The gaming industry has struck.
Microsoft, which has a lot of money, seized the opportunity to show off a "banknote ability".
On January 18, local time, Microsoft announced that it will spend $68.7 billion on the acquisition of Activision Blizzard, the world's largest third-party game developer and publisher, at a price of $95 per share, and the transaction is expected to be completed in 2023. The transaction amount is nearly $20 billion higher than Activision Blizzard's market value on that day, and the transaction will not only be the largest acquisition microsoft has ever made, but also break the record for the highest merger and acquisition in the game industry and even the global technology industry.
What can Microsoft's acquisition of Blizzard bring to Microsoft? And what impact has it had on the global gaming industry?
What happened to Blizzard?
The confidentiality of the blockbuster transaction is very in place, and there is no wind before the official announcement, which can be called "a thunder on the ground" for the market.
Activision Blizzard has nearly 400 million monthly active players in 190 countries and regions, and after this acquisition, Activision Blizzard's games will join the Xbox console and the PC version of XGP, and a large number of its original game IP is expected to become the trump card of Microsoft's game industry. After the completion of the transaction, Microsoft will have 30 internal game development studios, and microsoft will become the world's third largest game company after Tencent and Sony in terms of revenue.
According to Microsoft's official statement, Activision Blizzard and Microsoft Games will continue to operate independently until the acquisition transaction is officially completed. After the acquisition is complete, Activision Blizzard CEO Bobby Kotic will remain in office, reporting to Phil Spencer, head of Microsoft's gaming business.
In the official statement, Microsoft Chairman and CEO Satya emphasized: "Gaming is the most dynamic and exciting form of entertainment on all platforms today and will play a key role in the development of the Metasymonic platform. We're investing heavily in world-class content, community, and cloud computing technologies to usher in a new era of gaming that puts players and creators first. ”
Activision Blizzard CEO Kotick said: "Activision Blizzard's world-class talent and extraordinary franchise combined with Microsoft's technology, distribution, access to talent, ambitious vision and commitment to gaming and inclusion will ensure our continued success in the gaming industry." ”
"For the Alliance, for the Tribe, for Azeroth!"
For millennial and Z-era game enthusiasts, Blizzard was once a game company that could be called a faith-like existence, although Blizzard has changed owners several times since its inception in 1991, but it is regarded by one owner after another as a revenue growth point, but the Blizzard founding team led by Mike Mohan insisted on itself in game production, resisted management pressure, and created one game industry miracle after another.
Whenever looking back on the history of video games, many veteran players still regard "Warcraft" and "World of Warcraft" as their favorites, and firmly believe that the popular "Glory of Kings", "League of Legends" and even the PC platform e-sports industry are all Blizzard's "apprentices".
However, the good memories of "Blizzard's production must be fine" are far away, and today's Blizzard is long different from the past.
In 2013, Activision Blizzard spun off from Blizzard's old owner Vivendi by buying back shares and became an independent game company.
Because Activision's "Call of Duty" and other businesses can bring stronger cash flow, Activision dominated activision Blizzard's internal affairs, took control of Blizzard's popular projects, and after several purge operations, the Blizzard team led by Mike Mohan had to bid farewell to the IP series they created and leave the company. After the release of Overwatch in 2016, Blizzard never launched a new game, and various "riot operations" emerged in an endless stream, and the once firm "Blizzard Powder" was officially forced to become "Blizzard Black".
In July 2021, several former Activision Blizzard employees spoke out on social media, alleging that with the connivance of CEO Kotic, there was a serious "fraternity" culture within the company, full of sexual harassment and discrimination and other misconduct. The scandal attracted much attention from the US media, and Activision Blizzard fired 37 employees after an internal investigation.
Microsoft burned out the game business with money
Is Activision Blizzard worth the $68.7 billion?
At least for Blizzard fans, it's a good deal. Blizzard fans who have been in pain for many years have welcomed the rich and powerful gold lords and seen the dawn of saving Blizzard.
Although it is on the verge of bankruptcy in the mouth of players, Activision Blizzard is still a high-quality asset in the game industry from the financial report, with revenue of $8.09 billion and profit of $2.19 billion in 2020; revenue of $9.05 billion in the first three quarters of 2021, profit of $2.64 billion, and $8.2 billion in cash on the books.
Spencer, head of Microsoft's gaming business, has said: "As a technology company, you have to be in the game business. ”
Technically, video games have always been seen as a unique test of computing power. On the market side, the global gaming market size has maintained a growing trend over the years and is the largest entertainment medium on the planet. According to relevant statistics, there are about 2.5 billion gamers in the world, and the market size has reached 174.9 billion US dollars in 2020. Every tech giant wants to expand its presence in gaming.
Around the new millennium, Microsoft, which occupied the PC scene with the Windows system, locked the next traffic entrance as a home game console, but the Japanese game giants Nintendo, Sega, and the American EA company that were in a leading position in the market at that time did not want to cooperate with Microsoft, and Microsoft, which was not bad for money, had to acquire independent studios and start to do it alone.
In November 2001, Microsoft released the original Xbox priced at only $299, every Microsoft would lose $125, Microsoft used the money to burn the North American market, the original Xbox sold about 24 million units.
Subsequently, Microsoft used its dominance in the PC field to seize the "hardware standard setting power" in the game console competition, opening the way for the counter-trend rise of Xbox and laying the pattern of microsoft, Sony, and Nintendo in the console market.
For game studios, "small and beautiful" is an idealized state, but if you want to survive in the fierce market competition for a long time, you still have to cooperate with big capital. Microsoft has always been a good "gold lord", knowledgeable and willing to moderately decentralize, and at present, half of Microsoft's game business comes from acquisitions.
In 2001, Microsoft acquired Ensemble Studios, which produced the Age of Empires series;
In 2006, Microsoft acquired Lionhead Studios, which owns Black and White and Fables of the Gods;
In 2014, Microsoft won the "hard bones" Mojang studio in the fierce bidding for $2.5 billion, and its blockbuster open game "Minecraft" swept 140 million monthly active users around the world, opening up a huge new user group with heavy social attributes for Microsoft, so that Microsoft's happy mouth;
In 2018, Microsoft acquired Obsidian Entertainment, which specializes in making RPG games, and the next year's "Outer World" immediately won several awards in the game industry;
In 2020, Microsoft spent $7.5 billion to acquire Zenimax Media, which owns blockbuster game series such as Fallout, The Elder Scrolls, and Doom, and incorporated multiple games from the "B Society" into its huge game library.
Microsoft continues to expand its territory in the game industry, build a huge game IP lineup to enhance the competitiveness of the host battlefield, use a strong game lineup and Sony's exclusive strategy, Nintendo's self-developed games to compete, retreat can hold the PC base camp, continue to harvest traffic on windows mall, Steam and other platforms.
Microsoft is actually saving itself
Since Zuckerberg's crazy "cargo" metaverse, the game industry has been given unimaginable development potential. Previously, people familiar with the matter said that Facebook, which occupies the largest share of the VR market, was once also one of the potential acquirers of Activision Blizzard's contact. Some analysts even believe that Microsoft's "cut-off" Blizzard is to compete with Zuckerberg in the metaverse field.
This statement cannot be said to be completely wrong, but it is by no means the reason for Microsoft's heartbeat.
On January 26, local time, Microsoft released the second quarter of fiscal 2022. According to the financial report, Microsoft's revenue in the second fiscal quarter was $51.728 billion, an increase of 20% year-on-year; net profit was $18.765 billion, an increase of 21% year-on-year. Specifically, the smart cloud business revenue was $18.33 billion; productivity business revenue was $15.94 billion; and the Xbox business created the highest record since the birth of the business with a total revenue of $16.28 billion, with hardware revenue up 4%, game revenue up 8%, and Xbox platform content and services revenue up 10% year-on-year. Microsoft previously revealed that the subscribers of Xbox Game Pass have increased to 25 million.
After the release of the second quarter earnings report, Microsoft's stock price showed a significant decline, because the growth rate of the intelligent cloud business did not reach 50% of the market expectations, and the outside world worried that Microsoft's business growth ceiling has arrived.
As an "old" Internet company founded in 1975, the biggest feature of Microsoft's current business structure is equilibrium, which can eat the old version of Windows and seize cloud services after missing the era of mobile Internet. However, after the growth rate of the cloud business slows down, Microsoft needs to find more imaginative revenue growth points, and it is a very reasonable choice to increase the thriving and predictable revenue of the game industry. "Taking over" Blizzard is also in line with its strategy of acquiring high-quality game studios, creating an IP matrix, and empowering the host platform. Even if Microsoft sees the acquisition of Blizzard as part of building a metacosm, it is only a step forward in concept marketing, the icing on the cake, and the decisive factor is still the revenue of the game industry.
In the face of the relationship between the game business and the metaverse proposed by analysts, Microsoft CEO Nadella said: "Games are our important business field, in fact, gamers have begun to try metaversity, including some scenes in Minecraft" "Metacosm is the next wave in the Internet industry." Just as the first wave of the Internet industry was for everyone to build their own websites, the next wave will be characterized by openness, where users can build their own metaversal space according to their own ideas, whether it is for institutions, games, developers, or whatever. ”
Even if the concept of science and technology is advanced, landing is often gradual. The commercialization of the meta-universe is still only on paper, and getting real money and silver from the game industry is the key at present. In 2019, Microsoft launched "Minecraft Earth" on the mobile phone platform to enhance the AR/VR experience, but it is still difficult to completely transform the game into a complete 3D world, due to poor experience, coupled with the impact of the epidemic, the version was also discontinued in June 2021.
With operating systems, office software, game consoles, AR headsets, and cloud businesses in hand, Microsoft is calm enough to watch the development of the metaverse.