Microsoft's $68.7 billion acquisition of Activision Blizzard: Mixed sentiments under banknote capabilities

Wen 丨 Neighbor Chapter

Microsoft once again showed what banknotes are capable of.

Yesterday, Microsoft announced the acquisition of game giant Activision Blizzard for $68.7 billion, and this acquisition is in an all-cash manner, it can be said that Microsoft has interpreted what is "deep in wealth" with practical actions - after all, this price point is only slightly more than Microsoft's net profit in fiscal 2020, not to mention that Microsoft still has hundreds of billions of dollars in huge cash reserves.

Speaking of this acquisition, I personally believe that Microsoft's acquisition has a strong logical self-consistency in theory, but it also has practical challenges that cannot be ignored.

Strong logical self-consistency in theory

For Microsoft, games have always been the existence that Microsoft has spared no effort to support over the years, which can be seen from the reality that Microsoft has closed many side businesses over the years, but the status of the game side business has become more and more stable.

The most obvious benefit for Microsoft is that it can quickly obtain a large number of world-renowned IP such as "Warcraft", "Overwatch", "Call of Duty" and a huge global user base gathered by these well-known IP.

According to Activision Blizzard's third quarter of fiscal 2021 data, its current monthly active user number (MAU) is 390 million.

These well-known IPs and a huge user base may provide a strong impetus for Microsoft's game division Xbox console sales, Game Pass membership subscriptions, and subsequent game development.

This will enhance Microsoft's competitiveness in the game market, a change in the embarrassing situation of Microsoft being hung by Sony in the game market, in order to better compete with Sony, Nintendo, Tencent, etc., which is actually evident from the fact that Sony's stock price fell by 7% after the acquisition.

As Microsoft said in its statement, the acquisition will accelerate the growth of Microsoft's gaming business in the mobile (mobile), personal computer, console and cloud sectors.

In fact, if the acquisition can be successfully completed with regulatory approval, Microsoft will also surpass NetEase and Nintendo in one fell swoop to become the world's third largest game company after Tencent and Sony.

In the long run, Microsoft's acquisition of Activision Blizzard at a sky-high price is to seize the outlet of the meta-universe.

At present, the industry is viewing the game as a product of high immersion experience and a high combination of art, technology and culture, as the only way to open the meta-universe. Microsoft CEO and chairman Nadella also said: "Games are a key element to the metaverse."

Indeed, after the completion of this acquisition, Microsoft will further strengthen its content layout in its existing hardware, content, and cloud computing layout.

In this reality, it can be said that Microsoft's sky-high acquisition is not only paying for reality, but also laying out for the future.

Realistic challenges that cannot be ignored

But the challenges of such sky-high acquisitions are also obvious — such as how to achieve cultural integration and reinvigorate innovation in activision Blizzard, which is in decline, these are real problems in front of this sky-high acquisition.

From a realistic point of view, Activision Blizzard is on the downhill road - in recent years, "Blizzard production, must be a boutique" has almost ceased to exist, but has become a food-eating existence, the overall game quality has declined badly, which has also led to its overall loss of users.

This is evident from the sharp drop in its global monthly active users in 2021 from 435 million in Q1 to 390 million in the Q3 fiscal quarter.

This decline has also further accelerated the loss of talent for the company's game development.

The more serious problem is that Activision Blizzard is being plagued by negative scandals such as "employee discrimination and sexual harassment" within the company, and these scandals have not been dealt with so far, which has also led to the avoidance of excellent talents.

It is also the activism of Blizzard's performance in recent years that has disappointed players, so after the news of Microsoft's acquisition, players around the world are cheering and seeing Microsoft as Blizzard's savior.

Therefore, after Microsoft takes over, how to carry out cultural transformation of Activision Blizzard and eliminate the various scandals currently surrounding Activision Blizzard may be a key task in front of Microsoft, which requires Microsoft to make great efforts.

From Microsoft's point of view, a big strange circle haunting Microsoft is: although Microsoft has a lot of money and its main business has steadily improved, microsoft does not seem to be a good hand in terms of acquisition and integration, at least its historical record is so shown.

This started from Microsoft's huge acquisition of Skype, aQuantive, Nokia, etc. in the past few years, but in the later integration, it was a poor performance or failure.

However, when acquiring these businesses, there is also a strong logical self-consistency, but the logical self-consistency is often beaten by the cruelty of real competition.

Or after this acquisition, there was "Blizzard: Don't you have a cell phone?" Microsoft: There used to be "the reason for this meme."

So can Microsoft tear off this label this time and create a miracle of large-scale acquisition integration?

All this can only be answered by time.

【Titanium Media Author Introduction: Linzhang (WeChat: ZLxgic, public number: TMT317), focusing on interpreting industry development trends and the company's products and services. Digitalization, AI, cloud computing, corporate earnings, intelligent hardware, and consumer innovation are the focus. 】