Although it's been half a decade since I last played a video game, it's hard to shake off the feelings I've got for some of the games that played a big role in my upbringing. Activision Blizzard, as I'm sure most of you know for games such as World of Warcraft, Diablo, and Call of Duty, have had their fair share of my early years.
So to see them all fall in under the Microsoft empire in a $68,7bn acquisition is quite interesting both from a gaming and financial perspective. Let's both have a look at some of the reactions to the news, what it could mean, and if it is likely to be a success or a fiasco.
Image source: microsoft announcement
Microsoft's platform economy
The obvious rationale for the acquisition is to make Microsoft's platforms more desirable. With them now having the exclusive rights to so many new games - such as Warcraft, Call of Duty, Candy Crush, Overwatch, Crash Bandicoot, Tony Hawk's Pro Skater, Diablo, Starcraft, just to name a few - the XBox Game Pass subscribers may have a lot more to look forward too. Understanding the platform economy well has been Microsoft's recipe for success in the past decades. Get people to your platform and they will spend more money also on other things in it.
Still, $68,7bn is the biggest acquisition made by Microsoft ever, and more than twice the price they paid for LinkedIn. So it is a big move even for a company that big. Still, the past decade has shown a clear trend: Those who own the biggest platforms wins, and nobody wants to be on a smaller platform.
Market sends Sony down following the news
It was also interesting today to see Sony, who of course provides the main competitor to Microsoft's Xbox in their own Playsation, fall 10% in the stock market today. So clearly, the market believes this new acquisition will present significant competition to Sony.
Realistically, I don't think the market knows what it is doing here at all. It is easy for them to assume that Xbox being stronger means fewer people will choose Playstation and thus buy from Sony, right? The issue, however, is that people are so emotionally invested in the type of consoles that they've grown used to, and big games often find their way to both. It reminds me a little bit of how the market sent up the stocks of big football clubs after the announcement of Super League, clearly just assuming that big news would mean big new profits. Of course, the emotions of people invested in the sport proved them wrong. My guess is that the same will happen here and that today could then be a decent timing to pick up some Sony stocks cheap.
Problems with Blizzard
Despite Blizzard having created some of the best game titles ever, the company has struggled a lot in recent years. From severe declines in the player base for its biggest games (such as World of Warcraft), as well as a worsened relationship with its user base, to scandals of sexual harassment, the company is far from its peak.
This could either spell a big risk or a big opportunity for Microsoft. In one scenario, they've bought the company looking to bring in large userbases under big flagship games to their ecosystem, only to realize that those users are not as loyal and attached to the games as they had analyzed. In another scenario, the fact that Blizzard has been on a decline can also be a big opportunity to turn things around, as nobody can deny that they have some amazing game concepts with high potential.
Or what do you think? Will the acquisition work out well for Microsoft? Let me know in the comments what you think :).
they are both an opportunity and a risk but Microsoft knows what it is doing and that video game market is worth millions some changes to traditional games will surely attract more people. It is an important market since many of us grew up with them and surely when we have an opportunity we will play them again.
69 bn :P I bet some idiot who likes to clown around like I do made that deal :))
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i like how candy crush is up there between those games lol
microsoft are just trying to buy the entire market at this point, probably make people use their launcher for games and shit too
Microsoft ain't stupid.
Probably they know what they are doing.
Yup. As said in the article, it is all about platform dominance.
The platform launcher is the key as you said in the post who has the biggest will win at the end of the day. Gaming industry is huge but still sounds like they overpaid.
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@fredrikaa It has been couple of decades since I played any games (virtual I mean). I fondly recall the early versions of call of duty and other Activision-Blizzard titles. My son was hooked on those too. The games were really popular but the treatment of the fairer sex, in games as well as in reality in the company has been their downfall I think. There is real value in the company though and I think Microsoft swooped in on them to capitalize. I am hoping MS will leverage the combined strengths to offer AB games or their continuations on all MS platforms
I am focused on wildlife photography only these days but your post made me look up my old games collection. Very nostalgic. Thanks
Do visit my posts if you fancy wildlife clicks and if you have time. It will be a great pat on the back to get comments from you