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

[eastmen]

Independent publishers don't need to make such statements, Microsoft are being pressed for comment by media due the action of multiple market regulators. Independent publishers are generally looking for the greatest engagement and return, however Microsoft's motivations are different.

Why would it make "zero business sense" to keep Call of Duty off PlayStation, but it seemingly does make business sense to keep Starfield and Elder Scrolls VI off PlayStation? What is the "business sense" exactly? If Microsoft are chasing sales revenue then not releasing titles on a big platform makes no business sense.

Let's not be naive, Microsoft are spending tens of billions of dollars (almost $100bn at this point) on acquisitions so anybody who thinks they aren't willing to lose a few hundred hundred million dollars in lost revenue needs to replace their calculator.

Starfield is a new IP and elder scrolls is years away from release could be half a decade away. COD is still being released. Why would any company commit to releasing titles on a platform ? That negates any negotiation power they would have.

This is a very dangerous game for sony to play. I am sure going forward MS will push for every company that Sony purchases that has any 3rd party presence to not be approved

 

[Deleted member 11852]

Most obvious difference is COD has a big established multi player base to the game. Not that I personally have an issue them pulling COD, but I can appreciate why they wouldn't.

A big base that Microsoft would like to be thinking of buying an Xbox, or GamePass sub. The entirety of Acitivision-Blizzard brought in $8bn yesterday. Revenue, not profit. Do you think Microsoft really care if they lose tens of millions of dollars on revenue from PlayStation owners? They're literally spending tens of billions of dollars to make their platform more appealing.

Starfield is a new IP and elder scrolls is years away from release could be half a decade away.

What do that have to do with leaving money on the table? Where is the business sense?

This is a very dangerous game for sony to play. I am sure going forward MS will push for every company that Sony purchases that has any 3rd party presence to not be approved

And they should. Sony are subject to the same scrutiny over their proposed acquisition of Bungie.

 

[Jay]

A big base that Microsoft would like to be thinking of buying an Xbox, or GamePass sub. The entirety of Acitivision-Blizzard brought in $8bn yesterday. Revenue, not profit. Do you think Microsoft really care if they lose tens of millions of dollars on revenue from PlayStation owners? They're literally spending tens of billions of dollars to make their platform more appealing.

My main point about multi player base is, that's what you want with that game.
Making it xbox exclusive you would be cutting that down a huge amount even if you gain a few subs.

The point is that they will be making many other games exclusive. To bring in the subs.

COD is big, but its not the be all end all for MS.

 

[Deleted member 11852]

My main point about multi player base is, that's what you want with that game.
Making it xbox exclusive you would be cutting that down a huge amount even if you gain a few subs.

This is a fair point. I had to google it because I thought Call of Duty did not have cross-platform multiplayer (CPMP) but it did as of this year (2022) Call of Duty was even wildly more popular (sales) before CPMP so losing one platform will not massively impact PC and Xbox users - that's still a pretty massive user base.

If I were Microsoft, I reckon I'd be willing to take that risk. If it doesn't work, you can always bring Call of Duty back to PlayStation. But what you don't want is to be committed to doing it. This is why they're dragging this out.

 

[Silent_Buddha]

Independent publishers don't need to make such statements, Microsoft are being pressed for comment by media due the action of multiple market regulators. Independent publishers are generally looking for the greatest engagement and return, however Microsoft's motivations are different.

Why would it make "zero business sense" to keep Call of Duty off PlayStation, but it seemingly does make business sense to keep Starfield and Elder Scrolls VI off PlayStation? What is the "business sense" exactly? If Microsoft are chasing sales revenue then not releasing titles on a big platform makes no business sense.

Let's not be naive, Microsoft are spending tens of billions of dollars (almost $100bn at this point) on acquisitions so anybody who thinks they aren't willing to lose a few hundred hundred million dollars in lost revenue needs to replace their calculator.

So, there's many factors at play

• With as large of an investment as it is going to take to purchase Activision-Blizzard, a healthy revenue stream is at least as important if not more important than any potential benefits to be derived from exclusivity.
  • This is almost an order of magnitude larger than the Bethesda purchase and thus the need for a healthy revenue stream is significantly greater.
  • MS can more easily absorb revenue reductions from the Bethesda sale than from the Activision-Blizzard sale.
  • Look for smaller titles in the Activision-Blizzard IP stable to be made exclusive while the big hitters (especially COD) remain multiplatform.
• Most of the money with COD is made via DLC and microtransactions.
  • If you have exclusive DLC, that will draw players to that platform without needing the game itself to be exclusive.
  • MS benefitted from this with the X360 while Sony benefitted from this with the PS4 and PS5.
  • Basically you get most of the benefits of exclusivity without the player backlash of removing the game from a platform.
• MS generated a lot of bad will among gamers in the XBO generation and while they've done a remarkable job turning things around, they still aren't out of the weeds.
  • This ties into the above. You won't face nearly as much gamer backlash if you have exclusive COD DLC as you would if you remove the entire game from a platform.
    • IMO, you'll get a lot more gamers to buy into an Xbox for the exclusive DLC than you will if you removed the game from PlayStation consoles.
    • Reasoning is that if you remove it, you risk angering many of the people that have COD on PlayStation so much that they will swear off both the series (hurting PC sales as well) and Xbox.
    • People are already used to one console or the other having exclusive DLC, so that's business as usual. Annoying but diehard COD players are then more likely to naturally migrate to the console with the exclusive DLC.
      • IMO, it's good enough for MS if the majority of COD players are playing on Xbox versus PlayStation. Basically the reverse of the current situation.
      • Mindshare will be MS platform specific while they still generate significant revenue on other platform(s).
• Game Pass. Just having COD on Game Pass regardless of what other platforms it is on is a win. Especially if it's available on Game Pass but not available on PlayStation Now.

Regards,
SB

 

[Deleted member 11852]

So, there's many factors at play

There are, and revenue is not an important one. For years now Microsoft have been chasing the same money-printing model of Google by collecting and monetising data. Getting people into Microsoft's ecosystem seems to be their goal "at any cost".

Activision-Blizzard's net profit last year was $2.6bn, which is a 20+ year return on Microsoft's $70bn offer - assuming Microsoft do not radically change Activision-Blizzard's IP/platform output. This is definitely not about traditional revenue and profit streams. This is why Microsoft have so many 'reward' schemes for using their services.

 

[Silent_Buddha]

There are, and revenue is not an important one. For years now Microsoft have been chasing the same money-printing model of Google by collecting and monetising data. Getting people into Microsoft's ecosystem seems to be their goal "at any cost".

Activision-Blizzard's net profit last year was $2.6bn, which is a 20+ year return on Microsoft's $70bn offer - assuming Microsoft do not radically change Activision-Blizzard's IP/platform output. This is definitely not about traditional revenue and profit streams. This is why Microsoft have so many 'reward' schemes for using their services.

Keep in mind that operating expenses should be reduced somewhat due to redundancy in some departments with the purchase. Their operating expenses for the 12 months ending June 30, 2022 was 5.322 billion USD. For example, it's unlikely Bobby Kotick or anyone put in charge of that division will be making 600 million USD a year after the acquisition. It wouldn't be out of line if operating expenses were reduced by greater than 1 billion USD after the purchase.

It's still going to take a significant amount of time to see a return on investment, but MS are still very much a business and still very much focused on return on investment.

Microsoft just has the luxury of playing a longer game than most other companies WRT how quickly they want to see that return before investors on the Board of Directors start making things difficult.

Regards,
SB

 

[Deleted member 11852]

Keep in mind that operating expenses should be reduced somewhat due to redundancy in some departments with the purchase. Their operating expenses for the 12 months ending June 30, 2022 was 5.322 billion USD. For example, it's unlikely Bobby Kotick or anyone put in charge of that division will be making 600 million USD a year after the acquisition. It wouldn't be out of line if operating expenses were reduced by greater than 1 billion USD after the purchase.

There will be adjustments, some positive, some negative. It has been widely reported - and not challenged by Microsoft - that Call of Duty may no longer be an annual franchise so it remains to be seen what this could mean for one of the publisher's biggest revenue drivers. We know what Call of Duty costs to make across multiple teams but will Call of Duty hold it's appeal if it's not refreshed every year?

I have zero insight as competitive online gaming is not my thing, but they sure are an objectionable bunch and I don't know what the gaming world would be like if they didn't have something to complain about on a regular basis.

 

[eastmen]

A big base that Microsoft would like to be thinking of buying an Xbox, or GamePass sub. The entirety of Acitivision-Blizzard brought in $8bn yesterday. Revenue, not profit. Do you think Microsoft really care if they lose tens of millions of dollars on revenue from PlayStation owners? They're literally spending tens of billions of dollars to make their platform more appealing.


What do that have to do with leaving money on the table? Where is the business sense?


And they should. Sony are subject to the same scrutiny over their proposed acquisition of Bungie.

What money on the table ? You'd have to figure out how many users would migrate to another platform to play the game. how many will migrate to a platform that doesn't take a 30% cut and then the cost of supporting said platform. Then you also have game pass growth to consider into the equation.

For Skyrim

---

During the first day of release, Steam showed over 230,000 people playing Skyrim concurrently.[125] Within two days of the game's launch, 3.4 million physical copies were sold. Of those sales, 59% were for the Xbox 360, 27% for the PS3, and 14% for the PC.[126]

It seems that Skyrim favors the xbox platform with almost 60% of copies sold. PS3 only accounted for 27%. MS would loose 30% of revenue generated from that title on the sony platform. So for MS they have to factor in that Starfield is a new IP. They had to factor in the current situation of there being only X amount of next gen consoles that would run it. then they factor in that previous bethesda rpgs faired better on the xbox platform.

I am sure MS is looking at sales data of all games in their purchases to see what makes sense to make multiplatform and what makes sense to keep as a driver of game pass and the xbox ecosystem.

I expect Elder scrolls 6 to be a next gen game at this point most likely hitting in 2026. So at that point it would make sense for MS to use it as a driver for growth of the next gen xbox release as well as continued growth for game pass.

I am sure its the same for sony. Why are they leaving money on the table by not releasing Sony developed games on the switch and xbox but are going to continue releasing and supporting bungie games ?

 

[eastmen]

Keep in mind that operating expenses should be reduced somewhat due to redundancy in some departments with the purchase. Their operating expenses for the 12 months ending June 30, 2022 was 5.322 billion USD. For example, it's unlikely Bobby Kotick or anyone put in charge of that division will be making 600 million USD a year after the acquisition. It wouldn't be out of line if operating expenses were reduced by greater than 1 billion USD after the purchase.

It's still going to take a significant amount of time to see a return on investment, but MS are still very much a business and still very much focused on return on investment.

Microsoft just has the luxury of playing a longer game than most other companies WRT how quickly they want to see that return before investors on the Board of Directors start making things difficult.

Regards,
SB

There were 25m game pass subscribers as of Jan. Its hard to say the average cost but its $10 for game pass and $15 for ultimate. So lets just go with an average cost of $10 a month. So $10x12= so game pass will bring in $120 a year per user. $120x25m = 2.4B a year. Now the question is how many more subs will Acitivsion/ blizzard bring ? For every 1m more people subscribe to game pass you are looking at another 120m a year in profit from game pass at the minimum.

 

[Deleted member 11852]

What money on the table ?

By not selling games (Starfield, Elder Scrolls VI) on a large platform base willing to buy it.

For Skyrim - It seems that Skyrim favors the xbox platform with almost 60% of copies sold. PS3 only accounted for 27%.

Did you seriously have to use figures from two consoles generations back? Because that is some amazing shit. Would you mind posting the same breakdown for the PS4 vs Xbox One Special Edition? Or even the current generation Anniversary release?

 

[eastmen]

By not selling games (Starfield, Elder Scrolls VI) on a large platform base willing to buy it.



Did you seriously have to use figures from two consoles generations back? Because that is some amazing shit. Would you mind posting the same breakdown for the PS4 vs Xbox One Special Edition? Or even the current generation Anniversary release?

Do you have sales figures from another more recent elder scrolls ?

Outside of that the PS3 and Xbox 360 were more even in terms of install base like the ps5/xbox series are now. Ps4 era sony was outselling MS 2:1 in the console market.

 

[Jay]

There will be adjustments, some positive, some negative. It has been widely reported - and not challenged by Microsoft - that Call of Duty may no longer be an annual franchise so it remains to be seen what this could mean for one of the publisher's biggest revenue drivers. We know what Call of Duty costs to make across multiple teams but will Call of Duty hold it's appeal if it's not refreshed every year?

I have zero insight as competitive online gaming is not my thing, but they sure are an objectionable bunch and I don't know what the gaming world would be like if they didn't have something to complain about on a regular basis.

I'm pretty sure MS hinted that there's a possibility of it not being a yearly release could be possible.
But I'm also sure that AKB have also said that this year also.

What would you like to hear MS say about COD?
Sorry if you'll be repeating yourself, I've not gone back through the pages.

All this discussion (for obvious reasons) around COD and I don't even see that being the primery reason for purchase of AKB, not even second, just a very nice bonus.

 

[SmooTh]

#1 Mobile + MTX
Blizzard back to good ol days will probably make some $$$ in Asia (especially in Korea)

 

[eastmen]

#1 Mobile + MTX
Blizzard back to good ol days will probably make some $$$ in Asia (especially in Korea)

I thought Korea is very much a pay to win market ?

 

[JPT]

There are, and revenue is not an important one. For years now Microsoft have been chasing the same money-printing model of Google by collecting and monetising data. Getting people into Microsoft's ecosystem seems to be their goal "at any cost".

I never thought of Game pass from that angle, well then I guess its making money already.

These guys (https://www.plume.com/) said at conference that each user/consumer created 30K USD in their ecosystem. And I can not for the life of me figure out what data they collect which has this value and whom they sell it to. But if that figure holds up, then if MS gets those 25M Game pass users/subscribers to use their other services to, I do see how they can subsidise Game pass forever. No idea what the cost per user is for MS for Game pass, but I am sure 30K covers a couple of months.

Crap I am in the wrong business, need to spy on people and sell their data. Hmm a coworker is going to a Palantir sponsored conference next month, need to join now

 

[Deleted member 11852]

I'm pretty sure MS hinted that there's a possibility of it not being a yearly release could be possible. But I'm also sure that AKB have also said that this year also.

I've only seen be attributed to Microsoft. Under Activision-Blizzard, they're only added more and more resource to Call of Duty to ensure they get a release out as often as possible.

What would you like to hear MS say about COD? Sorry if you'll be repeating yourself, I've not gone back through the pages.

My enjoyment of Call of Duty started and ended with the Modern Warfare trilogy on PS3/X360! Single player campaign FTW! This isn't something I personally care about, as I said further up the chain, these deeper investigations caught me by surprise because I hadn't really appreciated how massive Call of Duty was. I'm trying to add some balance to this narrative perpetuated by some that this is some kind of attack on Microsoft, and how it's so unfair on Microsoft even though every big company that makes a sizeable acquisition has togo through the same process.

I get where Sony are coming from, but it's also in Sony's interest to make as big a deal about this as possible - to leverage the situation. All companies do it, where saw Microsoft weigh on the Apple/Epic trial taking potshots at Apple, Sony and other competitors left right and centre. That's what companies do; leverage any situation to your advantage. It's a business, and a lot of jobs and money are at stake.

As somebody who games on all the platforms I get to enjoy all the exclusives, but some of the things posted in this thread are nutty.

 

[eastmen]

https://twitter.com/x/status/1570557438902042626

Phil Spencer: "I can never say that we ever won't do something, but... I can definitely say today we have no plans to raise the price of our consoles. We think in a time where our customers are more economical challenged than ever, we don't think that would be the right move."

"Are you still looking to acquire more studios, make more gaming investments, or are you pressing pause after Activision Blizzard"?

Phil: "I don't think we get to press pause on anything. (...) We want to deliver great content to our players and we gonna remain active."

• More work to do in Asia
• Sony/Tencent ahead of Xbox yet also investing heavily
• Exclusivity is a backbone of the industry, still wants to reach more players with the Xbox ecosystem being on Console, PC, Cloud

Source: https://twitter.com/klobrille

They are going to keep hammering home that the ABK deal only puts them in third place

 

[Deleted member 11852]

They are going to keep hammering home that the ABK deal only puts them in third place

Microsoft are in third place now, so they could save that $70bn. Who are they afraid will displace them from third place into fourth, Ouya? I've lived on this ball of dirt orbiting the bright fiery orb for quite a few years and I have become accustomed to things changing. If Microsoft really think that spending $70bn will not change their market position, then that really would make "zero business sense"(tm).

Is Phil Spencer the worst executive around? No, of course he isn't. But he is a man who speaketh with a forked tongue. You can't both be convinced that "exclusivity is a backbone of the industry" and be committed to less exclusivity whilst making previously-announced cross platform games like Starfield console exclusive. Because you're saying one thing, and doing another.

Just an idea.. but perhaps we should stop listening to these highly-paid company executives? It feels like they're all trying to peddle a particular narrative that really only exists to support their company's strategic business interests. I'm beginning to feel like none of them care about gamers at all.

 

[Jay]

I've only seen be attributed to Microsoft. Under Activision-Blizzard, they're only added more and more resource to Call of Duty to ensure they get a release out as often as possible.

Quick google, seems that there won't be a release next year.
So I guess AKB will see how just releasing premium content works for them.
They sell a lot, but also costs a huge amount to make and with declining sales they need to reevaluate.

Microsoft even though every big company that makes a sizeable acquisition has togo through the same process.

I get where Sony are coming from, but it's also in Sony's interest to make as big a deal about this as possible - to leverage the situation. All companies do it, where saw Microsoft weigh on the Apple/Epic trial taking potshots at Apple, Sony and other competitors left right and centre. That's what companies do; leverage any situation to your advantage. It's a business, and a lot of jobs and money are at stake.

I totally agree, nothing wrong with the scrutiny it will and should get by regulators.
Just that sony's responses seem very bad faith and even though we know every company is looking out for themselves, they haven't said how it's bad for competition just them.

If Microsoft really think that spending $70bn will not change their market position, then that really would make "zero business sense"(tm).

It doesn't mean they will move from being in third to first or even second, may mean they close up the gap though.
So it does make sense.