Reporters Chen Yibo and Wu Kezhong reported in Beijing
At the beginning of 2022, the high-value acquisition cases of overseas game manufacturers have been one after another.
On the evening of January 18, Microsoft (stock code: MSFT.O) announced that it would acquire Activision Blizzard (stock code: ATVI.O) with nearly $70 billion in cash, which will become the third largest company in the world in terms of gaming revenue after the acquisition. Public opinion boiled over in an instant. From the early years of Microsoft employees writing "Microsoft understands games" on T-shirts to encourage and enhance their confidence in cultivating the game industry, to now expected to become the world's third largest game company, decades of game business development exploration, Microsoft has now gradually set its sights on the next generation of development opportunities in the game industry. The largest acquisition in the history of the game industry is also seen as its operation to further shape the C-end game metacosm.
In the view of Zhang Shule, a commentator in the game industry, this transaction can be seen as a modern version of the "buy and return the pearl", that is, Microsoft actually values the high-quality IP resources of Blizzard Entertainment (a company of Activision Blizzard) and the influence it can produce among players, which can contribute more content to Microsoft's console platform in the short term, and in the long run, it can use the game as an entrance to help build its metaverse.
In this regard, the China Business Daily reporter asked Microsoft and Activision Blizzard for verification, Microsoft said that the acquisition news disclosed on the official website shall prevail, as of press time, Activision Blizzard has not replied.
The biggest acquisition in the history of the game has been refreshed again
Just a few days apart, the largest acquisition in the history of global gaming has once again set a new record.
Compared with Take-Two's announcement a few days ago that it intends to buy Zynga for nearly $13 billion, Microsoft's acquisition price is as high as nearly $70 billion. According to Microsoft's disclosure, it will acquire Activision Blizzard at a premium of $95 per share for a total cash transaction consideration of $68.7 billion, which is the highest consideration in Microsoft's history and the largest acquisition in the game industry.
According to Wind Financial Terminal data, according to microsoft's original financial statements, as of fiscal year 2021 (July 1, 2020 to June 30, 2021), Microsoft's total revenue under consolidated statements was $168.1 billion (under the latest exchange rate, the same below), net profit was $61.3 billion, net cash flow from operating activities was $76.7 billion, and the balance of cash and cash equivalents at the end of the period was $14.2 billion.
As for whether the consideration for this transaction is too high, some people believe that considering the multiple negative news that has broken out in recent years by Activision Blizzard, its stock price may be higher if it is acquired at the peak of its development.
Gao Jingze, a professional in meta-universe research, recently told reporters that as a senior player of Activision Blizzard's games, as far as he knows, "Blizzard has been in great internal turmoil in recent years, most of the old ministers have been driven away, the product has not been updated in one year, and three CEOs have been changed in two years." In this case, it's already cheap enough. ”
"This acquisition is definitely a good thing for Activision Blizzard, the company has been worse than that, and any change is good." For Microsoft, 'taking advantage of the danger' bought two first-line IP pools + two first-line game development teams at a cost-effective price. Whether it is to continue to engage in traditional games or enter the meta-universe, there are sufficient resources. Gao Jingze added to reporters.
On January 18, Microsoft's official website released an acquisition note mentioning that games have now become the largest and fastest-growing form of entertainment. After the acquisition of Activision Blizzard, it will bring happiness and the game community to every player in the form of cross-platform, Activision Blizzard is a legendary game product, immersive interactive entertainment and publishing experience, will accelerate the growth of Microsoft's game business on mobile, PC, console and cloud, and can contribute to the construction of the meta-universe.
Bobby Kotick, CEO of Activision Blizzard, said, "Activision Blizzard's world-class talent, IP resources combined with Microsoft's technology, distribution, access to talent, ambitious vision, and commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive gaming industry." ”
The acquisition includes activision, Blizzard and King Studios' iconic game IPs, such as "Warcraft," "Diablo," "Overwatch," "Call of Duty," and "Candy Crush," as well as major league baseball games. According to reports, Activision Blizzard is an American video game developer, publisher and distributor, at present, Activision Blizzard is the world's largest third-party game developer and publisher. The company operates three main segments: Activision, which publishes interactive entertainment software products and downloadable software; Blizzard, which publishes real-time strategy, role-playing games, and games in the online paid multiplayer role-playing (MMORPG) category; and Activision Blizzard Distribution Co., Ltd. (Distribution), which publishes interactive entertainment software and hardware products.
Microsoft mentioned in its official acquisition note that with the completion of the acquisition, it plans to put Activision Blizzard's game on Game Pass, and the above transaction is expected to strengthen Microsoft's Game Pass portfolio. The data shows that at present, Game Pass has more than 25 million subscribers. Activision Blizzard has nearly 400 million monthly active players and $3 billion in franchises in 190 countries, and the 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 and esports production capabilities.
For now, Bobby Kotick will continue to serve as CEO of Activision Blizzard, and while it's unclear what position Bobby Kotick will hold in the future, Activision Blizzard's business will report to Microsoft Gaming CEO Phil Spencer once the deal closes.
The report also quoted a person familiar with Microsoft's business as saying that after the acquisition is completed, Microsoft plans to put some of Activision Blizzard's games on Sony's PS console platform, and will also put some exclusive game content on its Xbox platform.
It is understood that the transaction is expected to close in fiscal year 2023, and after the completion of the transaction, Microsoft will become the third largest game company in the world, after Tencent and Sony.
From a data point of view, in fiscal 2021, Microsoft's game business revenue was US$15.37 billion, while in 2020, Tencent's online game business revenue increased by 36% to RMB156.1 billion, and Sony's game and network services business revenue in fiscal 2021 (April 1, 2020 - March 31, 2021) was RMB144.3 billion (under the latest exchange rate).
However, it is worth noting that reports quoting Makan Delrahim, former head of the U.S. Department of Justice's antitrust unit, as saying: "Recent actions by the U.S. antitrust authorities, as well as recent unprecedented aggressive actions by overseas regulators such as the European Union and the United Kingdom, may indicate that these institutions will be closely watching this deal." ”
The modern version of "buy a bead"?
In the view of Zhang Shule, a commentator in the game industry, the above transaction is actually more like a modern version of "buying and returning pearls".
Microsoft's acquisition of Activision Blizzard should provide Blizzard Entertainment with a platform like Xbox, and the rest only needSBlizz Entertainment to create game content that can adapt to its consoles according to its technical standards." In this case, Blizzard Entertainment is expected to have the energy to concentrate on the game, so the two sides can reach a cooperation. Zhang Shule said.
"Although Blizzard Entertainment has seen a lot of negative news in recent years, and even many people feel that it is slowly declining, in the minds of players, Blizzard Entertainment is still synonymous with boutique games, Microsoft bought Activision Blizzard, more is to see the Blizzard Entertainment external this golden sign of the many IP attached to the many IP, and these IP can trigger the appeal to players", "This transaction in the short term can allow Microsoft's game console hardware platform to have more game content, long-term can help the construction of its meta-universe." Zhang Shule further added.
Gao Jingze also mentioned that Microsoft has vigorously developed Xbox game pass (XGP) in the past year, an XGP game subscription service, with EA and Ubisoft have deep cooperation, bringing games back to Windows PC computers from the console. Both Blizzard and Activision games enrich this library. The future "Diablo 4" should enter the XGP library on the line.
Tianfeng Securities also mentioned in a research report that the acquisition includes well-known IP and works of Activision Blizzard and subsidiary King, such as the "Warcraft" series, "Diablo", "Overwatch", "Call of Duty" and so on. This is another significant expansion of Microsoft's gaming asset library since the previous acquisition of Zenimax Studios. By integrating Blizzard's game lineup and monthly active users into XGP, it can further accelerate the double growth of XGP users and revenue.
But Zhang Shule said that after the acquisition of Activision Blizzard, microsoft may need to provide support, including people and property, in order to make the value of Blizzard Entertainment's former top IP really driven. Liao Xuhua, research director of the Analysys Interactive Entertainment Industry Center, also said, "If Microsoft can help Blizzard solve the employee trust crisis, it will be good news for the game industry and players."
For Zhang Shule's view that Microsoft is more interested in the value of Blizzard Entertainment IP, Liao Xuhua said, "I think Activision's Call of Duty IP is more important, because Blizzard's games are online games, and the direct value to Xbox is not so great." ”
But Zhang Shule said, "Game consoles can also be online games, and the metacosm is a huge online game." ”
In response to the view that Microsoft or is interested in Activision's publishing capabilities, Liao Xuhua said that he does not agree, Activision's most valuable should be its "Call of Duty" game and IP, as well as the development team.
Bloomberg mentioned in its report that Activision has a long history with Microsoft's Xbox, and that one of the main reasons for the success of Activision's largest IP Call of Duty is Microsoft's online platform, Xbox Live, which allows players to connect to multiplayer games. Most of Activision's games are designed for Xbox consoles. In 2020, Call of Duty game accounted for 55% of Activision's operating profits.
But it's worth noting that in 2021, Wall Street investment bank Baird said that the search volume for Call of Duty and World of Warcraft dropped significantly from the previous year, down 32% and 44% respectively.
In addition, in this acquisition, Microsoft also said that mobile is the largest segment of the game, and nearly 95% of the world's players enjoy the game on mobile. With strong teams and technology, Microsoft and Activision Blizzard will enable players to enjoy the most immersive games such as Halo and Warcraft wherever they want. Activision Blizzard's mobile business represents an important presence and opportunity for Microsoft in this fast-growing segment.
The reporter saw on the official website of the cicada master that only from the situation of the iOS side in the United States, there are currently 24 APPS developed by King, but only 15 games are currently on the shelves, and in these 15 games, only "Candy Crush Saga" is the top rank. On January 19, 2022, Candy Crush Saga was ranked second on the game bestseller list, and puzzle puzzles were ranked first on both the puzzle bestseller list and the arcade game bestseller list.
Of the 15 games still on the shelves, there are a number of mobile games with the word "Candy Crush", in addition to "Candy Crush Saga", "Candy Crush Soda Saga", "Candy Crush Jelly Saga" and "Candy Crush Friends Saga".
According to the real-time ranking data on the evening of January 19, Beijing time, "Candy Crush Soda Saga" is ranked 17th in the game best-seller list, 5th in arcade games, and 7th in puzzle games; "Candy Crush Jelly Saga" is 177th in the game best-seller list, 38th in the puzzle best-seller list, and 24th in the arcade game best-seller list; "Candy Crush Friends Saga" is in the game best-seller list. Ranked 155th, 33rd and 19th in the puzzle best-seller list and the arcade game best-seller list, respectively.
From the revenue level, according to the data of the mobile application data analysis company Sensor Tower, taking "Candy Crush Saga" as an example, only on the Apple iTunes side, the global download volume in December 2021 was 2 million, and the revenue was 36 million US dollars.
(Screenshot from Sensor Tower's official website)
On the Android side, in December 2021, "Candy Crush Saga" was downloaded 12 million times worldwide and reached $42 million in revenue.
Power C-end game metaverse
How can the acquisition of Activision Blizzard give Microsoft a competitive edge in the meta-universe race of the giants? How can we contribute to the construction of its metaverse in the long term?
Liao Xuhua mentioned to reporters that in fact, the metaverse is still very abstract, and it is very likely that companies without game assets in the future can also explore the development route of the metacosmum, that is to say, game assets must not be sufficient conditions for the metacosm, nor are they necessarily necessary conditions. What exactly is a usable, pragmatic metaverse is not yet a conclusion, and the entrance may be a game, it may be social, it may be other content or service.
A metaversymic research report by Essence Brokerage pointed out that in the territory that constitutes the entire metaversmic research framework, the first is the hardware entrance (VR/AR/MR/brain-computer interface) and operating system that provide the metacosmonic experience, followed by the back-end infrastructure (5G/computing power and algorithms/cloud computing/edge computing) and the underlying architecture (engine/development tools/digital twins/blockchains) that support the smooth operation of the metacosm, and then the core production factors in the metacosm (artificial intelligence), and finally presented as a hundred flowers of content and scenarios , and a large number of synergists that provide technology and services in the process of the ecological prosperity of the meta-universe.
In the rotation sequence of these six major layouts, hardware and content come first, while content is mainly game.com. The virtual world built by the game may be a precursor to the metaverse. On the one hand, games are a segment of the content industry and the epitome of economy, culture, art, community, governance, and more in Metaverse's new universe. On the other hand, from the perspective of multi-dimensional factors such as technical maturity, user matching, and content adaptability, games are also an excellent way to explore the metaverse.
(Screenshot from Tianfeng Securities Research Report)
Kong Rong, chief analyst of the global technology industry at Tianfeng Securities, also said that the game is the first stop of the metacosmection, an interactive 3D space, and a natural metacosmic application form.
Gao Jingze also mentioned that games are necessary to build a metaverse. If the game is 1.0, the online game is game 2.0, the mobile game is game 2.1, and the meta universe is game 3.0. The metacosm is a further embodiment of the technical route of the game. Game companies and companies with top game studios have an absolute advantage in building metaversms.
Kong Rong mentioned that in this transaction, Microsoft first saw the demand for content IP in the process of building the metaverse, especially in the future XR device, the head IP VR content is needed as a reserve, but in addition to having a large number of copyright IP required in the metaverse, it also needs to have an engine, which is also the foundation for building the metaverse.
Microsoft's above acquisitions have made the industry pay attention to the metacosm after the hardware layout, which requires a large number of content experiences to continue to attract user retention, and finally the competition is back to the value entrance of content. In the end, each generation of the Internet can retain users or have a valuable core or a healthy and rich content ecology. Only hardware or platforms cannot retain users.
Liao Xuhua said that the game only provides the content needed in the process of building the metaverse, but at the same time needs to have the underlying image and physics engine technology of the game to enter the world of the metaverse in the form of a game entrance.
For the situation that Microsoft obtained many top IP resources from Blizzard Entertainment after the acquisition to help build its meta-universe for a long time, Gao Jingze said, "The most important thing in developing meta-universe games is to spend money and time and smash manpower, and the first-line IP cost performance is not necessarily high."
In addition, it is worth noting that Satya Nadella, chairman and CEO of Microsoft, also said: "Games are the most dynamic and exciting entertainment category on all platforms today, and will play a key role in the development of virtual world platforms." "We're making deep investments in world-class content, community, and cloud technologies to usher in a new era of gaming that puts players and creators first, and makes games safe, inclusive, and open to all."
Hu Jie, a professor at the Shanghai Advanced Institute of Finance, once told reporters, "With the arrival of the meta-universe, a significant impact on the game industry is that the role of the big game operation platform will be diluted." In the metaverseic world, through the introduction of blockchain technology forms including NFTs, multi-person shared ledgers, etc., for the game industry, the production relationship will be reconstructed, and the benefits will be redistributed", "An important change in the Web 3.0 era triggered by the metacosm, that is, to turn the benefits to users".
After the completion of the acquisition, Microsoft will have nearly 400 million monthly active users of Activision Blizzard in addition to having more than 25 million Game Pass subscribers.
A research report by Tianfeng Securities pointed out that if the early core of the game was hardware, the core of the past decade was content, and Microsoft believes that the core of the current game metacosm is the player and the community. Acquisitions can build a platform ecosystem that integrates content, commerce, and applications around players and communities. By integrating Blizzard's 400 million MAU and its own XGP active users, it can turn the developer/developer's content monetization flywheel.
The report by Tianfeng Securities believes that the acquisition is a step in Microsoft's efforts to promote the formation of its To C game metacosm since the enterprise metacosm. Microsoft's previous focus has been on enterprises, from office software to enterprise-grade cloud services. In terms of metacosms, Microsoft is building the enterprise metacosm through Azure, Hololens, and mesh for Teams platforms. The C-end market means more content and user data for Microsoft, and has stronger cloud computing needs in the future. The development of C-end markets not only broadens the market space, but also empowers/accelerates the development of its cloud, AI, and productivity platforms.
For the overall competitive pattern of the current international giant layout metacosm, Gao Jingze believes that "from the perspective of product development progress, Meta is currently in the industry ceiling, because the software and hardware layout time is the longest, and mature hardware and excellent software demo products have been come up." The Sandbox thing in the crypto industry is good, and you can expect to go out of the circle when the official version is launched; Decentraland technology is relatively weak. Industries with a regulatory vacuum are likely to have a social and economic order based on the natural evolution of social behavior, which is worth paying attention to. The money and manpower of domestic Internet companies are also at the top level of the industry, but the current progress is not transparent, and it is speculated that it is also in the first echelon. There will definitely be products with global reach like Tiktok."
Liao Xuhua believes that no one in the meta-universe is really in the front at present, and everyone is in the basic deployment process. The problem with the metaverse is the abstraction of the concept, so the next competition focuses on which company can find a pragmatic route to make a high-usability product that allows users to really feel the revolution of the metaverse.
(Editor: Dong Shuguang Proofreader: Peng Yufeng)