On January 18, Microsoft announced the acquisition of game developer Activision Blizzard for $68.7 billion in cash, not only the largest acquisition in Microsoft's history, but also the largest acquisition in the entire history of the game.
Although Microsoft's market capitalization has already exceeded 2 trillion, $68.7 billion in cash is still not a small amount for Microsoft. But as the world's largest software service provider, what is microsoft's purpose? Can this acquisition rewrite the landscape of the global gaming industry? This article will answer you one by one.
01 "New Three Kingdoms Era" or will it open?
On January 10, game developer and publisher Take-Two Interactive spent $12.7 billion to acquire mobile game developer Zynga, and just a few days after setting a new record for the game industry, microsoft stole the limelight, which really shocked the entire game industry.
After this acquisition, the game industry may usher in greater changes.
In fact, in recent years, giants such as Amazon, Apple and Netflix have successively entered the field of video games; at the same time, they have tried to integrate resources through acquisitions and expand their territory quickly and efficiently.
Since Satya Nadella took the helm of Microsoft in 2014, Microsoft has made a series of game acquisitions. The acquisition of Activision Blizzard will make up for its software and content IP deficiencies, of course, will also consolidate the position of Microsoft games, and Microsoft will also become the world's third largest video game company in terms of revenue, second only to Tencent and rival Sony.
So in order to win Activision Blizzard, Microsoft bought it all-cash at a price of $95 per share, a premium of 45% over Activision Blizzard's closing price on January 14.
Of course, this may open a new era of three-legged standing!
Activision Blizzard's stock price has fallen about 40% in recent years due to a sexual harassment scandal, from last year's peak to open trading, and the game's performance has not been satisfactory.
But in the game era of "content is king", Activision Blizzard's "Call of Duty", "Overwatch", "Candy Legends", "Diablo", "World of Warcraft", "Hearthstone" and other classic game IP will inject strong vitality into Microsoft, and at the same time, with 400 million monthly active users, will help Microsoft expand its territory in the game field. Of course, these are also important factors that led to this transaction.
Foreign media analysis believes that for many years, compared with Microsoft, Sony has always had a more stable exclusive game IP, and Activision Blizzard's large number of classic games will make up for Microsoft's shortcomings in this regard, and Microsoft's Xbox game platform will also have more advantages than Sony's Playstation.
As one of the world's top three console manufacturers, with the Xbox and HoloLens, Microsoft has occupied an important position in the virtual game field.
As of September 30, 2021, Microsoft's fiscal first fiscal 2022 quarter, the game segment revenue of nearly $3.6 billion, of which hardware sales increased the most, mainly due to Xbox game console sales climbing.
Affected by the epidemic, the global game industry revenue increased by 23% in 2020. According to Microsoft data, in 2021 alone, the total number of video game releases worldwide will increase by 64% compared to 2020, and 51% of players in the United States say they spend more than 7 hours a week playing on consoles, PCs and mobile devices.
Currently, there are 3 billion gamers worldwide, and Microsoft expects that number to grow to 4.5 billion by 2030.
Data analytics firm NewZoo estimates that the market for the gaming industry will exceed $180 billion, and expects that number to grow to $218.8 billion by 2024.
02 Microsoft entered the mobile game market and laid out the meta-universe
On the mobile device side, these advantages of Activision Blizzard will add new meta-universe ports for Microsoft. Microsoft will also gain more foothold in the smartphone game market, where Microsoft has barely been involved in this area.
Microsoft also said that mobile games are the largest segment of the game, and nearly 95% of the world's players are mobile game users. The combination of Microsoft and Activision Blizzard will also allow players to enjoy games such as Warcraft, Call of Duty, Halo and more anytime, anywhere.
The mobile game company King, which Activision Blizzard acquired in 2015, has reached 245 million monthly users of mobile game users, most of whom are loyal users of "Candy Crush", which will also quickly drive Microsoft's growth in the mobile game market, and will also have a huge impact on Sony.
In addition, once Microsoft takes control of the rights to Call of Duty, it can decide whether those games appear on rival Sony's PlayStation.
In 2020, after Microsoft acquired another game developer, ZeniMax Media, for $7.5 billion, it said that it would abide by the terms of the existing distribution agreement between ZeniMax and Sony, but Sony's use of the new game will be considered "according to the specific circumstances", which can be described as "the heart of Sima Zhao, everyone knows it".
Games have become a weapon for tech giants trying to shape the future of mankind, and for a long time, games have made people see the possibilities of the metaverse. Because of its virtual attributes, the construction of a complete universe, and a large user community, the game is generally regarded as the best starting point for building a metaverse.
Analysts say the acquisition will accelerate the growth of Microsoft's gaming business in mobile, personal computers, consoles and the cloud in the long run, and will provide the cornerstone for the "meta-universe" business.
03 Why did Microsoft increase its investment in streaming games?
After the acquisition of Activision Blizzard, Microsoft included its games in its own cloud gaming platform Xbox Game Pass, which greatly improved the attractiveness of gamers and will also strengthen Microsoft's Xbox cloud gaming service, which is to use Microsoft's Azure cloud computing division to produce video games.
Last year, Netflix launched its own cloud service game platform Netflix Games, and the biggest feature of cloud games is that it does not require strong hardware support.
Cloud gaming will also significantly reduce hardware costs for gamers and attract more people, especially in middle-income countries where smartphones are common but consoles are rare.
On the contrary, if hardware requirements are put aside, higher requirements are put forward in terms of software and content. Microsoft's dominance in software research and development, coupled with Activision Blizzard, may achieve the effect of a two-sword combination, so that the exclusive content of the acquisition is more strategic.
In the streaming space, both game companies and other technology companies are eyeing the field.
Sony has its own cloud gaming platform, PlayStation Now; Amazon also launched an early version of its cloud gaming platform Luna in 2020; and Nvidia, which focuses on gaming microchip makers, launched GeForce Now in the same year.
But Microsoft's advantages are very obvious, from hardware, software to content, forming a complete imperial territory, coupled with decades of hard work in the game business, and its own world's second largest cloud computing platform, is bound to change the pattern of the game industry. Of course, this will also force other game makers to speed up the pace of acquisitions, with five acquisitions in 2021 alone worth more than $1 billion.
In the future, the game industry, or will usher in the dark period of sword and light sword shadow, the warlord melee, of course, for gamers, it is not a good thing, we can get better service and game experience through lower prices.
Text/White Ink
Knitting/well salt
Resources:
1． Why is Microsoft Investing $69 Billion in Video Games? The Economist
2. "Xbox Game Pass official subscribers exceed 25 million", Zhongguancun Online
3. Google bets on cloud games, who will become the Netflix of cloud games? Titanium Media
4. "Microsoft's Ambition to Acquire Blizzard: Competing with Sony, Heavy Money Layout Metacosm", Wall Street News
5. "With the $68.7 billion acquisition of Activision Blizzard, did Microsoft complete the meta-universe ecological puzzle?" " The Paper