On January 18, Microsoft announced that it would spend a total of $68.7 billion (about 436.4 billion yuan) to acquire Activision Blizzard Corporation (ATVI), the world's largest game developer and publisher, at a price of $95 per share, a deal that broke records for the game industry and the largest acquisition in Microsoft's history. After the transaction is completed, Microsoft will become the world's third-largest game company in terms of revenue, after Tencent and Sony. Affected by this, Activision Blizzard's stock price rose 25.88% on the day.
"This is a huge change for the gaming industry." Yves Guillemot, who heads the world's third-largest game developer, Ubisoft, commented to first financial reporters.
The acquisition, which is at a premium of about 45 percent and an equity valued at about $74 billion, has been approved by microsoft and Activision Blizzard's boards of directors, according to calculations. After the transaction is completed, Microsoft will become the world's third-largest game company after Tencent and Sony.
Will Microsoft build a gaming empire?
The so-called stone stirred up thousands of waves, Microsoft's acquisition of Activision Blizzard news came out, not only Activision Blizzard surged by more than 37% before the disk, the news also instantly occupied the headlines of major media and set off a lot of discussion in the global game industry field and many console gamers, even passers-by who did not understand the game at all will sigh a microsoft "banknote ability" is strong.
Microsoft's net operating cash flow for fiscal 2020-2021 was $76.74 billion, a $68.7 billion expense that means Microsoft is spending about 11 months of operating net cash flow, and the transaction is also the largest acquisition in Microsoft's history.
In fact, Microsoft has been in the game industry for a long time, as early as the turn of the century to establish and launch its video game brand - Xbox, with Nintendo and Sony in the field of console games, in recent years is more in the field of the game industry frequent action.
Judging from Microsoft's actions in the past two years, before acquiring Activision Blizzard, it first took the Parent Company of Bethesda for $7.5 billion, obtained the ownership of game IP such as "The Elder Scrolls", "Fallout", "Unjust Murder Machine", "Evil Possessed", and spent $2.5 billion in September 2021 to take the classic sandbox game "Minecraft" development team Mojang and its own "Minecraft" brand into the pocket. Blizzard, King Studio and its franchises of games, including World of Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush, are packaged into their own game ecosystem.
If the acquisition plan is successfully implemented, and Microsoft does not carry out a large-scale split and reorganization of Activision Blizzard's organizational structure after the acquisition, microsoft's game development department will have more than 30 studios, covering almost all mainstream games on the market, which is enough for Microsoft to take advantage of the game market competition.
Microsoft's acquisition of Activision Blizzard is actually eyeing the IP influence of its games and its own game production and distribution capabilities. From the perspective of the game market, Blizzard's Call of Duty series can be said to be at the top of the US game sales list.
According to the data released by the US NDF for the first 11 months of 2021, "Call of Duty: Black Ops Cold War" has been in the top three sales for 8 consecutive months, although the ranking has declined in September and October, but "Call of Duty: Vanguard" was released and reached the top of the sales throne in November, and its huge influence is evident.
For Activision Blizzard, this acquisition actually gave it a chance to be reborn. Previously, Activision Blizzard's Blizzard division was mired in a sexist and sexual harassment scandal, and Activision Blizzard's stock price plunged nearly 46% from a high of $104 per share to $56.
A generation recalls whether the king can return after the Blizzard is acquired
If you move the time forward 10 to 20 years and walk into any Internet café in China, you can intuitively feel the dominance of Blizzard Entertainment's games.
As early as 2000 years ago, Blizzard has Diablo 2, StarCraft, Warcraft 2 and other well-known game IP, in 2002, Warcraft 3 was listed and quickly swept the world, in the single-player game circle, "Blizzard production, must be a boutique" gradually became the consensus of the players of the year, "skipping class to fight Warcraft" has also become a generation of memories.
In January 2004, the online game World of Warcraft was released, triggering a frenzy of players around the world, and to this day, World of Warcraft is still in operation and has been updated to the ninth expansion pack.
In the past 20 years, Blizzard's games have given birth to countless excellent IPs, among which, Warcraft and world of Warcraft series have even given birth to the derivative card game "Hearthstone" due to their excellent plot design and historical view. To this day, World of Warcraft and Hearthstone are still the two most gold-sucking games under Blizzard Entertainment.
"The main reason why Blizzard is remembered by many veteran players is that it ushered in an era and defined the gameplay of many games, which are still used today." Li Jian, a practitioner in the game industry, told Shell Financial Reporter, "For example, Warcraft and StarCraft defined real-time strategy games with left-click selection units, right-click control, and the setting of map war fog; Diablo defined the setting of red health and blue magic bars for role-playing game characters; and even DOTA based on the birth of the Warcraft 3 editor directly created the MOBA game classification, and League of Legends and Glory of Kings still use this game today." It can be said that the games produced by Blizzard have always stood at the top of the chain of contempt in the game circle. ”
But Blizzard Entertainment's road to operation has not been smooth.
In December 2007, Blizzard Entertainment's parent company Vivendi Games and Activision, which owns games such as Halo, announced a merger and renamed Activision Blizzard, and since then, Blizzard Entertainment has maintained independent operations with Activision's game division, which has studios around the world and nearly 10,000 employees. However, after the merger, the reputation of the Blizzard brand among players has shown a gradual decline.
The first is the suspicion of "fried cold rice" all the time.
"For many years, Blizzard Entertainment has been designing games around the three major IPs of Warcraft, StarCraft and Diablo, and its StarCraft 2 and Diablo 3 launched in 2010 and 2012 have also received praise, but under the impact of other games that have sprung up like mushrooms, Blizzard's dominance has gradually declined." Li Jian told Shell Financial Reporter.
During this period, the only work that stood out was its shooter game Overwatch, which was launched in 2016. "The game is completely different from the previous one in terms of plot and character setting, and has been enthusiastically pursued by a large number of FPS and esports players since its launch. But from now on, this is just a 'flash in the pan' of Blizzard's ability to innovate. Li Jian said.
It is understood that in recent years, Blizzard has announced that it will launch "Diablo 4" and "Overwatch 2" and released a well-received promotional video, but to this day, these two games are still in a "ticket jumping" state. In contrast, it is the repeated "re-launching" of old works.
In 2019, "World of Warcraft Nostalgia Suit" was launched; in 2020, Blizzard launched "Warcraft 3 Reset Version", with "feelings", many players purchased these two games, but also many players questioned Blizzard's innovative ability, among them, "Warcraft 3 Reset Edition" due to the real game quality and the description in the promotional film, was spit by many players to consume player feelings, The player rating on the well-known foreign rating website MC is only 0.5 points, making it the lowest rated game on the MC. Shell financial reporter logged on to the Blizzard Battle Network client and found that the current "Warcraft 3 Reset Version" is still officially marked with the word "test" on its name.
In addition, activision Blizzard is facing employee turnover and negative controversy.
At present, the three veteran founders of Blizzard Entertainment have all left their jobs. In fact, until last year, Blizzard Entertainment was still facing the dilemma of a large number of employee losses. For example, in April 2021, Overwatch director Jeff Kaplan announced his departure from the company, and in June, Alex Afrasiabi, the former creative director of World of Warcraft, left and was reported to have sexually harassed several female employees in public at the company. Activision Blizzard is understood to have fired or fired more than 30 employees and imposed penalties on about 40 others since July 2021.
"The current Activision Blizzard is no longer the original Blizzard, so when Microsoft announced the acquisition of Activision Blizzard, many old players hoped that Blizzard could 'stand up' again and restore the glory of the past." Li Jian said.
Microsoft's acquisition not only enriches its own game content camp, but also enhances its game publishing and e-sports production capabilities, and is equivalent to pulling Activision Blizzard to get out of the quagmire of the Blizzard scandal. Microsoft's strong capital injection can make Activision Blizzard more focused on putting the focus back on game content development and production, and some of the projects that are rotten may be put back on the agenda. After the two completed the acquisition, the final pride was still the global players.
PK Sony? Microsoft is spending a lot of money to grab the game market
Affected by the news, Japan's Sony shares fell 9% after the opening of the market on Wednesday.
Gao Dongxu, founder and chief analyst of China Entertainment Think Tank, told First Finance that Sony's layout in the cultural industry and content industry is relatively comprehensive, and it is difficult for Microsoft to surpass Sony in a short period of time. In addition, Microsoft's corporate culture is relatively conservative, and the atmosphere of creative companies is different, and the effect of integration and acquisition remains to be seen.
It is worth noting that in the official tweet released by Activision Blizzard, it said that it will join the "Xbox family".
It is understood that Xbox is a home video game (aka console game) developed by Microsoft Corporation in the United States and released in 2001. Some voices said that the acquisition of Activision Blizzard once again reflects Microsoft's determination to seize the future console market, and also means that it and the old rival Sony are bound to set off a head-on confrontation again.
The gaming feud between Microsoft and Sony has a long history.
As the world's two largest desktop console gaming platforms, Microsoft lags behind Sony in both console hardware and gaming.
In November 2021, the two sides launched their game consoles Xbox Series X/S and PlayStation5 almost simultaneously. But according to foreign media VGChartz, the Xbox Series X/S sold about 1.2 million to 1.4 million units in the 24 hours after its release, while the PS5 sold 2.1 to 2.5 million units, almost twice the former. Also according to the data recently released by Japan's "Famitong", during 2021, PS5 sales in Japan were 942798 units, and Xbox Series X/S was only 95598 units, a difference of nearly 10 times between the two.
This is not the first time this has happened. According to VGChartz data, as of July 2020, the total sales of Sony PS4s reached 110 million units in the sales competition of the previous generation of consoles, far better than the Xbox One, which sold only 48.14 million units.
The sales competition of game consoles not only determines who will have more players in the market, but also directly determines the performance of the companies behind them.
The importance of games to performance need not be said, but also let Sony and Microsoft pay special attention to the competition in the console market.
In fact, the competition of game consoles is also reflected in game products. Excellent platform-exclusive games may directly drive the sales of consoles.
"I chose to buy the PS5 before, and I went to my debut game 'Spider-Man: Miles'." On January 19, player Lin Xiang told reporters that almost all friends around him chose PS5, which is largely because its game richness is far better than other platforms.
The richness of the game has become a key competition venue. Acquiring game companies with a large number of IPs has naturally become the fastest way for platforms to seize players.
Shell financial reporter noted that this transaction is not the first time Microsoft has acquired a game company. Back in 2014, Microsoft acquired Minecraft game maker "Mojang" for $2.5 billion. In 2020, Microsoft acquired game maker "Bethesda" for $7.5 billion, which released "The Elder Scrolls" and "Fallout".
At the same time, through the exploration of cloud games, Microsoft has now established and acquired a large number of excellent game studios to ensure that its consoles are not weaker than Sony in the game field.
Microsoft's official article said that the acquisition strengthens Microsoft's Xbox Game Pass product line, "with Activision Blizzard's monthly active players and $3 billion IP value in 190 countries and regions, this acquisition will make Game Pass one of the most compelling and diverse lineups of game content in the industry." Upon completion of the transaction, Microsoft will have 30 in-house game development studios as well as additional publishing capabilities and esports event production capabilities. ”
"It's bound to be a fierce competition. Sony has no way back. The share of its gaming business in the group's revenue makes it not want to 'lose to Microsoft' in this core area. Game industry observer Ma Jing analyzed, "And Microsoft is bound to make efforts to seize the market after tasting the revenue and player market benefits brought by the game business." ”
The goal paves the metaverse
An intriguing detail is that the many IPs owned by Activision Blizzard have actually been linked to the metaverse concept.
Spielberg's Ready Player One is hailed as a prophecy for the future metaverse world, and in the Ready Player One movie, multiple activision Blizzard's game characters have appeared, such as overwatch's game character Hunting, and Halo's game character Sergeant Major, all of whom follow the protagonist in the final showdown scene.
Screenshot of the movie "Ready Player One", the second from the left is the Overwatch game character Hunting Air.
The greatest value that Activision Blizzard can offer is its many classic IPs. These core products can be combined with Microsoft's cloud gaming, Xbox business, and metaverse to open up new possibilities. The industry believes that the acquisition also means that Microsoft is betting heavily on the metacosm, and the arms race in the metacosm has begun.
Satya Nadella, chairman and CEO of Microsoft, bluntly puts out her ambitions for the metaverse, "Gaming is the most dynamic and exciting category of entertainment on all platforms today and will play a key role in the development of the metaverse." We're investing heavily in world-class content, communities, and the cloud to usher in a new era of gaming that puts players and creators first, making games safe, inclusive, and accessible to all. ”
Shen Meng, founder of Chanson Capital, told CbN that Activision Blizzard's core game products are a powerful tool for building a metacosm. Microsoft currently has Xbox, Xbox Game Pass, so Activision Blizzard's products can be the most direct and fast translation, the future can also use some of the game development in the graphic image technology, in the business, research and development and other platforms combined, to create Microsoft's multi-purpose comprehensive meta-universe.
"Activision Blizzard and B Society have been acquired by Microsoft, and the two major game companies are the hegemons of the game engine industry, and Microsoft is going to monopolize the meta-universe." Some players said that the vast map of Activision Blizzard's "World of Warcraft" and the refined map of the B Society's "Fallout" series seem to be specially designed for the metaverse.
In addition to metascopies, Activision Blizzard will also promote Microsoft's cloud gaming and Xbox gaming subscription services. Microsoft said in a statement that at present, Activision Blizzard has nearly 400 million monthly active players in 190 countries or regions. Through this transaction, Activision Blizzard not only brought billions of dollars worth of franchises to Microsoft Games, but also brought a loyal user base to promote the expansion of Microsoft's business.
Previously, Microsoft has been working on cloud games, and the 2021 financial report shows that Xbox cloud games can already be used on PCs and mobile phones and tablets. Activision Blizzard's gaming assets will accelerate its cloud gaming initiatives, boosting Microsoft's cloud business and gaming device sales.
"We're enabling people around the world to stream games in high fidelity by putting players in the entertainment hub, which is why we've invested in Xbox cloud games over the past few years to deploy dedicated Xbox hardware in our data centers around the world." Microsoft says it's expanding the Xbox ecosystem and community to millions of new users through the cloud.
In the past 20 years, Microsoft has not given up the game track, and has successively acquired many game studios and their IP. Statistics show that Microsoft currently occupies three of the top ten acquisitions in the game industry, in addition to the acquisition of Activision Blizzard, in 2020 for 7.5 billion US dollars to acquire the well-known game developer B company ZeniMax Media, in 2014 for 2.5 billion US dollars to buy sandbox originator "Minecraft" studio Mojang.
Shen Meng told First Finance that cloud computing is the core of Microsoft's business and the foundation of performance, and the game entertainment platform Xbox Game Pass is the direction with the most potential for growth, but because Microsoft is obviously lagging behind competitors in game software development, coupled with the rise of the concept of meta-universe promoted by major competitors, it is likely to weaken the importance of Microsoft cloud computing and related platforms, so Microsoft chooses to reduce the gap in competition through large acquisitions.
Comprehensive Beijing Youth Daily, First Finance, Beijing News