Microsoft will buy Activision Blizzard for $68.7 billion, why is it "shaking" the gaming industry?

On the evening of January 18, Beijing time, Microsoft announced that it would acquire game production company Activision Blizzard in full cash for $95 per share, with a total transaction value of $68.7 billion (about 436.5 billion yuan), which is expected to be completed in fiscal year 2023. After the transaction is completed, Microsoft will become the world's third-largest game company in terms of revenue, after Tencent and Sony.

What is the concept of $68.7 billion? Why is this largest acquisition in Microsoft's history called an "earthquake" in the game industry? Actuarial lion takes you to see.

Microsoft spent more than 1 year of profit to refresh the record of acquisitions in the game industry

Microsoft's acquisition of Activision Blizzard has caused a huge shock to the global gaming industry, not only becoming the largest acquisition in Microsoft's history, but also refreshing the acquisition record of the entire game industry – a record that originally belonged to Take-Two a week ago. The company announced on Jan. 10 that it would buy Zynga for $12.7 billion, while Microsoft intends to buy Activision Blizzard for about $68.7 billion for about 5.4 times its share.

What is the concept of $68.7 billion? At present, the US stock market value of domestic game giant NetEase is about $68.266 billion (16:00 EASTERN TIME on January 18), which is roughly equivalent to the total value of this transaction. Market analyst firm Newzoo estimates that the global gaming industry generated $180.3 billion in total revenue last year. In addition, the "2021 China Game Industry Report" shows that the actual sales revenue of china's game market in 2021 is 296.513 billion yuan (about 46.7 billion US dollars), and based on a rough calculation, the total value of Microsoft's acquisition of Activision Blizzard has reached 38% of the total revenue of the global game industry last year, which is equivalent to the total output value of China's game industry for 1 and a half years.

In fact, $68.7 billion is not a small amount for Microsoft, and based on its net profit of $61.271 billion in fiscal 2021, the acquisition will cost Microsoft more than a year of profits.

Keep betting on the gaming space

Microsoft intends to increase the "metacosm"

It is understood that in recent years, Microsoft has continuously bet in the field of games. Since taking office, Nadella has acquired more than 10 game studios in a row, including game developer Mojang Studios, which was acquired for $2.5 billion in 2014, and Zenimax, a game developer that was acquired for $7.5 billion last year.

In this transaction, Microsoft will obtain the operation and management rights of activision Blizzard, one of the giants of the game industry, and all the studios under the subsidiary King, and will also get the ownership of world-renowned game IPs such as "Call of Duty", "Warcraft Series", "Diablo", "Overwatch", and "Candy Crush Legend". According to the analysis, these will become the core competitiveness of Microsoft's game business and Sony's all-round competition in the future. Following the completion of the acquisition of Activision Blizzard, Microsoft's market share in the global gaming business will rise from 6.5% to 10.7%, making it the third-largest global game company by revenue after Tencent and Sony, while it will have 30 in-house game development studios and additional esports organizational capabilities.

Microsoft's acquisition of Activision Blizzard is not only to increase competition in the field of games, but also to increase the layout of the "meta-universe". After Zuckerberg renamed Facebook to Meta last year, the future concept of "metaverse" became a big hit, and the game industry was considered to be the best landing scene in the early days of metaverse. According to reports, Microsoft issued an official statement saying: "This acquisition will accelerate the growth of Microsoft's gaming business in the mobile, personal computer, game console and cloud computing fields, and provide the cornerstone for building a metacosm." In a memo sent to employees, Satya Nadella, chairman and CEO of Microsoft, also said, "Since the company's inception, the gaming business has been very important. Currently, gaming is the largest and fastest growing form of entertainment, and as the physical and digital worlds merge, it will play an important role in the development of metaverse platforms. ”

Shenyang, executive director of the New Media Research Center of the School of Journalism of Tsinghua University, analyzed that "Microsoft perfects the meta-universe closed loop, social networking and games are the first places in the meta-universe, the attacker wins, the retreater is weak; after the acquisition, Microsoft holds a 22 billion military meta-universe order in its left hand, and takes out 68.7 billion US dollars in the right hand to build a game meta-universe, one hand To B, the other hand To C, which can be called a double sword." ”

Producer: Nandu Big Data Research Institute

Data collection and analysis: Tang Jingyi

Design: Bo Zhang

Data source: Newzoo, "2021 China Game Industry Report", Baidu Stock Connect, media public reports

Note: The US dollar in this article is converted into RMB at the exchange rate of 15:00 on January 19, 2022