During the Electronic Entertainment Expo (E3) in Los Angeles, California, crowds are waiting for a video presentation at the Activision booth.
Jonathan Archon | Reuters
In January, I was worried about the world of big tech and games. Microsoft has announced a deal to buy Activision Blizzard, A major video game publisher, $ 68.7 billion. Microsoft CEO Satya Nadella is by far the largest driver of the company’s growing Metaverse strategy, despite Activision being best known for blockbuster games such as Call of Duty, World of Warcraft, and Candy Crush. Assembled the acquisition of, but other technologies that underpin AR / VR and the fledgling Metaverse.
However, if you look closely, Microsoft You may be in a better position to become a leader in both the Metaverse and the game area. Bernstein analyst Mark Moadler recently told CNBC that “Microsoft is in a great position over the Metaverse.” “But I’m not thinking about this [acquisition] It was purely a Metaverse drive. They were also looking for a bigger way to expand the depth and breadth of the game. “
Moerdler expected Microsoft to buy a smaller game studio, but eventually decided that “one should be bigger.” [purchase] For many little things, “he said.
The proposed transaction still requires approval from shareholders and US and international regulatory agencies, which is expected to support closing by June 2023.
Microsoft has played the concept of the Metaverse in its acquisition message. And from now on until the deal is expected to close, Microsoft is talking in terms of a dual-track model. “Games have been important to Microsoft since the early days of the company,” Nadera said in an email to about 181,000 employees about the acquisition. “Today, this is the largest and fastest growing form of entertainment and will play an important role in the development of the Metaverse platform as the digital and physical worlds merge.”
There is no doubt that games are an attractive and lucrative sector. The The global gaming market generated $ 180.3 billion in 2021According to market research firm Newzoo, game revenue is projected to surge to $ 218.8 billion by 2024. eMarketer estimates: Last year, 2.96 billion people around the world played digital gamesThrough consoles, computers, or mobile devices, and that figure will reach 3.09 billion in 2022, or about one-third of the Earth’s population.
Microsoft first embarked on video games with the release of the Xbox console in 2001, but is now in its fourth generation, with third-quarter sales up 14%. Today, the Microsoft Gaming division, headed by CEO Phil Spencer, consists of 23 game design and software studios and hundreds of games. The division’s Game Pass subscription service has more than 25 million customers, while the Xbox Cloud Gaming service has nearly 10 million people streaming games.
Activision isn’t considered a Metaverse player, which is an ongoing task by definition, but one of its video games is a good example of how it works. Blizzard released World of Warcraft in 2004. At that time, it was the game studio that merged with Activision in 2008.
“It’s a virtual world [your avatar] I was able to walk around with my friends, form tribes, and attack together. That’s the Metaverse. ” VindexEsports infrastructure platform.
Sepso refers to several other games that incorporate the Metaverse element. Roblox, Fortnite, Second life And Microsoft Mine Craft.. On these platforms, players can teleport between millions of games, build virtual social spaces, and attend concerts. In the meantime, you can purchase virtual content to improve your experience. Most of these types of games require a VR headset and console. This is in favor of Microsoft with HoloLens and Xbox hardware.
The virtual worlds of these games may not level up to what is predicted by Metaverse proponents. Users are immersed in mixed reality For business meetings, doctor visits, vacations, and all sorts of e-commerce. Here, Microsoft’s software, cloud computing, gaming, and virtual technologies are in place for the company. Also, adding Activision’s gaming features will only improve that outlook.
“I definitely understand [the metaverse] Spencer told The New York Times Karaswisher in a Sway podcast about a week before the deal was announced. For example, Microsoft game developers said they were imagining a virtual workspace and part of it. What they learned in video games is about people working together to accomplish tasks.
However, whenever the Metaverse materializes, there is primarily a generation after Gen Z that grows exclusively in the digital world, especially in games.According to recently study Among Gen Z gamers by Razorfish and Vice Media Group, they spend twice as much time in real life with their friends in the Metaverse. More than half said they would like to experience making money in the Metaverse. 33% want to experience building a career there. 20% of the entertainment / leisure budget will be allocated to in-game purchases over the next five years.
Microsoft will continue to be one of the strongest players while the tech sector is undergoing a fix Third quarter revenueAnd strong demand for cloud services and software capabilities, which are the core components of both the Metaverse and Gaming businesses, are impacting their operational capabilities.
Activision Matte report First quarter revenueThe Warren Buffett of, the most notable new investor, has been hit by the declining demand for the latest Call of Duty games. Berkshire Hathaway Has increased the stock of his company, Merger arbitrageHe told Berkshire Hathaway shareholders at a recent annual shareholders meeting that he bet that Microsoft’s proposed acquisition of a video game company would end.
Berkshire currently owns approximately 9.5% of Activision’s stake.
Due to the surge in technology, Activision’s share price fell 20% below Microsoft’s $ 95 bid per share.
Clay Griffin, an analyst at Moffett Nathanson, said that numbers weaker than Call of Duty’s expectations are bad for the basic story behind Activision. If the deal collapses and Activision is forced to do it alone, the stock will probably be valued somewhere in the mid- $ 60s, but Griffin doesn’t expect it to happen.
“Occasionally, we see arbitrage and do it,” Buffett said. “Odds can sometimes look good to us, but depending on what happened if the transaction exploded, we could definitely lose a fair amount of money at the company.”
“I don’t know what the Justice Department will do, what the EU will do, or what the other 30 jurisdictions will do. One of the things we know is that Microsoft has the money. “Mr. Buffett. Added.
Microsoft and Activision declined to comment.
Temporarily, the fate of current Activision CEO Bobby Kotick is uncertain. He is part of two separate federal investigations launched last year by the Securities and Exchange Commission and the Department of Justice on how the company handled allegations of employee sexual misconduct and discrimination at work. is. In November, The Wall Street Journal was published by Cotic Allegations of mistreated sexual misconduct..
This issue caught Spencer’s attention before the deal was announced. Last November, as the number of headlines increased, Bloomberg reported He told his employees that he was “disturbed and deeply annoyed by horrific events and actions” at Activision Blizzard, and as a result, Microsoft “evaluated every aspect of his relationship with Activision Blizzard and continued to be proactive.” We are making various adjustments. “
In fact, this was about the same time Spencer and Microsoft’s top executives started. Discuss dealings with Activision..
“This is [Activision] When the deal closes, Microsoft Gaming will become the world’s third-largest gaming company in terms of revenue, after Tencent and Sony, “Spencer said in a webcast after an announcement with analysts in January. [then], Activision Blizzard and Microsoft Gaming will continue to operate independently. When the transaction is completed, Activision Blizzard’s business will be reported to me.
“For most acquisitions, senior management will resign,” Moadler said. “In this case, it’s more likely.”
It considers Activision’s own huge cash of intellectual property, as well as about 400 million active players per month. Many are already spending money on virtual worlds and don’t bother with acquisitions or Spencer’s ambitions. Supervise.
“This deal solves some of Microsoft’s problems,” Sepso said. “One is to add a lot of great IP and player base to the Game Pass service in the short term. In the long term, we can extend that IP to this primitive metaverse, so who owns it. I’m in an enviable position about it. Metaverse. “