Microsoft's big-budget acquisition of Activision Blizzard, Nadella and Za jr. PK Meta universe

After Zhou Yingmei entered the meta-universe non-stop in Zuckerberg's Meta, another international Internet giant, Microsoft, also made a big move.

Microsoft's approach is acquisition. On January 19, Microsoft announced the acquisition of Activision Blizzard at a cost of $68.7 billion. Activision Blizzard is a public company that has launched classic games such as World of Warcraft, Diablo, Hearthstone, and Overwatch, with 400 million monthly active users as of the third quarter of 2021. After Microsoft acquired it at a premium of 45%, it will become the world's third-largest gaming giant in one fell swoop.

The transaction, which is expected to close in fiscal year 2023, has been approved by microsoft and Activision Blizzard's boards of directors, and is subject to regulatory approval. Some voices believe that the acquisition may face antitrust review.

"Microsoft's business is mainly operating system ecological services, as well as the hardware market. The acquisition of Activision Blizzard has limited market share gains in software and hardware and is not enough to severely limit competition. In the view of Liu Xu, a special researcher at the Institute of National Strategic Studies of Tsinghua University, this merger is more likely to be unconditionally approved.

Microsoft's open letter clearly mentioned the purpose of the acquisition, and the acquisition will contribute to Microsoft's creation of a "meta-universe". It was also the largest acquisition in Microsoft's history.

Du Hongchao, an independent director of Canaan Technology, told reporters that Microsoft's entry has increased the global consensus of the metacosm. At present, the giant with the most action in the meta-universe is Zuckerberg's Meta, and although the domestic giants Tencent, Huawei, Xiaomi, etc. are also in the layout, no company has publicly stood up to speak. "Companies like Microsoft, coupled with their influence in the industry, will increase the development of the metaverse, and also make more people dare to lay out the metaverse."

So far, in the field of meta-universe, the two major Internet giants have made big bets. When Nadella and Zaky Jr. PK, who will come out on top?

Why Microsoft watched Blizzard

Microsoft's acquisition of Activision Blizzard, game industry observer and founder of Youdi Research Wang Wei is not surprised. Microsoft has a tradition of acquiring game companies in recent years, spending $7.5 billion to acquire Society B in 2020. In 2015, it acquired Mojang for $2.5 billion, and its game product "Minecraft" has been called the original meta-universe product.

"For Microsoft, it's about spending a little money on a company that's unique in the game industry." Microsoft is currently worth $2.27 trillion and is the world's second-largest Internet technology company. When the funds are sufficient, "how much money to spend to buy scarce things, do not lose." ”

Moreover, Microsoft has suffered the loss of no good content. Microsoft's game products are mainly Xbox, together with Nintendo, Sony and known as the three major game console suppliers, but in recent years, Xbox sales are far less than Nintendo and Sony, at the end of 2019, Xbox hardware revenue fell by 48%, the game sector revenue fell by 10%, the fundamental reason is that there is no exclusive content.

Pei Pei, who served as chief analyst of Internet media at Guojin Securities, said that in 2016, he bought Sony's PS4 in order to play "Persona"; in 2018, in order to play "Zelda's Breath of the Wilderness", he bought Nintendo Switch. Sony's rise to prominence is built on top of its early exclusive game, Final Fantasy. Nintendo also continues to have its own classic console games such as Super Mario Bros., "The Legend of Zelda", and "Animal Friends" to attract consumers.

The acquisition of Activision Blizzard, one of the top five in the game industry, could theoretically make up for Microsoft's lack of content. As of the close, Sony Group shares were down 13 percent in Tokyo, Japan, the biggest drop since September 2014.

Du Hongchao told reporters that Microsoft's acquisition, there is a greater purpose, is to lay out the next generation of the Internet, and defend Meta. "Microsoft for so many years, walking in the enterprise market, in recent years, on the one hand rooted in the enterprise market, on the one hand, investment in VR and other consumer markets, in addition to providing free products to stabilize the basic disk." But now, Meta has rushed out and is about to revolutionize. Microsoft can't be an ostrich anymore. ”

In the era of mobile Internet, Microsoft once got up early to catch up with a late set, acquired Nokia in 2013, developed its own operating system, but eventually compromised with Google's Android system. In the metaverse and the VR era, Microsoft can no longer afford to suffer this loss.

"Meta's VR device sales have reached 10 million and are about to occupy the third generation. Microsoft will worry about becoming like a phone again. Du Hongchao said. On Christmas Day last year, Meta's virtual reality app Oculus topped the U.S. market, also jumping into the top five in 14 countries.

Microsoft's current strengths are cloud and Office-based enterprise services, and Microsoft has a huge market in China. Du Hongchao believes that if Microsoft's layout metacosm is successful, it can do a global universal enterprise metacosm, which can diversify traffic, diversify users, and even possibly flip in the field of personal consumption.

Gao Dongxu, founder and chief analyst of China Entertainment Think Tank, also told reporters that Microsoft's acquisition is more to pave the way for the future, although it costs $68.7 billion, but "with the ability to quickly acquire, to acquire a team with strong content, which is a very cost-effective acquisition for Microsoft." ”

Why Activision Blizzard is willing to be acquired by Microsoft

Wang Wei once visited the headquarters of Blizzard and Fist in the United States, and she still remembers the buffet restaurant of the super five-star hotel in Fist, the basketball court surrounded by low offices, and the relaxed office environment. And Blizzard is surrounded by iron fences, can only look at the high-rise office from a distance, the security sister let go farther.

"Blizzard's 30th anniversary has gone from great to mediocre." She sighed to reporters.

Activision Blizzard is mainly composed of activision, Blizzard and Kingdom. The largest number of users is still the subsidiary Kingdom, with MUA (monthly active users) of 255 million in the third quarter of 2021, and its main product is the mobile game "Candy Legend". Activision MUA reached 119 million in the third quarter of last year, and its main products are Call of Duty. Subsidiary Blizzard MUA was 26 million in the third quarter, although it has several major IPs such as "World of Warcraft", "Overwatch", "Diablo" and so on, but MUA has fallen from 42 million in 2017 to 26 million today.

In the eyes of a gamer, Blizzard's research and development advantages are gone, and some of them have not kept up with the trend in recent years. "There are no particularly eye-catching new products, basically fried cold rice, and Overwatch is just a flash in the pan." The player also mentioned that the "Warcraft" player crowd is still concentrated in 30 to 35 years old, "now young people want to play MMORPG (massively multiplayer online role-playing game), the first choice is not World of Warcraft, too exclusive." Most people will play Final Fantasy XIV or the domestic Sword Net 3. ”

Since 2021, many activision Blizzard R&D personnel have left. In April 2021, Activision Blizzard announced the resignation of Blizzard Game Director and Designer and Overwatch Director Jeff Kaplan. Johnny Cash, chief mission designer for World of Warcraft, who worked at Blizzard for 12 years on January 12, 2022, leaves office. A number of game developers have left before.

In the past two years, Activision Blizzard news has been continuous, but it is not good news. What makes people relish is no longer "World of Warcraft", "Overwatch" and other game products that affect a generation, but instead an endless line of office sexual harassment, high-level departures, etc., corporate culture has been questioned, a number of executives, senior employee project leaders have left, and the current CEO has been complained about and asked to leave.

Of course, Activision Blizzard's foundation still exists, it is still the world's top ranking game company, and the Warcraft series is still making a lot of money and users are very active. Activision Blizzard's 2021 Q3 financial report showed revenue of $2.07 billion for the period, up 6% year-over-year, and net bookings of $1.88 billion, up 6% from the same period last year. In the third quarter, Activision Blizzard's net profit was approximately $639 million, up 5% year-over-year.

Wang Wei believes that Activision Blizzard's willingness to accept Microsoft's acquisition is also related to its decentralized equity. Since 1998, Blizzard belongs to Vivendi, in 2007, Vivendi's original game division as a whole merged with Activision to form "Activision Blizzard", in 2013, Activision Blizzard completed the stock repurchase for itself "redemption", in the same year, Tencent participated in Activision Blizzard, activision Blizzard's current CEO, and many institutions hold stocks, and the equity is relatively dispersed.

Under the sexual harassment scandal, Activision Blizzard's game business was also affected. In the past two years, IP generations such as Warcraft and Diablo have been delayed, and the latest time, Activision Blizzard has revealed that "Overwatch 2" and "Diablo 4" cannot be listed as scheduled. Moreover, in May 2021, the user myth of World of Warcraft was also broken, and Final Fantasy XIV surpassed World of Warcraft to reach the top of the leaderboard, becoming the MMO online game with the largest number of active players.

"Under the current storm, suddenly someone said, I am 45% premium to you, investors can no longer find a better takeover man." The capital is certainly willing to sell quickly. Otherwise wait for the wave double sale, do not know when to wait. ”

Nadella vs. Little Zayuan Universe

In the metaverseal track, the person who moves the most and makes the loudest noise is Zuckerberg, who renamed Facebook to Meta and bet on the metaverse.

This time, Microsoft acquired Activision Blizzard, and Microsoft Chairman and CEO Satya Nadella said, "Gaming is the most dynamic and exciting form of entertainment of all platforms today and will play a key role in the development of metaverse platforms." ”

Nadella is the soul of Microsoft's return from the trough to the top. He successfully led Microsoft into the 21st century, and Microsoft ushered in the second spring. He also wrote a book called Refresh, refreshing himself.

Du Hongchao told reporters that Nadella suddenly emerged, because it was Microsoft's low tide period, when the outside world questioned whether Microsoft was old and still able to eat, "When the company is in a hungry state, it will run fast," so with Nadella's rapid rise.

But now, Microsoft is a very different situation. Microsoft is the world's second largest Internet technology company, as of the close of trading on January 19, the market value of 2.27 trillion US dollars, second only to Apple, higher than Google, Amazon. The company's business is stable and profitable and the strategy is clear, on the one hand, rooted in the enterprise-level market, on the other hand, investment in consumer markets such as VR, and free products to stabilize the basic disk, "after eating a full meal, there is no motivation to change, it is still unknown." ”

Judging from Microsoft's previous acquisition history, there is not much successful history in the field of personal consumption. The last round of Microsoft's acquisition of the game target, was the 2015 $2.5 billion acquisition of Minecraft's developer Mojang, if you want to describe it as a "meta-universe" fundamentalism, Minecraft may be the originator of this wave, but the laurel has long been taken away by Roblox.

"That company was already very successful, launching Minecraft. At that time, at the peak of the day, it was taken in by Microsoft. But after Microsoft received it, there was no innovation, and it was getting worse and worse. Microsoft's style is very conservative, and it is naturally not compatible with the game industry. Wang Wei believes that at least from the results, Mojang has not maintained its former glory.

In September 2020, Microsoft acquired ZeniMax Media Inc. and its subsidiaries in full for $7.5 billion. Whether the company will help Microsoft Games is not quite clear.

"A lot of the things I swallowed in the past were not digested well." Du Hongchao told reporters that Microsoft's digestion ability is relatively poor, and whether this large-scale acquisition of Activision Blizzard can break the convention will test whether Nadella can refresh himself again.