 not relevant to the current deal. I don't think Activision was even on their radar at the time.

It doesnt matter when. It is recent and it is part of their strategy. Such huge buy outs reflect exactly that and have the same outcome.
That was actually their strategy since the day they entered the console market when they were targeting to buy huge third parties but were rejected.

 

[Shifty Geezer]

So what you're saying is, Xbox simply isn't important to Microsoft to setup global sales and distribution for it? That is, I think, probably the truth.

That's also Silent_Buddha's take, appeasing what the shareholders want. Which is of course okay. The issue was more MS presenting their hard-done-by case to the EU, "we're only 20% of the EU market," without the "because we didn't care to sell here" caveat and others pointing to the skewed market without factoring in the causes.

I think the moderate consensus now is that yes, MS didn't chase the console market as they could have resulting in a skewed market, but now they want to compete (in gaming, if not consoles) and there's no way any new player can do that without spending BIG.

 

[Nisaaru]

It's either competence or laziness but its unfair to compare Microsoft's success to that of Nintendo and Sony ignoring some unwelcome facts that Microsoft sell in far fewer counties and in most of those counties, have no marketing where their competitors do. That is the biggest reason why Microsoft have a smaller market than their competitors.

The biggest reason is the right timing and product(s). MS made some strategic mistakes at the end the 200x about HW and SW they still haven't recovered from at least in the last part.

Now, about marketing.

As an opinion of a normal customer I don't even know how marketing works these days anymore. Ads on TV are pointless because who watches them? What do I care about Ads on the Web/Youtube. Either I block them or skip them as fast as possible. I stopped caring about game magazines a long time ago and I don't think the game review sites are really flourishing either. I only buy my consoles from Amazon and games from the digital online store of the console I use.

So how would marketing reach me (and possible you)?

How could any marketing fix this?

Only real impact products can do that and if you have a real franchise title again you need to keep it exclusive.

I believe this "we are all friends" is a mistake even if Spencer doesn't really care about console wars.

Why? The hardcore fanbase of the other consoles will never "like" you and it removes the emotional aspect out of the console scene which is one of the driving forces behind the "excitement". It doesn't matter if it's stupid and irrational. It's like arguing about your favourite sports team. The drama is a big part of (past) console marketing.

IMHO Sony fully understands the partisan nature of the business and uses it.

Some people will never change their sports team and others will change if they they smell success or like a certain player. The same applies to consoles.

To me games sales are based on past reputation(Studio, franchise series, game designer) and word of mouth for new things others recommend. Maybe top game title sales.

I'm not sure how marketing can really influence this anymore these days. Gamepass is surely a try to spread the awareness of games(aka. "marketing) but this is all low key to support word of mouth.