Author 丨 Sun Yu
Editor 丨 Kang Xiao
Produced by 丨Shenwang Tencent News Xiaoman Studio
In the past three years, the company has reduced nearly 30% of its active users, which translates to about 11 million, and many core employees have left one after another, and the company has been involved in a sexual harassment scandal. As a direct consequence, they haven't launched new products for six years, and only occasionally iterate or remake those old ones.
How much is such a company worth? Microsoft gave the answer, $68.7 billion. On the evening of January 18, 2022, Beijing time, Microsoft announced that it would acquire Activision Blizzard, and in order to complete the transaction, it would use 53% of its cash reserves, which is also the largest acquisition in Microsoft's 46-year history.
After the acquisition is completed, Microsoft will occupy the third position in the world's game company revenue after Tencent and Sony. This should have been a story worth looking forward to, but in recent years, Activision Blizzard has long since lost its name, and this nearly $70 billion deal can bring Blizzard back to the top? Can Microsoft tell more stories in the metaverse and mobile game market?
At least, for those Blizzard fans, it is just that the parent company has changed from the investment company Vivendi to the game company Activision and then to the enterprise services company Microsoft.
The real challenge is that now that the era of polishing the essence of the game has passed, traffic is the ultimate answer to all problems, and Blizzard has declined because it is behind the times.
Everything is still undecided, the official press release shows that Microsoft has no intention of parachuting management, and people familiar with Blizzard told the Deep Web that Activision Blizzard itself has a very complex financial structure and is deeply involved in executive turmoil, "At least in two years, it is difficult to see what specific changes have occurred, whether it is Blizzard's own games or Microsoft's layout in the meta-universe or mobile game field." ”
In Blizzard's well-known game Warcraft 3, enter "whosyourdaddy" to enter invincible mode. Now that Blizzard has a new "daddy", can they go into invincibility mode?
The blizzard slowly stopped
Blizzard is a slightly unfamiliar name for a new generation of gamers who have grown up with mobile devices such as laptops, smartphones, and iPads. But for the PC generation, Blizzard is a magical name, full of magic, imagination and even a redefinition of the world, "Blizzard production must be a masterpiece" is the lifelong belief of gamers of that era.
In the single-player era, StarCraft, Warcraft, and Diablo became prominent; with the gradual popularization of the Internet, World of Warcraft has become one of the best multiplayer online games in history. With the influx of mobile phones and consoles, these names, along with Hearthstone and Overwatch, became the benchmark for a certain game mode.
It wasn't until 2007 that two major events, one inside and one outside, changed Blizzard forever. The first was the official launch of the internal Titan project, followed by the fact that Blizzard's then-parent company, Vivendi, which had changed hands several times, accepted Activision's acquisition proposal.
Titan is a magical game, and even if Microsoft acquired it today, there are comments that Titan may borrow a corpse to return the soul. But in those days, a game that was completely beyond time nearly overwhelmed the superhemoth in the history of gaming.
In 2014, Blizzard finally announced that development on Titan had failed completely. In this long 7 years ago, Blizzard launched and is making games such as the Warcraft trilogy, the first two diablo, StarCraft and the first two versions of World of Warcraft.
During the same and late periods of Titan development, Blizzard handed over a number of new versions of World of Warcraft, StarCraft II and multiple new versions, Diablo III, Hearthstone and Overwatch, and a very obvious downward trend can be seen from the player reputation and game ratings.
At the same time as development was terminated, another mixed news was that Activision Blizzard had been redeemed from vivendi games and became independent. Some Activision games joined Battle.net, and Activision began to control Blizzard's profits and expenses, and cost reduction was officially proposed.
No new games were launched, and a number of Blizzard soul figures left: in October 2018, Blizzard CEO and co-founder Mike Mohan left; in 2019, a large number of Blizzard core employees left, which is said to be more than 800; in March 2021, Blizzard esports department laid off a large number of employees; in April, David King, an important participant in StarCraft 2, Diablo 4, World of Warcraft and other projects, left. A few days later, Jeff Kaplan, former vice president of Blizzard and chief designer of Overwatch, left; in August, several designers of Diablo 4, World of Warcraft and other projects passively looked at Blizzard; subsequently, Blizzard Entertainment's vice president and chief legal counsel announced their departures.
If the executive team leaves, relevant management talents can still be found, but for the game company known as the ninth art, the loss of designers means the loss of inspiration. For example, Jeff, who left last year, is also one of the founding developers of World of Warcraft, the first two mission designers, and has had a huge impact on the mission and story lines of World of Warcraft.
Late last year, Blizzard Entertainment announced the cancellation of the Blizzard Carnival scheduled for early 2022, and players waited for worse news: Diablo 4 and Overwatch 2 would be significantly postponed. Players protested, the new game was postponed, and the last old game, Overwatch 1, was almost broken, and the story was not promoted for 5 years.
To make matters worse, almost the entire second half of 2021, Activision Blizzard has been struggling with sexual harassment scandals. An overseas media outlet familiar with Blizzard told Deepnet after the acquisition, "Blizzard's recent news headlines have been sexual assault. In fact, people who follow Blizzard's messages feel this way, "You may not even see that it's a game company." ”
According to government investigations, Activision Blizzard has a "fraternity culture" within it, mainly manifested in discrimination and open sexual harassment against female employees (and some male employees). It was reported that a female Activision Blizzard employee committed suicide during a business trip with a male supervisor, and before that, she was also distributed nude photos within the company.
Activision Blizzard shares fell 23 percent over the past year. On the day of last year's third-quarter earnings report, its stock price plunged 14%.
For a superhemoth, there are many reasons for decay, lack of market sharpness, and poor corporate culture, but for Blizzard, the figure of $68.7 billion still gives it a decent ending.
Invisible metaversics and visible mobile games
Microsoft's acquisition of Blizzard, $68.7 billion, cash payments, and the most stirred up thousands of waves in the gaming circle. In fact, in recent years, whether it is the economic downturn or the outbreak of the epidemic, Microsoft's revenue that has successfully transformed has hardly been affected.
Its latest financial report at the end of last year showed that revenue reached $45.3 billion, up 22% year-on-year, exceeding the market expectation average of 43.9 billion; operating profit of 20.2 billion, also exceeded market expectations of 18.6 billion. Microsoft is no longer what people used to look like, the same earnings report shows that its traditional software SaaS flagship product Office 365 growth rate reached 23%; Azure cloud business growth rate of 50% this quarter, according to the single product revenue contribution, it is already the first source of revenue and the first revenue driver.
An analyst who owns a large number of Microsoft stock companies said after the acquisition: "$68.7 billion is only equivalent to 3% of Microsoft's valuation." If Microsoft wants money, it has the ability to get it, so I don't think it will hurt other opportunities because of the transaction. ”
Microsoft's layout in the game industry began with the launch of the console Xbox in 2001, but the most familiar to Chinese players is the Xbox One that competes with the PS4. When it comes to game development, Microsoft has always been accustomed to acquisitions, including mojang, a well-known game Minecraft developer, and ZeniMax Media, which bought for $8.1 billion.
On January 18, 2022, local time, Los Angeles, USA, during the electronic entertainment expo held locally, Activision Blizzard's booth was displayed. (Source: Visual China)
However, unlike the super profitability of game companies that people perceive, Blizzard, despite its fame, is not very profitable. In Activision's financial report, Blizzard's revenue capacity ranks at the bottom or even the bottom one for many years. According to the financial report, Activision Blizzard's revenue growth rate in the third quarter was less than 6%, Microsoft's was 22%, and the game industry was 16%. Activision Blizzard's operating margin is about 40%, and Microsoft's is about 45%.
Of course, at the capital level, the acquisition is still a good thing for Blizzard. After the announcement of the acquisition, Activision Blizzard shares soared 25.88% to $82.31, up more than 32% during the session. Microsoft shares closed down 2.43 percent at $302.65 on Tuesday.
Microsoft said in a statement that the acquisition will accelerate the growth of Microsoft's gaming business in the mobile (mobile), PC, console and cloud sectors and provide the cornerstone for the "metacosm".
Would it be a good idea to restart the Titans that once brought down Blizzard?
Like World of Warcraft, Titans is a massively multiplayer online game, but the gameplay is much more complex. News circulating when Titans stopped developing in 2014 showed that Titans would be divided into real worlds and shadow worlds, where players could do whatever was needed in the "real world," such as chefs, engineers, or even corporate employees. In the shadow world, players can participate in battles and even participate in wars. Of course, all players can skip the battle and continue to work in the real world.
Doesn't that sound a bit like the metaverse? The bad news is that the Titans once dragged down Blizzard. What's more troublesome is that Blizzard's most familiar MMORPG game is World of Warcraft, and World of Warcraft quests are a very important mechanic that drives players to actively explore the world and have a better immersive experience. These mature mechanics may be Microsoft's expectation of a game-driven metaverse of worldviews, but as mentioned above, the vast majority of mature designers have left Blizzard.
At least for now, another keyword mentioned in the announcement is a more realistic income for Microsoft, and that is mobile games.
This is an area that Blizzard is not good at, and it is also the most hated word for Blizzard's loyal fans, and the final game of Blizzard Carnival in 2018 is Diablo Immortal, a mobile game. In the face of disappointed fans, the Blizzard designer said the classic quote that was circulating at the time, "Don't you have a mobile phone?" The mobile game that once brought blizzard infamy has opened the "Android Limited Paid Deletion Test" at the end of last year, and the game's chief producer Caleb Arseneaux has left.
But King, a game company previously acquired by Activision Blizzard, happens to be good at mobile game production, and its ace product Candy Crush Legend is a beautifully screented match-3 game with a revenue of $1.2 billion last year, ranking 7th in the world.
How does Sony fight back?
Years ago, there was a game company called Ninth City, which was the first echelon of Chinese game companies at that time. The company's main income happens to come from the agency World of Warcraft, but the boss Zhu Jun does not want to make his income too single. So the Ninth City found Blizzard's nemesis EA, represented its pro evolution soccer OL, and accepted EA investment.
However, after losing World of Warcraft, Nine Cities quickly collapsed, and the stock price fell to less than one dollar. NetEase, which stole World of Warcraft and incidentally stole Hearthstone from future Blizzard, has successfully become the second largest game company in China.
Now the story seems to be repeating itself, and it became Sony who played the role of the Nine Cities. After the Microsoft and Blizzard acquisitions, Sony Group shares fell as much as 9.6 percent in Tokyo stocks on Wednesday, the biggest drop since March 2020.
According to Microsoft's published content, before the end of the acquisition, Activision Blizzard will operate independently with Microsoft Games, and after the acquisition, Activision Blizzard will become the direct management business of Microsoft Game CEO Phil Spencer.
Foreign media reports show that although Activision Blizzard was acquired by Microsoft, the studio will continue to launch game works for the PlayStation platform. The report asks Phil about the future exclusivity of Activision Blizzard games, saying, "I want to say to players who play Activision Blizzard games on the PlayStation platform that our intention [with this acquisition] is not to pull the Activision Blizzard community away from the PlayStation platform, and we remain committed to it."
This may simply be to circumvent antitrust issues, analyst Michael Pachter said, "There is a good chance that they are going to stop offering Activision Blizzard games on the PlayStation, which raises a series of antitrust issues, so I expect the deal to face censorship and consent decrees requiring them to continue to support PlayStation for several years to close the deal." ”
In fact, Microsoft did announce that after the acquisition, Activision Blizzard's new games and games that have been released in the past will log on to Xbox Game Pass and PC Game Pass as much as possible.
Previously, Phil had expressed the same view when he acquired Zenimax, and had agreed to an exclusive PS console transaction that included Death Loop, Ghost Line: Tokyo, and guaranteed that The Elder Scrolls OL could continue to operate on the PS platform. However, in the future, many works of the B Society, including the Elder Scrolls 6, Starry Sky and other games, will be sold in the form of Xbox + PC.
The direct number is that after Microsoft's acquisition of Activision Blizzard, IW, Raven Software, Sledgehammer, Toys for Bob, Treyarch and other studios have also been included, and Microsoft's first-party studios will expand to more than 30.
Before the acquisition, Microsoft's well-known game IP that it developed only had Halo and Age of Empires, but when the game library expanded, in addition to the ace projects mentioned above and the candy crush legend just mentioned, well-known game IPs such as Call of Duty and Torture Prototype will also join the Microsoft camp.
It should be noted that the main sales markets and backgrounds of the above games are for the European and American markets, and if these games are only monopolized by Xbox in the future, PlayStation and sony entertainment behind it may be expelled from the European and American markets.
What's more troublesome is that today, after a year of PS5 release, there are still fewer exclusive games than Xbox and Switch. Exclusive games have always been the biggest feature and the most important dependency of consoles, but at present, the only completely exclusive products of PS5 are Demon Souls: remakes, death returns, Ricky and Ding-dong jumps a few.
According to the PS5 play data released by the president of Sony Interactive, 7 of the most popular 10 games are cross-platform online games, while 3 single-player games, only Demon Soul is a completely exclusive game for PS5.
Backward compatibility may be a good idea, and players have previously found some PS3-exclusive games in the PS5 game store, which is Sony's legendary service plan codenamed "Spartacus", which integrates the original PS Plus and PS Now subscription services to combat Microsoft's Xbox Game Pass. This new project has less official information, and one of the features already known is playing some old platform games on next-generation consoles.
But backward compatibility will not actually help the sales of the PS5, and sony has a lot of work to do to challenge Microsoft, which has won many resources in game development and Nintendo, which has a unique advantage in home entertainment.
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