Wen | Qing Axis Tour, the author | Zhou Sledgehammer
On January 19, 2022, Blizzard's chaotic fate saw the light of day when Microsoft announced that it would acquire Activision Blizzard for $95 per share for a total value of $68.7 billion, which is expected to close in fiscal year 2023.
After the acquisition is completed, Microsoft will surpass Nintendo to become the third-largest global game company in terms of global revenue after Tencent and Sony.
Of course, there are still variables about whether this transaction can be completed smoothly and as planned. Now that the U.S. government has proposed to limit big tech companies, the acquisition, which is the largest in the history of the world's gaming industry, is likely to face enormous regulatory pressure.
Because Microsoft and Activision Blizzard are both large multinational companies, with their subsidiaries and business units spanning the globe, the regulatory aspects involved in this round of acquisitions are not only the United States, but also need to obtain approval from the European Union and China to be subject to global antitrust investigations.
If this acquisition goes as planned, Microsoft will not only obtain franchise rights to games such as Activision Blizzard's Call of Duty, Candy Saga, Warcraft, Diablo, Overwatch and Hearthstone, but more importantly, the game team that automatically sees Blizzard, and will also become a powerful boost to Microsoft's Game Pass business.
Game Pass is Microsoft's key to the next era.
Microsoft's sword is sheathed
This acquisition may have been foreshadowed.
In November 2021, activision Blizzard's workplace scandal continued to intensify, sony, Nintendo, Microsoft collectively came down to denounce, at that time, Microsoft expressed its attitude, saying that it would re-evaluate the relationship with Blizzard.
The result of the re-evaluation was to pay for it and kill its peers by surprise.
After the news of Microsoft's acquisition of Blizzard, the game sector of the global stock market fluctuated sharply, with french game developer Ubisoft shares soaring 11.87%, Polish game developer CD Projekt shares rising 1.57%, and even Nintendo's stock price also improving slightly, except for Sony in Tokyo, where it fell 9.6%.
The motivation is not difficult to understand, in the wave of all the big technology companies are adding code to the meta-universe, Microsoft needs a C-end entry, and compared to Meta and Tencent, which master the social traffic entrance, the game is the best card in Microsoft's hand at this moment.
According to Microsoft's 2021 Quarterly Report, Microsoft's gaming division's overall revenue increased by $357 million, with a growth rate of 11%, of which Xbox's performance was amazing, hardware revenue increased by as much as 172%, like Microsoft's best-selling game console in history, Game Pass subscribers also exceeded 25 million, the market potential is huge.
Under the influence of the global epidemic, the game industry continues to be hot, and the strong purchasing power is to be met, and Microsoft is bound to launch more games and buy more high-quality game studios.
Microsoft's first-party studio lineup
And even if creativity declines, in the face of public opinion storms and personnel turmoil, Blizzard is still a good target for acquisition - World of Warcraft, Call of Duty, Hearthstone and Overwatch, all of which are excellent games that are famous around the world, and the IP related to these games is also a precious asset.
According to an open letter released by Microsoft, Bobby Kotick will continue to serve as CEO of Activision Blizzard, leading the team to report directly to Phil Spencer, CEO of Microsoft's gaming business.
Spencer has high expectations for the prospects of the two sides after the combination, saying: "Players around the world love the games developed by Activision Blizzard, and we believe that the creative team will send their best works to the players." Together, we will build a future where people can play the games they want to play almost anywhere they want to play. ”
In fact, this acquisition of Activision Blizzard has another significance for Microsoft - to enter the long-absent mobile game field and use more radical strategies to accelerate the layout of the meta-universe.
Microsoft's goal is not only Tencent and Sony, which are in the front of the game field, but also the huge market of the entire metaverse.
Blizzard Soul Returns?
As another protagonist of the largest merger and acquisition in the history of the gaming industry, Activision Blizzard will obviously also reap huge benefits.
According to Bloomberg calculations, the acquisition is at a premium of about 45 percent and an equity stake worth about $74 billion, making it a powerful shot in the arm for Activision Blizzard, which is in the midst of a storm.
In order to close the deal, Microsoft needs to use 53% of its cash reserves, which looks scary but not too much of a burden for Microsoft — $68.7 billion, just 3% of Microsoft's valuation, does not affect Microsoft's business development.
But from Blizzard's point of view, the olive branch thrown by Microsoft is enough to become a needle in the haystack to calm people's hearts.
Last November article "The Blizzard Is Gone! Nintendo, Sony, Microsoft joint crusade, the former king of online games fell into the abyss", we have sorted out the dilemma facing Blizzard, due to sexual harassment, bullying and other workplace scandals, Blizzard is experiencing huge personnel turmoil, more than 20,000 employees jointly petitioned CEO Bobby Kotick to resign, the California government department also launched an investigation against Blizzard.
The impact of this storm on Blizzard is very huge, in addition to the loss of users, the decline in stock prices, many middle and high-level people who once created Blizzard myths have also begun to leave.
Source: U.S. Stock Information
Alex Afrasiabi, former World of Warcraft Senior Creative Director, and Blizzard Entertainment Vice President J. From Allen Brack and other core members of Blizzard Entertainment, to Luis Barriga, director of Diablo 4 game, and Chacko Sonny, executive producer and vice president of Blizzard 2, to Jen Oneal, co-leader of Blizzard Entertainment, who resigned on November 3, 2021, the first Blizzard "patron saints" almost walked clean.
When the news of Microsoft's acquisition of Blizzard came out, many people in the industry did not evaluate optimistically, "The engine, steering wheel, and rudder have all run, so much money to buy a car shell." ”
Even with just a car case left, Blizzard still has great value, and Microsoft's entry is expected to be the beginning of the company's resurgence and rejuvenation.
According to the Wall Street Journal, people familiar with the matter have agreed that Bobby Kotick, a longtime CEO of Activision Blizzard, will leave with a severance payment of up to $290 million after the deal is completed.
In the context of this acquisition, and looking back at the series of responses before Blizzard, many things make sense.
After the sexual harassment scandal broke out, Activision Blizzard's decision-making level with more than 20,000 employees protested to keep Bobby Kotick, not because of his irreplaceable value, but because before the company was about to be acquired, someone was needed to stabilize the situation and make sure that the transaction could be completed smoothly.
Rolling and gushing
This deal is well hidden.
Just before the news of the acquisition, Blizzard and Microsoft had not disclosed a single word of wind, and even a week ago, Activision Blizzard had approached a financial company to buy Zynga for about $12.7 billion more than Take-Two.
At that time, Take-Two's acquisition was the world's largest acquisition in the game industry, and no one expected that the all-time high price of $11 billion would be refreshed by a huge increase of 6 times in just one week.
Behind the century merger between Microsoft and Blizzard, there is also a small Easter egg.
In 2019, Mike Ybarra, who had been with Microsoft for 22 years, jumped ship to Activision Blizzard as CEO of Blizzard Entertainment, and just two years later, the new owner was swallowed by the old owner, and he returned to Microsoft's arms.
After the news of the acquisition broke, Mike Bala made an expression
As for whether this return from exile is providential or man-made, it is difficult to say.
When Microsoft first acquired Nokia, former Microsoft employee Steven Elop also joined Nokia as CEO, staged a Trojan horse business drama, and now history is playing out again, it is not surprising.
Regardless of the inside story, it is certain that Microsoft is determined to win with Blizzard.
If the deal is seen as a content distributor's acquisition of a content producer, it can be interpreted as vertical integration and is hardly affected by the restrictive antitrust principles of the U.S. courts. But assuming the game developers of Microsoft's games business will be incorporated, the deal could also be seen as a "horizontal" acquisition — a merger of two direct competitors.
The variables remain.
Game companies that claim to create happiness and dreams are still essentially companies, and the rules and logic of operation still revolve around revenue.
The good news is that after being reorganized by Microsoft, Blizzard may be able to get rid of those bad habits that have been criticized, and the long-overdue "Overwatch 2" and "Diablo 4" may really be worth looking forward to.