Microsoft spent $68.7 billion to acquire Activision Blizzard, and many people don't understand what this concept is.
Put it this way, Microsoft's net profit in fiscal year 2021 is only $61.3 billion, which is equivalent to a year of waste, which can be described as a blood cost. More intuitively, against the benchmark domestic, NetEase's current Hong Kong stock market value is about 70 billion US dollars.
There's another shocking detail: Microsoft paid the $68.7 billion in full cash. There are many companies with total assets of more than $70 billion, but I am afraid that no more than 5 can come up with nearly 70 billion in cash.
Before the $68.7 billion record for the largest deal in the history of mergers and acquisitions in the industry, it was Company B's parent company ZeniMax that sold it for $7.5 billion last year, known as the "earthquake of the game world".
Coincidentally, the one who bought ZeniMax is also Microsoft, what is rich and powerful?
On the other hand, Riot ranks first in the market value of the third party in North American games, and its Blizzard Studio is the most prestigious, which is the well-deserved "PC King" in the minds of many players. From this point of view, Microsoft's intention to move is obvious:
Not only do you want to turn around in the "host war", but also take the lead in beating the war drum of the "meta-universe dispute".
Whether it is Sony, Facebook or Byte and Tencent, I am afraid that I did not get a good night's sleep when I saw this breaking news last night.
01
From Microsoft to Mega Hard
For this century acquisition, everyone should be most concerned about: What can Activision Blizzard bring to Microsoft? What can Microsoft bring to Activision Blizzard? What impact will the combination of the two have on the entire industry?
Let's start with the first question.
Twenty years ago, the original Xbox had just arrived. Someone in the European and American console industry finally stepped forward to challenge the majesty of the two Japanese giants of Sony and Nintendo, but it looked like a mantis arm as a car, and Xbox was also ridiculed by the Japanese media as a "murder box".
Microsoft's console wars in the millennium continue to this day, and if we take Microsoft as the protagonist of this story, then it should get Zhang Wujie's script.
Why? Let's take a look at the environment in which the original Xbox grew up in its "childhood": The "Atari Shock" in 1983 plunged the size of the U.S. game market by more than 97%, and the local game console market completely disappeared.
In the same year, Nintendo launched the FC, without any surprise occupying the almost blank North American market. Uncle Mario's popularity was explosive, and the IP value even exceeded that of Harry Potter, and Nintendo became the hegemon of the console market.
The second-generation overlord Sony was just a hardware partner at Nintendo at the time. It has the technology, the money, and wants to get a piece of the huge game industry but is not allowed by Nintendo, so the independently developed PS console came into being.
At this time, at the juncture of the game industry's transition to 3D technology and CD media, PS with powerful image processing performance and the needs of cinematic game development was sought after, and finally blew up the entire game world in 1997 with Final Fantasy VII.
This is the market situation that Microsoft faced when Bill Gates unveiled the Xbox concept at GDC2000 on March 10, 2000: two consoles occupied the American living room, each with its own unique magic weapon in terms of gaming.
As a latecomer, Microsoft is not easy to challenge the status of Big Brother. There is no platform in the air but can not make their own killer-level software, just like Zhang Wujie, who has practiced the Nine Yang True Scriptures, and still has to stand and be beaten after coming out of the mountain.
Fortunately, Zhang Jiao's main qi is as vast as the universe, and So is Microsoft, whose only advantage in the new century console war is money - buy without a game, and even considered acquiring Nintendo, and it is said that the directors laughed madly when they saw Microsoft's letter.
However, Microsoft's acquisition of Bungie Studios has developed the Halo series of games, relying on the highest-rated FPS game in history, Xbox, but it is still inferior to Nintendo and Sony.
As of the end of production, the NES sold 62 million units, the first generation of PS sold more than 100 million units, and the PS2, which was listed almost at the same time as the Xbox, became the emperor of history, selling 160 million units.
The Xbox sold less than 25 million units, and the most popular host in Microsoft's history, the Xbox 360, sold 85.8 million units, ranking eighth among the three previous hosts.
Backed by Microsoft's powerful technology base, Xbox consoles have had industry-leading configurations, at least much higher than Nintendo's hardware level. But the latter holds a large number of first-party exclusive IP and never needs to worry about sales.
And Microsoft has acquired or established 41 game studios since Xbox, as if Zhang Wujie has learned to move a big move, and he has received all the martial arts he sees. But more than 20 years later, Microsoft still can't come up with a second popular IP other than Halo.
Players buy hosts in the end to see the game lineup, Microsoft spent a lot of money to buy a bunch of games, it seems that the lineup is strong, but in fact, can not play much, to the next era of the host war has come to raise their eyebrows, really can not count on them.
So Microsoft's $70 billion purchase of riots is clearly to solve this pain point in one fell swoop: these games must be on Xbox, and I will give you a reason that you can't refuse.
02
Blizzard: The Lich King Is Back?
What Microsoft lacks everyone understands, the question is what it wants, can Activision Blizzard give? Activision and Blizzard are relatively separate divisions, and we look at them separately.
In 1991, under the bright sunshine on the south coast, three like-minded University of California graduates decided to team up to start a game company, the predecessor of Blizzard.
Ten years later, around the same time as the original Xbox, one of the most popular online games in Blizzard history, Diablo II, was released, and Warcraft III was named pc game of the year.
One is a console rookie, one is a popular fried chicken in the PC game industry, and at that time, if Blizzard will be acquired by Microsoft in the future, I don't believe it. How did Blizzard get down to making the acquisition seem reasonable in those 20 years?
Mike Mohan, one of the founders of Blizzard Games
There is an unavoidable paradox that prevails in the game and film markets.
To some extent, the business models of AAA game production and Hollywood blockbusters are the same, and they all need to make huge investments in the early stage, and then recover the cost and make a profit later. The key lies in quality and word of mouth.
The problem is that the work needs a very long cycle in years from planning to entering the market, large companies can maintain capital turnover, and small studios can only bet on all their wealth, such as Mihayou.
This is the reason why new era mobile games and terminal game RPGs are popular: selling a skin or prop can recoup the cost, why take such a big risk to do AAA?
However, the AAA masterpiece has a wide market in foreign countries, and in order to seek stability, game manufacturers often embark on the same road of deep cultivation of big IP as Hollywood, and do not squeeze all the value without giving up.
The original Blizzard gathered many geniuses born for the game, and the early years of Warcraft, Diablo and StarCraft all achieved millions of sales with epoch-making creativity and quality, when "Blizzard production, must be a boutique" is not an empty phrase.
Later, with a series of equity changes such as being acquired by Vivendi and merging with Activision into Activision Blizzard, Blizzard experienced a series of changes such as the disintegration of Northern Blizzard, the loss of core employees in the "Dark" series, and the change of senior management.
The most deadly thing is the miscarriage of Titan, which has been sharpened for 7 years and invested hundreds of millions of dollars, and after the failure of this project that Blizzard has placed high hopes on and intends to inherit the dominance of Warcraft in the MMORPG field, Blizzard has generated unprecedented pressure and contradictions within Blizzard.
From the ashes of Titans was born Overwatch
Listed companies are responsible for shareholders, and Blizzard has been under heavy profit pressure ever since. Overwatch, born from the ashes of Titan, was hastily launched and had to stop working on a new, more sophisticated version three years later.
The "Diablo" IP was used as a mobile game development experiment, and the famous "Do you guys don't have phones?" on the carnival. "Disgusted countless Blizzard players. Where is the "king of PCs" who only makes high-quality games and stands to make money?
Activision is in a much better situation, for a long time Activision only had one IP for Call of Duty, but that was enough.
The popularity of "Call of Duty" in the European and American markets is comparable to the glory of the king of China today, even if it becomes a New Year's goods, it is still the best-selling series of games for 13 consecutive years, and it is the most gold-sucking IP on both Xbox and PS.
Coupled with the fact that Blizzard is difficult to produce new games, the earning power of the old IP is still unquestionable, and "World of Warcraft" is still a $1 billion cash cow per year after more than a decade, and it seems that there is no need to sell it?
Since last year, Activision Blizzard has been mired in gender controversy, and in the United States, where political correctness has intensified, it has almost reached the point where everyone is shouting and beating. Affiliated league advertisers have withdrawn, staff have been greatly lost, and management has fallen into a crisis of trust.
Activision Blizzard's sale of Microsoft shocked the industry, but it is indeed reasonable to think about it: while the value of its IP is still there, it is wise to sell it at a high point.
03
The future can be expected
Microsoft and Activision Blizzard look like a match made in heaven:
For Blizzard, Diablo 4 and Overwatch 2 have been difficult to produce so far, and even had to stop overwatch operations: The last time the game launched a new hero was nearly two years ago.
For comparison, League of Legends introduced 13 new heroes during this period.
Overwatch has caused unprecedented popularity in China but is unsustainable, due to the lack of manpower in Blizzard's internal developers to continue to launch new content. In the final analysis, management's "squeeze" of Blizzard is the culprit behind the loss of glory of the former ace IP.
Blizzard has always had a tradition of incubating new projects and concentrating manpower on key projects, but in recent years, there have been repeated news of Blizzard projects being cut and insufficient developers, which is not unrelated to the fact that Mike, one of Blizzard's founders, was forced to leave in a palace fight.
Bobby Kotick, who replaced Lao Mai as the new CEO, is strong, focusing more on the company's performance in business and capital markets rather than on game quality.
After Microsoft's integration with Riot, Phil Spencer, who had just been promoted to head of Microsoft's gaming business, will replace Kotick as CEO. The former is passionate about the game industry, and at least Blizzard's development funding should no longer be a problem.
A new architecture for Microsoft Games was announced last night
According to the former CEO of Blizzard, about half of the projects incubated within Blizzard are never announced.
That is to say, the evaluation of Blizzard's "Jiang Lang Talent" may not be fair, and with the blessing of Microsoft, it is not known whether Blizzard can abandon the burden of the past to revitalize the glory, at least the player's long-awaited "Watch 2" and "Dark 4" can be successfully launched.
For Activision, a series of lawsuits against women, unequal pay, and sexual harassment culture have made the company panic, and after joining Microsoft, these troubles should be solved.
In terms of stock prices, Activision Blizzard's last share price reached $95 last June, and then fell all the way to a minimum of $56. Yesterday's news soared nearly 40% after the suspension of trading, which is enough to prove that the market has reached an agreement on the blessing effect of Microsoft's riot operation.
For Microsoft, first of all, Xbox still lacks heavyweight IP. Activision Blizzard's "Call of Duty" and "Warcraft", "Blizzard", "Diablo", "Watch" are famous. They will bring nearly 400 million monthly active users to Microsoft.
In particular, the enthusiasm of European and American players for FPS makes Call of Duty appear to exist in this acquisition, and this game is enough to make Xbox stand tall in the next-generation console war. If it withdraws from PS from now on, Sony's throne doesn't look so secure.
Call of Duty topped the game sales for the third year
Secondly, from a longer-term perspective, the significance of this acquisition to the meta-universe war is probably higher than the main engine war. Games are the most active area of the metaverse concept, and Blizzard has a group of talent inside the world who are the most storytellers in the game.
In his speech last night, the CEO of Microsoft specifically emphasized that "this acquisition will accelerate the growth of Microsoft's gaming business in the mobile, personal computer, game console and cloud computing fields, and will contribute to the creation of a 'meta-universe'." ”
On the other hand, Microsoft showed the world the arrogance of "not bad money" last night. The acquisition of Activision Blizzard has made it the third-largest game company in the world by revenue, is it the turn of Ubisoft, EA, Take-Two or even V?
04
epilogue
Most of the old Blizzard players should be in a similar mood when they see this news.
We have witnessed its glory and accompanied it to the bottom. Like an AE86 that once pulled the wind, now occasionally goes around Akina Mountain, it can only be laughed at in front of a row of GTRs and FCs.
Then Microsoft came, carelessly taking out the old engine and replacing it with a fierce one. Then, with a cigarette, he painted the old car a circle of new paint, and said while brushing:
"Come on, old fellow, let them see how fast you can run."