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

[wco81]

I just listened to a podcast.

Says that this acquisition could help MS compete better against Google and FB in digital advertising. Activision includes the maker of Candy Crush, which had over $2 billion in revenues last year, most from ads. I presume it also has a lot of micro transactions too.

 

[Nesh]

This whole debate about Microsoft's acquisitions being bad just seems like a waste of time. It's a free market economy. If people get better services or content out of the deal quicker & faster than growing them organically who cares? I certainly don't & I'm sure most people don't either. Companies better "git gud".

Tommy McClain

Though thats not how real economics work. Thats why there has been a long debate about Keynesian economics, we have Regulatory Economics, anti-trust laws etc. Because that "free-market" efficiency and that it works always at the consumer's favor all the time has been proven to be nothing more than a theory and political mambo jumbo.

 

[cheapchips]

I don't know a lot about King/Candy Crush, other than it being a money maker. I just assume it's monetisation is on the more despicable side, being a successful mobile game, which might become an issue once it's part of MS

 

[Malo]

which might become an issue once it's part of MS

What's the thought behind that? I don't see anything changing for the King side of the business, other than trying to make more money.

 

[cheapchips]

What's the thought behind that? I don't see anything changing for the King side of the business, other than trying to make more money.

Relatively speaking, MS are generally opposed to shitty monetisation practices. Does King/Candy crush still make that sort of money without fleecing whales and semi gambling like behaviour?

 

[Malo]

Relatively speaking, MS are generally opposed to shitty monetisation practices. Does King/Candy crush still make that sort of money without fleecing whales and semi gambling like behaviour?

I'm sure King has many games with gambling mechanics and targeted at whales.

Other games in ABK not limited to mobile have a lot of those types of mechanics. I'm sure MS is counting on those types of revenues to justify the massive price of purchase.

MS also counts of a lot of micro transactions in Game Pass to bring in a lot more income and pay for the games they add to it.

I really don't see MS being in any way ethical with any games coming over from ABK.

 

[BRiT]

I really don't see MS being in any way ethical with any games coming over from ABK.

I don't see Microsoft having much of a hands-on approach outside of replacing top tier leadership and even with that it'll probably start with removing Kotik and lettings the current directors continue directing and running their respective pieces for the first year or so before doing any additional moves.

 

[cheapchips]

MS also counts of a lot of micro transactions in Game Pass to bring in a lot more income and pay for the games they add to it.

I really don't see MS being in any way ethical with any games coming over from ABK.

I deliberately used 'relatively speaking'. Microtransactions are very different to semi-gambling practices.

..but, yes, I'm sure "It's not us! We just happen to own them, but we could do better..." will be wheeled out when they face criticism.

 

[Silent_Buddha]

Mergers and acquisitions are not unique to the videogames industry. What makes the last couple of years different is the number, size and calibre of the independent studios that Microsoft have expressed an interest in acquiring. I cannot think of anything remotely like such consolidation in any other industry.

You don't have to look too far back other than the PC gaming industry of the 90's and 2000's.

CUC (Vivendi Games) went on a purchasing spree. They bought Sierra Online, Blizzard, Massive Entertainment, among others. Sierra Online alone was 1.5 billion USD in 1996. That was absolutely gigantic at the time. Somewhat amusingly in that same deal they also acquired Davidson & Associates who owned Blizzard entertainment, that was combined with the Sierra Online acquisition for a total of 1.8 billion USD.

Considering the size of the PC market at the time that's roughly the equivalent of MS (in the current games market with a publisher publishing on multiple platforms) acquiring a publisher that's larger than Bethesda and smaller than Activision Blizzard in terms of impact to the gaming industry. It sent seismic shockwaves through the PC industry at the time. Sierra Online was not a small publisher at the time, they were one of the big boys (in terms of publishing clout in the 90's probably similar to or higher than UBIsoft today).

Let's not even go into EA's massive consolidation of the gaming industry. They put MS to shame with their history of acquisitions. Origin, Westwood Studios and all of Virgin Interactive's NA operations, Bullfrog, and a whole host of prolific developers. From 1994 to 2012, they purchased a minimum of 1 publisher or developer a year with some years having 3-4 acquisitions during that timeframe.

The acquisitions in the 1990's were particularly hurtful to the PC industry because there were significantly fewer games developers than exist today so each acquisition impacted the games industry significantly more than anything MS has done up to this point. The Activision-Blizzard acquisition, however, likely trumps any previous single gaming industry acquisition that I can think of.

I fully expect to see more acquisitions by Netease, Tencent, MS, Sony, and others as AAA games publishers and developers attempt to get out of the game publishing/development industry due to rapidly increasing cost of development (both in USD and time). If they can't find a buyer, I fully expect we'll see some developer closures and potentially even a publisher or two going bankrupt.

Regards,
SB

 

[Deleted member 11852]

I don't see Microsoft having much of a hands-on approach outside of replacing top tier leadership and even with that it'll probably start with removing Kotik and lettings the current directors continue directing and running their respective pieces for the first year or so before doing any additional moves.

It would also be slightly nuts for Microsoft to can profitable ventures. I'm not into the type of games that King (indeed, many) mobile developers are churning out that make money but they do make money and all of these companies are businesses. I'm sure I read Sony were looking at the mobile market and Nintendo have dabbled a little as well. Why wouldn't go chase the absurd amount of money pouring through the iOS and Google Play stores.

To put tings in perspective, Apple's revenue from games apps on iOS dwarfs Nintendo, Microsoft and Sony put together and that's kind of crazy. What is that number? In 2021 it was $85bn - of which Apple would ave taken a third cut.

Let's not even go into EA's massive consolidation of the gaming industry. They put MS to shame with their history of acquisitions. Origin, Westwood Studios and all of Virgin Interactive's NA operations, Bullfrog, and a whole host of prolific developers. From 1994 to 2012, they purchased a minimum of 1 publisher or developer a year with some years having 3-4 acquisitions during that timeframe.

If you look at the combined revenue of EAs acquisitions, number of studios or money spent - adjusted for inflation, I think you may be shocked at how much Microsoft have left others trailing in the dust. The reason it's such massive news is because it's literally unparalleled. Minecraft seemed nuts at $4bn, Zenimax was eye-opening at $7.5bn but Activision-Blizzard is huge.

If this goes through, this is will in the top fifteen largest corporate acquisitions of all time and most of those include chemicals, pharmaceuticals and telecoms - industries that dwarf gaming in terms of profits and consumer reach.

 

[Silent_Buddha]

If you look at the combined revenue of EAs acquisitions, number of studios or money spent - adjusted for inflation, I think you may be shocked at how much Microsoft have left others trailing in the dust. The reason it's such massive news is because it's literally unparalleled. Minecraft seemed nuts at $4bn, Zenimax was eye-opening at $7.5bn but Activision-Blizzard is huge.

If this goes through, this is will in the top fifteen largest corporate acquisitions of all time and most of those include chemicals, pharmaceuticals and telecoms - industries that dwarf gaming in terms of profits and consumer reach.

I think you are doing EA's acquisitions a disservice, especially in the 1990's and early 2000's. What you should be doing is comparing the size of the acquisition to the size of the gaming market. In particular the affected gaming markets.

That will then be more illustrative of the disruptive effect they had on the relative industries.

Take Westwood Studios, for example. Yes, when adjusted for inflation its purchase price was a fraction of the Bethesda purchase price, but then the PC gaming market was an even smaller fraction of today's gaming market. In other words, Westwood Studio's share of the PC gaming market was likely far larger than Bethesda's share of the PC, PS and Xbox gaming markets. Thus the impact from that purchase on the PC games market was at least as large if not larger than the impact of Bethesda's purchase on the PC, PS, and Xbox gaming markets.

If you look only at pure USD value of a purchase and ignore all other market factors, then yes, something like Bethesda's buyout looks massive. But if you look at it in the context of how it affects the industry that they are part of, it's not that large compared to historically impactful purchases.

Regards,
SB

 

[Deleted member 11852]

I think you are doing EA's acquisitions a disservice, especially in the 1990's and early 2000's. What you should be doing is comparing the size of the acquisition to the size of the gaming market. In particular the affected gaming markets.

Mate, I can't remember what I had for breakfast! But I'd be interested to see your take.

That will then be more illustrative of the disruptive effect they had on the relative industries. Take Westwood Studios, for example. Yes, when adjusted for inflation its purchase price was a fraction of the Bethesda purchase price, but then the PC gaming market was an even smaller fraction of today's gaming market. In other words, Westwood Studio's share of the PC gaming market was likely far larger than Bethesda's share of the PC, PS and Xbox gaming markets.

I would welcome some black and white numbers, which it sounds like you've already done some work on - which I don't want to repeat and I'm sure nobody else wants to either. In the 1990s the entire videogame industry was smaller, even when there were more console hardware options. A point I made above was that Microsoft do look like they are focussing on the console space. Right now Microsoft could put a whole bunch of their first party titles in PC GamePass but they haven't. If there are reasons for this, they aren't clear to me but it's clear to see but when you look what Microsoft own but which isn't included to download and install on GamePass PC - only streaming. It feels like they have different strategies.

Thus the impact from that purchase on the PC games market was at least as large if not larger than the impact of Bethesda's purchase on the PC, PS, and Xbox gaming markets.

I had to look up Westwood's games because they made no impact on me at all. Perhaps this is more anecdotal? Numbers would be good though!

 

[eastmen]

I'm sure King has many games with gambling mechanics and targeted at whales.

Other games in ABK not limited to mobile have a lot of those types of mechanics. I'm sure MS is counting on those types of revenues to justify the massive price of purchase.

MS also counts of a lot of micro transactions in Game Pass to bring in a lot more income and pay for the games they add to it.

I really don't see MS being in any way ethical with any games coming over from ABK.

Out of curiosity is there an example you can bring up of microsoft being unethical in regards to microtransactions vs activision

 

[Malo]

Out of curiosity is there an example you can bring up of microsoft being unethical in regards to microtransactions vs activision

No I'm not sure there is, and that's not the point. I'm unsure where you're coming from sorry.

 

[eastmen]

No I'm not sure there is, and that's not the point. I'm unsure where you're coming from sorry.

I am just seeking clarification on this "I really don't see MS being in any way ethical with any games coming over from ABK." from your previous post. Why don't you see ms being ethical with any games coming over from ABK ? I am assuming it has to do with the microtransaction as that is what the rest of your post discusses.

I had just assumed that there was a reason why you didn't see ms as being ethical with microtransactions ?

 

[Malo]

I am just seeking clarification on this "I really don't see MS being in any way ethical with any games coming over from ABK." from your previous post. Why don't you see ms being ethical with any games coming over from ABK ? I am assuming it has to do with the microtransaction as that is what the rest of your post discusses.

I had just assumed that there was a reason why you didn't see ms as being ethical with microtransactions ?

I just don't see them changing anything from ABK, so not being proactively ethical and changing anything from ABK.

 

[eastmen]

I just don't see them changing anything from ABK, so not being proactively ethical and changing anything from ABK.

Did you find what activision is doing as unethical ?

 

[PSman1700]

PC gaming market was an even smaller fraction of today's gaming market

Not that PC gaming is small today. But yea, it was smaller back then and i completely agree with all of your post. People need to understand that MS practically saved ACTVI from going extinct seeing the direction it was going.

 

[Silent_Buddha]

I had to look up Westwood's games because they made no impact on me at all. Perhaps this is more anecdotal? Numbers would be good though!

Yeah, they were big into RTS and to a somewhat lesser extent CRPGs. Both relatively large market segments for the PC games industry.

The fun part with coming up with numbers, especially from the 90's is that much of that information wasn't widely made available on the internet so even something like the Archive.org may not be able to pull anything up from that. I also threw away almost all of the industry mags and papers that I had back in the 2000's.

Just a quick bit from Wikipedia however has them stating that at the time of Westwood Studio's acquisition they represented ~5-6% of the entire PC game market. It was considered a massive pickup by EA at the time. RTS at the time was about as large a market (if not larger) as FPS games. Acquiring Command and Conquer in the 90's was the equivalent of buying the Battlefield franchise or even the COD franchise today.

Regards,
SB

 

[eastmen]

Yeah, they were big into RTS and to a somewhat lesser extent CRPGs. Both relatively large market segments for the PC games industry.

The fun part with coming up with numbers, especially from the 90's is that much of that information wasn't widely made available on the internet so even something like the Archive.org may not be able to pull anything up from that. I also threw away almost all of the industry mags and papers that I had back in the 2000's.

Just a quick bit from Wikipedia however has them stating that at the time of Westwood Studio's acquisition they represented ~5-6% of the entire PC game market. It was considered a massive pickup by EA at the time. RTS at the time was about as large a market (if not larger) as FPS games. Acquiring Command and Conquer in the 90's was the equivalent of buying the Battlefield franchise or even the COD franchise today.

Regards,
SB

Oh man can't believe people weren't aware of westwood. EA gobbled up so much talent and now look at it. There are so many amazing IPs locked away there. I just want remakes of the Ultimas ......