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

[iroboto]

People dont want a ferrari. People want a better and improved Civic. A Civic in the 80s is not the same as the Civic in 2023. A Civic in 2023 is still not the same as any Ferrari that ever existed.

I’m going to disagree with that given the blowback from gamer responses to AAA titles not looking “next Gen enough” and RT failing to meet expectations, and people wanting to see games take full advantage of NVMe speeds. If RT and NVMe combined can’t theoretically make a Ferrari, I really don’t know what else could.

The industry's inability to scale and reduce costs, the common incentive to standardize for easy profits by people in suits who see only numbers,

the industry is scaling quite well actually, game studios contract and subcontract more than ever. Developer budgets are larger than ever and we build worlds larger and more detailed than ever before.

dont understand the industry and make bad business decisions that work only theoretically,

Business men understand the industry a lot better than you or I. I’m not sure what you mean by this. There is an upper limit on units sold given the total addressable market. If the market was 5x larger than it is today, there would be 5x more profits. 5x more development studios. Etc. everything would grow on the content production side to coincide with a larger TAM quite simply, if there is money to be made the gaps will be filled until it’s saturated. We saw this with mobile platforms where once these apps became a new market it became a gold rush to produce new apps.

Gaming has been growing, but largely in the mobile sector. AAA gaming is still confined to the same platforms which is why you aren’t seeing more AAA being green lighted.

the acquisitions by very very select players with very particular business strategies.

Acquisitions are going to occur as the market grows. And in turn more developers studios will grow to meet the market growth. And in turn more independent publishers will grow to fund those studios. And then these publishers will be acquired to produce more mega publishers whihc over time will likely be consumed by platform holders.

As far as I can see, this is all par for the course. If cloud gaming does take off without needing hardware, there could be a massive growth in AAA gaming. I still don’t understand or see your argument.

 

[Shifty Geezer]

I keep reading this statement, but is it really setting a precedent? Wouldn't the Zenimax acquisition be the real precedent setter.

At that point there wasn't an arms race. Since then, Sony massively increased its acquisition rate. Knowing Sony felt a need to respond to the Zenimax buyout, ABK just cranks it up another couple of gears. But at that point, we didn't know if there was an regulation going to prevent a maximum sized purchase. This ABK deal says no, it really doesn't matter as every publisher is just a percentage of the whole market so is okay for acquisition. Given EA, Ubisoft, Square etc are smaller than ABK and it's okay to swallow ABK, it's okay to swallow one of those others. imagine one of the consoles getting EA, THQ, Gearbox or Square as an exclusive. That'd suck massively for the other platform. Prior to this deal, we didn't know if such purchases would be allowed, but now there's no clear reason to block such smaller purchases.

That said, that could largely be because the FTC screwed up the legal battle more than the regulation wasn't deemed necessary. A different publisher challenged with better reference to the consumers, in particular pointing out that exclusivity requires the purchase of two nigh-identical boxes, might get them to block third-party publisher acquisitions.

 

[iroboto]

At that point there wasn't an arms race. Since then, Sony massively increased its acquisition rate. Knowing Sony felt a need to respond to the Zenimax buyout, ABK just cranks it up another couple of gears. But at that point, we didn't know if there was an regulation going to prevent a maximum sized purchase. This ABK deal says no, it really doesn't matter as every publisher is just a percentage of the whole market so is okay for acquisition. Given EA, Ubisoft, Square etc are smaller than ABK and it's okay to swallow ABK, it's okay to swallow one of those others. imagine one of the consoles getting EA, THQ, Gearbox or Square as an exclusive. That'd suck massively for the other platform. Prior to this deal, we didn't know if such purchases would be allowed, but now there's no clear reason to block such smaller purchases.

That said, that could largely be because the FTC screwed up the legal battle more than the regulation wasn't deemed necessary. A different publisher challenged with better reference to the consumers, in particular pointing out that exclusivity requires the purchase of two nigh-identical boxes, might get them to block third-party publisher acquisitions.

I disagree entirely. No one is going to keep buying third party publishers if it’s just going to result in lower profits over time. There is massive risk involved and there has to be growth and immediate return.

they are unlikely to keep buying up studios if they can’t grow the total TAM. Fighting over the same size of pie but spending billions to do it makes no business sense.

Shareholders would not agree with this.

 

[eastmen]

We're talking about the ongoing consolidation if the industry, not just ABK. This acquisition is setting a precedent for more and fewer large, independent publishers. Projecting forwards, we risk losing independent publishers which would result in fewer AAA titles as there's no meaningful way to get AAA title funding outside of large publishers.

In the short term but that may not be true in the long term. Like I said in my other post some of the companies that ABK has published games for are also backed by large corporations that they themselves have published games. Nick doesn't need ABK to publish a TMNT game or Sponge Bob game , they published a bunch on their own and can finance the majority of that.

What has ABK published in the last decade that wouldn't have been funded otherwise ?

 

[Shifty Geezer]

I disagree entirely. No one is going to keep buying third party publishers if it’s just going to result in lower profits over time.

All these publishers are profitable. Ergo buying them increases ones own profitability. MS buying ABK adds $7 billion a year revenue, plus increases adoption of their other services. Adding EA would add another $7 billion and increase market share and hardware sales and subscription services moreso. the more they buy, the more profits they make. That's how and why big companies become bigger.

Shareholders would not agree with this.

If there's no blowback from shareholders on MS spending on ABK, why would there be them buying SE or EA or whoever?

 

[iroboto]

All these publishers are profitable. Ergo buying them increases ones own profitability. MS buying ABK adds $7 billion a year revenue, plus increases adoption of their other services. Adding EA would add another $7 billion and increase market share and hardware sales and subscription services moreso. the more they buy, the more profits they make. That's how and why big companies become bigger.

If there's no blowback from shareholders on MS spending on ABK, why would there be them buying SE or EA or whoever?

but they aren’t profitable if you make their titles exclusive. Which runs counter to your point that we’re going to see an arms race if buying up publishers and that content only being available on their platform. It’s just not realistic. Recall the email during the FTC trial 2 years ago where Phil discussed wanting to give up Xbox to go after the mobile market? The console TAM is barely growing, which is why we increasingly see a push into the PC space. What’s the value in spending billions on a market that doesn’t return anywhere close to that amount, there are better investments for that money that could net higher returns. MS has money yes, but it’s not an infinite pit of money. There are limits to this and given how much has been spent already, it’s likely going to stop until they can prove what they’ve invested in already.

MS main push here for ABK was mobile. Call of Duty, they needed to own it because COD Mobile is one of the largest mobile games, they can’t go without it. The justification for the ABK is not COD, it’s mobile.

 

[Silent_Buddha]

How many new publishers producing AAA games have formed in the last ten years?

OK, it's just outside of 10 years (formed in 2011), but the Embracer Group just about fits that. And they've also been on a huge buying spree, although that might be coming back to bite them in the arse.

Keep in mind the Embracer group also includes other large publishers like THQ Nordic (formed in 2011, renamed to THQ Nordic after the THQ name was acquired by the Embracer Group). They also own Gearbox, the Saber Group and a bunch of other smaller publishers.

It was formed from the failing dregs of a former small time mostly indie/low AA publisher (Nordic Games). They're too small to have had a wiki entry written for them, so I'm not sure if the original Nordic Games (formed in the 1990s) ever released a AAA game.

Regardless, a prime example of a small independent publisher turning big time when it was given the opportunity (Nordic Games getting acquired by a non-gaming Businessman and transformed into a large AAA publisher) due to either a vacuum caused by a failed publisher or contraction in game publishing due to acquisitions by the larger publishers.

Speaking of Gearbox games, they were formed from former 3DRealms employees, started by making expansions for other games, transformed into a AAA studio, then got large enough that they become a small AAA publisher (with investment help from the Embracer Group), started to fail due to bad management (they made good games, but were not good at determining publishing risk vs. reward) and got acquired in 2021 by the Embracer Group.

Geee, that's a story that gets repeated often in the gaming industry. Almost like the gaming industry hates a vacuum. People leave a AAA developer and/or publisher, start up an indie studio making content for other games or small games of their own, grow over time into a AAA studio and then perhaps become a AAA publisher.

I mean history is rife with these situations. See, Interplay as an example. Just like Gearbox. Started by former employees of other AAA studios/publishers. Started off making games. Became a AAA publisher. Became one of the largest PC gaming publishers in the world. Eventually failed due to mismanagement and a too large company Ethos of funding new development startups to try to help them become successful.

There's a bunch of smaller publishers (not AAA) that have been formed in the past 10 years, who knows if one of those will eventually become a AAA publisher now that ABK is off the board.

If I were to try to take a bet, Raw Fury is a potential candidate for future AAA publisher. They've just rocketed up in terms of not only the number of games published but successful games published since their founding in 2015. It just depends on whether or not they want to take the financial risk of being a AAA publisher or not.

Of course, as Iroboto mentioned, ABK wasn't exactly funding many, if any AAA games that weren't already part of their core IP. So it's not like ABK existing or not existing was helping with the growth of AAA game studios around the world other than providing the seeds of future development studios via development talent leaving and forming a new studio.

For Activision, I think the only non-Activision core IP that was made in the past 10 years was Sekiro: Shadows Die Twice. For Blizzard <sound of crickets> nothing outside of Blizzard owned IP.

People and businesses that fail to learn from history are people and businesses that are generally doomed to fail.

The only way you stop the cycle of new developers/publishers taking the place of those that exit is to completely close off development of games to any new studios/publishers. Even if Sony and MS were to do that with the consoles, it'd just continue on PC, Mac, Linux, wherever there's a open development environment where a developer can distribute their title. And if that exists then there will always be someone that's willing to invest in them (become a publisher) in order to make money.

Regards,
SB

 

[Silent_Buddha]

So you're saying it's better that gaming becomes like regional food and instead of using digital tech to distribute all games to all platforms, it's better to have different boxes have different cultures and for people to have to own both, same as they have to fly around the world to sample different cuisine?

(BTW Champagne is available in my local supermarket. As is sushi.)


It's not. Those 'exclusives' (features) are caused by physical factors. OLED is proprietary to some manufacturers because there's only so many panels being made at whatever price they have to pay.

Looking at digital media, absolutely everything that can be platform agnostic is. Books, can read on any reader. TV and films, can stream on any device. I can stream Disney on Amazon and Amazon on Google and Netflix on everything. Music plays on every device - I can play Spotify on Windows or Mac or iOS and Android or TV OS.

There's no need nor particular physical limitation preventing games being cross platform, particularly when already being made cross-platform from cross-platform developers. For these developers to get swallowed up and then restricted to certain boxes is an artificial restriction of consumer options. It's a situation that doesn't currently exist in the industry and doesn't need to exist, so why would people be okay with it happening?? This is akin to France refusing to export Champagne and people having to fly to Champagne to buy it, and for Japan to ban sushi outside of Japan and people having to fly there to enjoy it. It's just a dumb concept! There's no sanity in taking stuff that loads of people can share in and reduce its availability.

Champagne can only be produced in that region of the world. IE - just like COD, assuming ABK is acquired by MS, would only be able to be produced by an MS Studio. Champagne, can be sold anywhere in the world similar to how COD will also, again assuming ABK is acquired by MS, be available on virtually any platform (rather than just PS and Xbox).

In that respect, it becomes very similar to regionally protected food, drink and alcohol products.

For example, there's a LOT of regionally protected Cheeses that can only be produced in those specific regions.

List of European cheeses with protected geographical status - Wikipedia

en.wikipedia.org

Also, while there's been massive consolidation in the food industry it hasn't led to there being less "choice" or variety of foods. Because industry hates a vacuum and, using the US as an example, all of those US food companies that got acquired or went out of business have been replaced either by new food startups or foreign food companies moving in to fill that void. So the end result of massive food industry consolidation? Very little change in the number or variety of product available and in many cases, it's actually expanded the variety of food available in Supermarkets because now we're seeing food items that were never widely available in the US.

IMO, I'm actually happy for consolidation of AAA studios/publishers because I generally find AAA games limited and too formulaic with the only new things incorporated being gameplay or ideas that have been used/proven in the indie/AA gaming scene. IE - the more consolidated the AAA market becomes, the more developers will leave to form their own studios and the number of actually interesting and fun games to play increases. That then filters back to AAA games so that people who turn their noses up at indie games can, after a few years, enjoy the gameplay that's been available for years to people that play a lot of indie games.

Win - Win.

There are rare exceptions, of course. There is still no one that does a Souls-like game as well as From Software.

Regards,
SB

 

[AmFreak]

but they aren’t profitable if you make their titles exclusive.

No profit != less profit. Less profit is true for every exclusive game, platform owners make games exclusive to push their platform, because they think the profit from extra users in their ecosystem will outweigh the profit of the lost sales from other platforms.

Which runs counter to your point that we’re going to see an arms race if buying up publishers and that content only being available on their platform. It’s just not realistic.

How can you claim that when exactly this is already happening with their other acquisitions.

Recall the email during the FTC trial 2 years ago where Phil discussed wanting to give up Xbox to go after the mobile market? The console TAM is barely growing, which is why we increasingly see a push into the PC space. What’s the value in spending billions on a market that doesn’t return anywhere close to that amount, there are better investments for that money that could net higher returns. MS has money yes, but it’s not an infinite pit of money. There are limits to this and given how much has been spent already, it’s likely going to stop until they can prove what they’ve invested in already.

You seem to confuse their console hardware as their platform when in reality it is Game Pass.

MS main push here for ABK was mobile. Call of Duty, they needed to own it because COD Mobile is one of the largest mobile games, they can’t go without it. The justification for the ABK is not COD, it’s mobile.

Yeah, no.
A little over 1/3 of AB's revenue was mobile when Ms announced to acquire them, so they would overpay in a biblical manner if it were about the mobile part. There is basically no worse way to spend $70B if you want to get into mobile. Ms also bought everyone and their neighbor in the last 5 years and all of these were console/pc devs, because they want to push their platform.

 

[Deleted member 11852]

OK, it's just outside of 10 years (formed in 2011), but the Embracer Group just about fits that. And they've also been on a huge buying spree, although that might be coming back to bite them in the arse.

The last instance being twelve years ago reaffirms the decreasing frequency of new AAA parties forming, which meshes with the kind of development numbers we're seen disclosed in past years.

There is no shortage of non-AAA games out there. The budgets required for AAA gaming are now so insane so having fewer independent publishers able to funnel that funding isn't a plus for the industry.

 

[Silent_Buddha]

There is no shortage of non-AAA games out there. The budgets required for AAA gaming are now so insane so having fewer independent publishers able to funnel that funding isn't a plus for the industry.

And I'd argue that's a prime reason for AAA gaming to either die or only be done by a very small number of publishers who can afford to do them. The cost of AAA game development is becoming almost unbearable for anyone but the console makers. If even ABK was looking for a way out of the video game market ... that says a LOT.

It doesn't help that many (obviously not all) AAA game consumers immediately criticize any game that isn't pushing the latest graphics tech or looks like a challenger for best graphics of the year. That then just incentivizes companies to spend even more of their budget on graphics rather than improving the actual gameplay. It also incentivizes AAA publishers to not experiment with non-established IP leading to stagnation in AAA gaming (I mean even Sony studios are just doing minor modifications to the UBIsoft open world formula).

Currently, I'm at about 1 or 2 AAA games a year being even remotely interesting enough to try (if I had to buy them, thank you Game Pass). And maybe 1 AAA game a year I find on the same level of enjoyment as I'd get out of one of any multiple indie/AA games I enjoy where the cost and consumer scrutiny is far lower and they're allowed to focus on the game rather than the graphics.

Hell, I took a chance on Diablo 4 recently because I love the series that started my liking for ARPGs (I remember hating the idea of an ARPG when Diablo was announced). But it's so much worse than other indie/AA ARPGs like PoE, Grim Dawn, or others that I've played.

I know there's people that still enjoy AAA games, and I'm glad for them. But I can't help looking at the current state of AAA game development and feeling like it's a cancer on the gaming world even if there's the occasional good AAA game.

Regards,
SB

 

[Deleted member 11852]

And I'd argue that's a prime reason for AAA gaming to either die or only be done by a very small number of publishers who can afford to do them. The cost of AAA game development is becoming almost unbearable for anyone but the console makers.

Yet he number of AAA games from parties other than Nintendo, Microsoft and Sony, has far exceeded their output.

For decades, independent publishers like Activision-Blizzard, CD Projekt Red, Crytek, EA, Ubisoft, Take Two (Rockstar), and Square Enix have collectively released more AAA games than console manufacturers. The whole 'problem' of marketing and console exclusivity cited by Microsoft during the current acquisiton underscores that point. The console manufacturer / independence ratio dropped with Microsoft's acquisition of Zenimax and it will drop further once the current acquisition is approved.

Which is my point. If your concern is the lack of AAA development, why would you advocate for further consolidation?

 

[see colon]

I think that is why this would really be the precedent. Under the Zenimax acquisition Microsoft presented the same narrative - that "it made no commercial sense" to make IP exclusive to Xbox - to all regulators.

Now it's known that was a nonsense, regulators are taking decisions on the basis that Microsoft probably won't support other platforms beyond any legal commitments they feel makes their acquisition look better in the short term. ¯\_(ツ)_/¯

Fundamentally, the value of an IP is intrinsically tied to what revenue it can generate so if Microsoft want to restrict IPs from one or two console platforms (Nintendo and Sony), then lack of revenue will defect devalue those IPs. Not that I think Microsoft care, these acquisitions aren't about long-term investments, they're to bolster the appeal of Xbox, whatever that is - console, Windows app, cloud delivery.

What you are describing is that the precedent of Microsoft's Zenimax acquisition should be used to determine if the (for now) proposed Activision acquisition should go forward. Whish is exactly the point. The Activision acquisition isn't setting the precedent. Zenimax did it already.

At that point there wasn't an arms race. Since then, Sony massively increased its acquisition rate. Knowing Sony felt a need to respond to the Zenimax buyout, ABK just cranks it up another couple of gears.

It was an arms race. Microsoft purchased Zenimax because Sony was trying to buy their way into making PS5 exclusive the lion's share of Bethesda's output for a generation.

 

[stu11]

It was an arms race. Microsoft purchased Zenimax because Sony was trying to buy their way into making PS5 exclusive the lion's share of Bethesda's output for a generation.

Thats not accurate though. Sony was likely negotiating a timed exclusive deal with Bethesda for Starfield, just like they did with Deathloop and Ghostwire: Tokyo, both of those games appeared on Xbox a year later. That is not for a generation like you are trying to portray.

 

[eastmen]

What you are describing is that the precedent of Microsoft's Zenimax acquisition should be used to determine if the (for now) proposed Activision acquisition should go forward. Whish is exactly the point. The Activision acquisition isn't setting the precedent. Zenimax did it already.

It was an arms race. Microsoft purchased Zenimax because Sony was trying to buy their way into making PS5 exclusive the lion's share of Bethesda's output for a generation.

Shhhh they are going to come out and explain why sony doing something is different than MS doing the exact same something. It's always rearranging deck chairs on the titanic.

It always boggles my mind when someone can try and defend Sony a company that literally bought a publisher to enter this market and has bought over a dozen developers to sure up their own first party offers by acting like it was some how different. When sony used their money to enter the market, their connections in the CE/music world to load up the playstation with tech tehy made and could create cheaper than the other players could buy and forced standard after standard on us that now some how they are the good guys of the industry.

It's one of the most pathetic things I have seen on gaming sites and twitter and to be frank even these forums.

 

[stu11]

Shhhh they are going to come out and explain why sony doing something is different than MS doing the exact same something. It's always rearranging deck chairs on the titanic.

It always boggles my mind when someone can try and defend Sony a company that literally bought a publisher to enter this market and has bought over a dozen developers to sure up their own first party offers by acting like it was some how different. When sony used their money to enter the market, their connections in the CE/music world to load up the playstation with tech tehy made and could create cheaper than the other players could buy and forced standard after standard on us that now some how they are the good guys of the industry.

It's one of the most pathetic things I have seen on gaming sites and twitter and to be frank even these forums.

Oh no, here we go again another TEH EV1L S0NY!!! story.

 

[cheapchips]

They should never be forgiven for buying Psygnosis and dooming the CD32.

 

[eastmen]

They should never be forgiven for buying Psygnosis and dooming the CD32.

I'm still bitter about them blocking Tomb Raider 2 on the saturn. But hey someone will jump in and tell me about the long long history they had with crystal dynamics and capcom and why its okay that they paid to make those games exclusive even though they were in the industry for a few years at best that way. Or how when Sony uses resources from other parts of the company and Ken tells sega they should give up and become third party because Sega has to buy from cd drives and chips from nec and hatachi but Sony can just make them themselves that its apparently okay cause its Sony and its totally different than Ms using their other ventures to fund their expansion into video games.

 

[Nesh]

Oh brother. Still holding on to adolescent console war fanboy butt hurt feelings of 26 years ago. I dont believe for some this is still the driving force of their current arguments.

 

[Shifty Geezer]

Shhhh they are going to come out and explain why sony doing something is different than MS doing the exact same something. It's always rearranging deck chairs on the titanic.

If Sony were using exclusivity to block content, that's a negative, and I think most here agree on that actually. Although presumably it was just a timed exclusive deal? I don't think Sony is in a financial position to drop a few hundred million on an exclusive.

It always boggles my mind when someone can try and defend Sony a company that literally bought a publisher to enter this market

Which publisher did they buy? AFAIK they only bought one studio, Psygnosis. And MS bought Rare, and no-one complained. No-one complains about a company entering the market securing some starter-deals.

.... When sony used their money to enter the market, their connections in the CE/music world to load up the playstation with tech tehy made and could create cheaper than the other players

You're just making stuff up now. Sony operates it internal divisions as separate corporations. Gaming couldn't get hardware cheap as the hardware group would not want to reduce its own profitability. Howard Stringer wanted to change that to vertical integration and corporate synergy. AFAIK that never happened and Sony gaming has to negotiate with Sony electronics to buy components same as any other supplier. If there is any advantage, it's only preferential availability and not in terms of cost.

And even then, Sony was a hardware company at that point! As a CE manufacturer, they obviously could lean on their strengths. What has that got to do with buying in publishers or studios en masse? What Sony hypocrisy is on show towards MS? I don't see anyone complaining about MS leveraging DirectX, or having an unfair advantage for network developments.

And let's not forget Sony entered the market in partnership with Nintendo and were then betrayed. PlayStation only released as a means to exact revenge! Also that a partnership with SEGA for the next-gen platform was declined by both parties.

could buy and forced standard after standard on us that now some how they are the good guys of the industry.

It has nothing to do with 'good guys' and 'bad guys'. Sony has done plenty of wrong too and come under criticism as a result. Each good and bad point any corporation has done can be discussed on its merits and comparative place in the market. Or are you saying because Sony required Memory Stick on PSP (MemStick was heavily criticised), MS should be allowed to do whatever it wants without people discussing and comparing the negatives of MS's actions??