Microsoft acquired Activision Blizzard King for $69 Billion on 2023-10-13
- Thread starter Rangers
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What was actually said:
"I do think at some point we'll have to raise the prices on certain things, but going into this holiday we thought it was important to maintain the prices."
"We've held price on our console, we've held price on games... and our subscription. I don't think we'll be able to do that forever. I do think at some point we'll have to raise some prices on certain things..."
"I do think at some point we'll have to raise the prices on certain things, but going into this holiday we thought it was important to maintain the prices."
"We've held price on our console, we've held price on games... and our subscription. I don't think we'll be able to do that forever. I do think at some point we'll have to raise some prices on certain things..."
With what I know about brazil and pricing of games and hardware there this could only be a good thing for the region
Software prices are the same between XBOX and Playstation. Software companies also said they are increasing their prices on software games because costs increased,
Again what you describe makes a lot of assumptions, ignoring that Playstation has been one of Sony's main or not the primary source or revenue which has taken a hit due to supply problems. Secondly MS has extra supply thanks to Series S they want to sell during the holidays as a great opportunity to minimize the gap, plus their main source of revenue is larger and comes from somewhere else. Your quote describes exactly that. The rest are just assumptions
And here is the part you left out:
"We have to look at the return on our business the cost of the business," Spencer said. "We've held price on our console, we've held price on games for us and our subscription. I don't think we'll be able to do that forever."
It suggests there is pressure on price hikes from external factors which MS delayed and Sony responded sooner because it was necessary. Again this has nothing to do with "deliberately raising prices because of leadership".
Development prices or consumer prices?
Not that I know of. First party titles are still 69.99 on Xbox. Only 3rd party titles like COD and Ubisoft have been increasing their prices to the 79.99 price point which is inline with PS5 first party titles at 79.99 since the start of this generation.
Or that Sony owns 66% of that particular market and Xbox only 33% ?
The line item that MS can forever fund a sinkhole that Xbox is, is false. Xbox has to be self sustainable for it to continue in business for this long. It has its own budgets and expenses.
Nintendo hasn't changed prices, they are also affected equally.
Both. A friend of mine is selling games on retail and the charges from suppliers are the same, with the recommended retail prices being equal.
As already mentioned, that is not the reality in the US and Canada. Some third party titles are the same, but first party titles have a gap.
In the US, the consumer price for Microsoft Xbox titles are still $60 at most while PlayStation titles is $70.
Very few titles, and for the same reason I mentioned earlier. Revenue decreases on Playstation are more detrimental for Sony due to limited hardware supply and increasing costs.
When Sony had an even clearer lead with no supply strains for three generations (PS1, PS2, PS4) their prices were kept the same. This has nothing to do with being market leaders.
Until Microsoft has done so it is just talk. It might happen next month or it might happen a couple of years from now. He was not specific as to what would need to go up in price. It might mean 70 dollar games all around, The price of the console, or GamePass. People are just assuming that the price of the consoles are going to go up.There goes the argument that Sony is increasing their prices because of their market leading position:
Xbox Boss Phil Spencer Says Price Hikes Are Coming, But Not Until After The Holidays
"I do think at some point we'll have to raise the prices on certain things..."www.gamespot.com
They do, or at least partially. The truck certainly does. The expense of capital goods, such as the truck, is countered by an equal value asset, which is subsequently written off in chunks over a standardized expected lifetime of the asset.
For buying a company, it is more complex (a company will most often consist of a mix of capital goods, human capital, intellectual property, goodwill, etc.; some of it with uncertain monetary value) but the basic principle on the initial balance sheet is the same: Money out, value of assets in.
If I understand you correctly, though; you are correct in asserting that a purchase (no matter how big) does not immediately or necessarily impact the profitability of the purchasing entity. It should all balance out initially. Directly attributable profits or losses from the aquisition will only show on the books when the value of the purchased assets turn out to be significantly different than their, at any time, present valuation.
D
Deleted member 11852
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I don't know where you have ever done accountancy, but acquiring assets is definitely an expense. It's not magical free money. You may be thinking of the differentiation between programme/capital and running costs budgets. Profits may = revenue - expenses, and can replace profits for losses if expenses > revenue.
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Silent_Buddha
Legend
Yes, it's an expense in a sense but it is also income in a sense. Very loosely. As those assets don't suddenly revert to Zero monetary units. Those assets are still worth X something. So you are spending Y monetary units to acquire assets (which can include non-physical assets such as IP) worth X monetary units. As Zaphod mentioned and Iroboto was trying to convey is that in the case of Activision-Blizzard, yes there is an expense of ~70 billion USD. However, that is acquiring assets worth X something USD.
The accounting is necessarily complex for such a large acquisition but it's too simplistic to only cite it as an expense without also accounting for the value of what is acquired and how that also increases the valuation of the acquiring company. IE - "revenue" in a very loose non-accounting layman's sense.
Regards,
SB
D
Deleted member 11852
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It's worth as much as somebody is willing to pay for it. I don't know anybody else out there clambering to buy Activision-Blizzard for $70bn. You can that priceless or worthless, but it amounts to the same thing. If you spend $70bn on something that cannot recoup that cost quickly (decades) and you cannot sell it, it's a massive expense.
Another company may not be willing to buy Acitvision blizzard for $70bn but there can be other companies willing to buy parts of activision- blizzard that would actually equate to it being worth more parted out. But that is if MS chooses to do so.
Activision is an investment in the future and MS is hoping that by combining Activision/ Blizzard with MS's existing services and IP they can increase the value of both.
I'd assume with the talent MS has been bringing in they might be eying Blizzard to convert their popular desktop client over to the xbox pc client bringing in a lot of accounts. They seem to be suggesting the same on mobile. By combining the two they get more eyes into the MS eccosystem .
Well, I did some accounting classes in university and highschool, so outside of that I'm not qualified to say, but I recall having to learn the differences between a cost and an expense fairly vividly.
As far I know the only expenses incurred from M&A are the transaction fees and any interest owed. The company that is being acquired, its liabilities move onto your balance sheet, its assets move onto your asset's.
Outside of Goodwill, the only way you're going to incur an actual additional liability is if MS is borrowing 70B to purchase ABK. If they have liquid amounts of cash and/or willing to convert shares over then the respective assets decline, in exchange for the gains of ABK's assets.
You are welcome to bring up M&A income accountancy and balance sheets. I cannot find something I would assume is basic, where the purchase price of a company is listed as an 'expense' on an income sheet.
Under these very basic principals, since ABK is not leaving Xbox Gaming, the M&A would fall under cost and not expense. And costs are for Assets. And if MS is swapping assets for assets, their balance sheet does not effectively change unless they are borrowing money to purchase ABK. Even then the only expense there is the interest on the loan.
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what do you account as "change" in the balance sheet? there will be changes in the balance sheet, like processing expenses of the acquisiton that will be reflected I suppose in the P&L account that will be carried over to the balance sheet. Then there will be other changes either through borrowing or cash (huge reduction/loss of liquidity) or a combination of the two. In every company cash/liquidity is king. The former will increase liabilities and assets on both sides of the balance sheet. The second one will reduce liquidity/cash/bank balance and offset through added assets. The third is a combination of the two. Then of course there will be expenses and revenues of operating those assets that will be reflected in the later finances, thus in the balance sheet. Plus depreciations, amortizations etc. The major benefit of using directly available cash is that you arent dealing with interest offsetting some of your returns. With loans you will be affecting your liquidity in the depth of time through installments plus interest
It is a huge investment that will take a very long time until it breaks even the money spent.
MS like every company doesnt care about owning assets for the sake of owning. They are useless if they dont contribute to liquidity and they have liabilities
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