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The Risks of Big Gaming Acquisitions [Gameindustry.biz]

Very good article



The price tag is only one facet of the scale of the deal, though; Activision Blizzard is also a huge company in other respects, with roughly 10,000 employees and a large number of internal studios, several of which would be pretty decently-sized companies in their own right.
The scale and complexity of what's being attempted with this acquisition -- with the full complexity only really starting at the point where the deal itself closes -- makes it into a genuinely risky proposition. There's an obvious temptation to read it as a major competitive broadside aimed at Sony and thus to present the deal as a huge coup for Microsoft, but that obscures just how difficult the task ahead for Microsoft actually is, and the many ways in which an acquisition like this can actually fail, ultimately delivering far less value than the acquiring company was hoping for.
Click to shrink...
Why Microsoft needs to be careful:
In truth, mergers and acquisitions fail to deliver real value all the time; we need look no further than close-to-home examples, like EA's various studio acquisitions or Microsoft's own expensive buyout of Rare, for instances where acquisitions ultimately underdelivered on expectations.
Such failures can be due to a cultural mismatch, poor management of the merger, badly calibrated expectations on either side, or a host of other reasons ranging from internal politics to simple bad timing.

Microsoft is still in the process of really trying to get its first-party game studios off the ground, so it's not like there's a well-established studio system and product pipeline that Activision Blizzard's various studios can be integrated with. And Microsoft is still in a process of integrating its last major gaming acquisition, Bethesda, which remains in the "hugely promising" pile regarding its contribution to the Xbox platform and is unlikely to actually start delivering major first-party titles for quite some time.
Click to expand...
Why Sony won't be rushing to respond:
Sony will be perturbed by this deal, but also keenly aware of the complexity of what Microsoft is undertaking and the risks involved, and thus wary of making any rushed or panicked moves in response.
Sony is a little less vulnerable to a rival buying up third-party publishers than it used to be. Microsoft buying Activision a couple of console generations ago would have been a devastating blow to PlayStation, but all Sony's work on building up its first-party exclusives now cushions that blow significantly.
 

mejin

Member
MS is finishing their station

 

TrueLegend

Member
I don't see any salt anywhere in this article. The only salt I'm seeing is from you.
Then visit a doctor and get a checkup. Why on earth I will be salty. Articles being posted here is the thing here on NEOGAF. And I dont know what ideas you are getting but I mainly Play on PC and I have game pass. I also love PlayStation because of MGS, FF and GOW. And I dont give two shits about this acquisition except that maybe finally we could see some new stuff from Actiblizzard. Also this is my second post since the whole thing happened but the amount of redundant thread and articles appearing on the feed here have been on nuts level.
 

TrueLegend

Member
Why are you and some others acting as if there's ZERO risk to buying game companies with price tags in the billions?
When did I said that or acted like that? There is a risk even if you are crossing a road and there is no vehicle in your vision. All these kinds of decisions are risky but there is no substance here in the article, it is just another speculative piece. We will get some real info in due time but till then this is just clickbait.
 
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assurdum

Member
Then visit a doctor and get a checkup. Why on earth I will be salty. Articles being posted here is the thing here on NEOGAF. And I dont know what ideas you are getting but I mainly Play on PC and I have game pass. I also love PlayStation because of MGS, FF and GOW. And I dont give two shits about this acquisition except that maybe finally we could see some new stuff from Actiblizzard. Also this is my second post since the whole thing happened but the amount of redundant thread and articles appearing on the feed here have been on nuts level.
The hell of salt there is about to write an article saying big acquisitions could be risky too?
 
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NoPiece

Member
Interesting that the article doesn't really mention that Activision Blizzard itself is the product of dozens of mergers and acquisitions, arguably somewhat successfully. Activision (Raven, Treyarch, Infinity Ward, Neversoft) + King + Vivendi (Blizzard, Fox Interactive, Universal Interactive, Sierra Online (Dynamix, Papyrus)). And dozens of other small studios and publishers.

Not sure it is that high risk, this is just the inevitable consolidation taht has been happening for the last 20 years.
 
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Alebrije

Gold Member
Does Sony can keep on bussiness a being profitable without Bethesda and Activision?

The answer ia Yes....

Microsoft took the risk buying those companies....my bet is that Xbone will be better but not that will destroy Sony ....at much will be competitive again...
 

SlimySnake

Member
Very good article





Why Microsoft needs to be careful:




Why Sony won't be rushing to respond:
lol Earlier today, I brought up the same exact point about MS buying Activision two gens ago. The purchase will fuck with Sony, but they have their own 20 million selling franchises now so if they focus on those they just might come out of it ok like Nintendo did.

In truth, mergers and acquisitions fail to deliver real value all the time; we need look no further than close-to-home examples, like EA's various studio acquisitions or Microsoft's own expensive buyout of Rare, for instances where acquisitions ultimately underdelivered on expectations.

Such failures can be due to a cultural mismatch, poor management of the merger, badly calibrated expectations on either side, or a host of other reasons ranging from internal politics to simple bad timing.

The worst thing MS can do here is run it like a first party studio. They need to let Activision run these companies. I already hear Phil talking about reviving old franchises and Im like get your fucking hands out of that jar. Activision needed every single fucking dev over there to get CoD to come out during the pandemic on an yearly schedule and COD simply cannot miss. If Phil wants Crash so bad, have rare make them. If anything, Phil will have to hire more studios to help make sure CoD can come out when next gen versions of the game inevitably take more time to produce.

Phil had said that they would let Zenimax publish their own games, and stay out their way, and he needs to do the same here. Dont fuck with CoD. This thing makes them $3-4 billion a year, and some B game like Crash or whatever shit IP Activision has left cannot come between yearly CoDs and their gamers.
 

assurdum

Member
Interesting that the article doesn't really mention that Activision Blizzard itself is the product of dozens of mergers and acquisitions, arguably somewhat successfully. Activision (Raven, Treyarch, Infinity Ward, Neversoft) + King + Vivendi (Blizzard, Fox Interactive, Universal Interactive, Sierra Online (Dynamix, Papyrus). And dozens of other small studios and publishers.

Not sure it is that high risk, this is just the inevitable consolidation taht has been happening for the last 20 years.
Very arguably. Outside COD and Warcraft I don't remind so many successful by Activision and it's a decade where is just remembered as the COD company and nothing else.
 
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sainraja

Member
I don't see any salt anywhere in this article. The only salt I'm seeing is from you.
^^ This. It's like they forget they are on a discussion forum. lol

Then visit a doctor and get a checkup. Why on earth I will be salty. Articles being posted here is the thing here on NEOGAF. And I dont know what ideas you are getting but I mainly Play on PC and I have game pass. I also love PlayStation because of MGS, FF and GOW. And I dont give two shits about this acquisition except that maybe finally we could see some new stuff from Actiblizzard. Also this is my second post since the whole thing happened but the amount of redundant thread and articles appearing on the feed here have been on nuts level.
Your tone says everything even with you denying it LOL.
 
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SLB1904

Gold Member
Not sure it is that high risk, this is just the inevitable consolidation taht has been happening for the last 20 years.
Consolidation will never happen. Like ever. Companies will be bought, will be created, will be closed. There won't be consolidation ever.
 

Orta

console wars 2020 - participant
Aw diddums. Been said several times over, if it was you know know who buying up publishers it would be a stroke if genius. As its Microsoft the world is about to end.

Tbh I hope they buy up a huge one next, Take2, Capcom, Square, whoever, purely for no other reason than salt and bitterness :messenger_tears_of_joy:
 
^^ This. It's like they forget they are on a discussion forum. lol


Your tone says everything even with you denying it LOL.
I bet he couldn't wait to type that embarrassing post after seeing the thread title.

Its an interesting article and one doesn't need to agree with it. It's just an opinion piece and some people fail to understand that this is a discussion board.
 

Elog

Member
As always a bunch of people are completely missing the point of the article. M&A and creative businesses has a truly lousy track-record across industries.

This is a very large gamble by MS and with MS track record of being unsuccessful to integrate even non-creative businesses it is very reasonable to be sceptical as an MS shareholder. Add to that, that ActiBlizz already was on a downturn with a demoralised work-force.

It is not about salt - it is about being sober.
 
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TrueLegend

Member
^^ This. It's like they forget they are on a discussion forum. lol


Your tone says everything even with you denying it LOL.
My tone. Check my entire post history and then go to a clinic. Also that LOL says more than my tone. Why on earth I as a gamepass ultimate subscriber will be salty with this acquisition or this article. I don't care much about companies dude whether they be Sony, Microsoft, Amazon or Meta. I care about gaming. Go take a hike in my post history and learn that Sony is my go-to company but not particularly because of PlayStation or gaming, I like their TVs, Cameras and Headphone more but I have bought Microsoft products too . And Yes it is possible for an individual to do that. You know not all people worship companies.
Also I am not calling out Discussion, I am calling out redundancy in discussion to the point redundancy is a better discussion now.
 
lol Earlier today, I brought up the same exact point about MS buying Activision two gens ago. The purchase will fuck with Sony, but they have their own 20 million selling franchises now so if they focus on those they just might come out of it ok like Nintendo did.





The worst thing MS can do here is run it like a first party studio. They need to let Activision run these companies. I already hear Phil talking about reviving old franchises and Im like get your fucking hands out of that jar. Activision needed every single fucking dev over there to get CoD to come out during the pandemic on an yearly schedule and COD simply cannot miss. If Phil wants Crash so bad, have rare make them. If anything, Phil will have to hire more studios to help make sure CoD can come out when next gen versions of the game inevitably take more time to produce.

Phil had said that they would let Zenimax publish their own games, and stay out their way, and he needs to do the same here. Dont fuck with CoD. This thing makes them $3-4 billion a year, and some B game like Crash or whatever shit IP Activision has left cannot come between yearly CoDs and their gamers.
Very interesting points. MS do have their hands full with the culture at Activision. I'm sure Phil will be working hard to get rid of that toxic environment. Remains to be seen how this will go in the long run but yeah agree in the here and now letting Activision handle COD is probably a good idea without any MS interference.
 
My tone. Check my entire post history and then go to a clinic. Also that LOL says more than my tone. Why on earth I as a gamepass ultimate subscriber will be salty with this acquisition or this article. I don't care much about companies dude whether they be Sony, Microsoft, Amazon or Meta. I care about gaming. Go take a hike in my post history and learn that Sony is my go-to company but not particularly because of PlayStation or gaming, I like their TVs, Cameras and Headphone more but I have bought Microsoft products too . And Yes it is possible for an individual to do that. You know not all people worship companies.
Also I am not calling out Discussion, I am calling out redundancy in discussion to the point redundancy is a better discussion now.
Then exit the thread please.

You have no intention to discuss the topic at hand. Thanks
 

sainraja

Member
My tone. Check my entire post history and then go to a clinic. Also that LOL says more than my tone. Why on earth I as a gamepass ultimate subscriber will be salty with this acquisition or this article. I don't care much about companies dude whether they be Sony, Microsoft, Amazon or Meta. I care about gaming. Go take a hike in my post history and learn that Sony is my go-to company but not particularly because of PlayStation or gaming, I like their TVs, Cameras and Headphone more but I have bought Microsoft products too . And Yes it is possible for an individual to do that. You know not all people worship companies.
Also I am not calling out Discussion, I am calling out redundancy in discussion to the point redundancy is a better discussion now.
You could have fooled me.
I get that you are not interested in this topic but others are and if you don't know this is a hot topic right now.
 
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Imagine thinking this after Sea of Thieves has been rocking for over three years. 😂

To evaluate this claim we need to see what the opportunity cost was.

Rare was purchased by Microsoft for 375 million in 2002. $375 million invested in the S&P 500 in 2002 compounded at nearly 10% annually, which would be worth $2.5 Billion today.

Is Rare a $2.5B studio? For reference, Capcom is a $4.5B studio and has multiple huge titles with regular annual releases.

Rare, in comparison, has Sea of Thieves and projects that take many years to release. Maybe you consider that property to be a success, but objectively speaking that acquisition was a terrible investment. They are not heavily utilizing Rare’s IP.

Insomniac cost less in 2018 than Rare did in 2002, and they churn out far more regular content and have sold a massive number of games. That’s what I would consider a highly successful acquisition
 

Topher

Gold Member
Best example of an acquisition/merger gone bad is Activision Blizzard itself. When shit like this goes bad then it is almost always poor leadership. Phil Spencer needs trash Activision Blizzard's management and put new people in charge. I'm not talking about just dealing with the controversies of late, but the overall management of the company. AB makes enough money off of Call of Duty and Candy Crush that its stockholders don't give a shit about the garbage games the company makes. That's an attitude Spencer should get corrected ASAP.
 

FrankWza

Member
I bet he couldn't wait to type that embarrassing post after seeing the thread title.

Its an interesting article and one doesn't need to agree with it. It's just an opinion piece and some people fail to understand that this is a discussion board.
I think it was more of a hope of whatever meltdowns were expected or ridiculous takes perhaps. There’s people here posting their hopes and dreams that Microsoft buys more publishers and studios just so it can make people upset because they’re not seeing the reactions they want. Now that’s some salty shit. Meanwhile, the Vanguard OT is 4 pages long.
 

FunkMiller

Gold Member
Anyone not wanting to engage in micro-penis, oatmeal brain console warring will probably largely agree with this article. An acquisition of this size could present huge logistical problems for Microsoft into the future, and its by no means a guarantee that it will go smoothly. Irrespective of plastic boxes that go bing, massive takeovers like this are a risky business - and you don't have to look far for ones that have gone badly wrong.

Microsoft's best bet is to be pretty ruthless with the way they handle this, to be honest. The fat, lizard-like management at AB are clearly where the majority of both the bloat and the problems exist. If Phil and co can streamline things, adjust the levels of greed downwards, while still retaining the creative talent, then this venture should prove a success.
 
I think it was more of a hope of whatever meltdowns were expected or ridiculous takes perhaps. There’s people here posting their hopes and dreams that Microsoft buys more publishers and studios just so it can make people upset because they’re not seeing the reactions they want. Now that’s some salty shit. Meanwhile, the Vanguard OT is 4 pages long.
Yeah but its how many days now since the news of the acquisition. One would think the crazy atmosphere from that purchase would have died down now and people can discuss things like normal. At least that's what I thought coming into this thread but I still see some of these 'ah dey salty' shit from some people. Its really off putting.
As I said before this is just an opinion piece and its worth a read at least.

The acquisition took me by surprise too and I rather these big companies stay independent but hey life goes on. This is not the end of gaming or Sony or Nintendo like most think it is. Its definitely not salt either. I'm the biggest PS fan having spent hundreds of dollars on PS4 content and I can appreciate Xbox efforts too having subscribed to GamePass Ultimate just for Forza Horizon 5 and StarField (yeah long term goals lol).
 
lol Earlier today, I brought up the same exact point about MS buying Activision two gens ago. The purchase will fuck with Sony, but they have their own 20 million selling franchises now so if they focus on those they just might come out of it ok like Nintendo did.





The worst thing MS can do here is run it like a first party studio. They need to let Activision run these companies. I already hear Phil talking about reviving old franchises and Im like get your fucking hands out of that jar. Activision needed every single fucking dev over there to get CoD to come out during the pandemic on an yearly schedule and COD simply cannot miss. If Phil wants Crash so bad, have rare make them. If anything, Phil will have to hire more studios to help make sure CoD can come out when next gen versions of the game inevitably take more time to produce.

Phil had said that they would let Zenimax publish their own games, and stay out their way, and he needs to do the same here. Dont fuck with CoD. This thing makes them $3-4 billion a year, and some B game like Crash or whatever shit IP Activision has left cannot come between yearly CoDs and their gamers.

That’s precisely the issue - what leadership is left at Activision?

Many of their higher ranking employees have left to start new studios leading up to the fiasco.

Those studios are in serious turmoil, and without excellent top line leadership who is going to steer the ship in the years to come?
 
Yeah but its how many days now since the news of the acquisition. One would think the crazy atmosphere from that purchase would have died down now and people can discuss things like normal. At least that's what I thought coming into this thread but I still see some of these 'ah dey salty' shit from some people. Its really off putting.
As I said before this is just an opinion piece and its worth a read at least.

The acquisition took me by surprise too and I rather these big companies stay independent but hey life goes on. This is not the end of gaming or Sony or Nintendo like most think it is. Its definitely not salt either. I'm the biggest PS fan having spent hundreds of dollars on PS4 content and I can appreciate Xbox efforts too having subscribed to GamePass Ultimate just for Forza Horizon 5 and StarField (yeah long term goals lol).

Yeah it’s a shame that some can’t have a nuanced discussion about this without resorting to snarky one liners

Extremely defensive posting isn’t constructive discussion. The reality is that just because Microsoft has a massive war chest of cash to spend doesn’t mean that all these acquisitions are efficient uses of capital imvestment. There are major risks baked into a deal of this magnitude, and while it’s not going to make a dent into their bottom line, the risk is that the investment is kind of an albatross of studios that MS does not have the resources to manage effectively, and their output dwindles.
 
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SlimySnake

Member
Yeah it’s a shame that some can’t have a nuanced discussion about this without resorting to snarky one liners

Extremely defensive posting isn’t constructive discussion. The reality is that just because Microsoft has a massive war chest of cash to spend doesn’t mean that all these acquisitions are efficient uses of capital imvestment. There are major risks baked into a deal of this magnitude, and while it’s not going to make a dent into their bottom line, the risk is that the investment is kind of an albatross of studios that MS does not have the resources to manage effectively, and their output dwindles.
Yep. I hate how tribal this forum has become lately. It's pretty much become a game of exchanging LOL emojis.

Someone in the other thread pointed out how Sony cant afford to lose CoD because COD generates most of their revenue from PS, but they ironically failed to see that if CoD can survive without Playstation. IMO, the cod userbase will move but that should at least be a point of discussion. Everyone wants to just stop all discussion nowadays which is weird because this is literally a discussion forum.
 
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Yeah it’s a shame that some can’t have a nuanced discussion about this without resorting to snarky one liners

Extremely defensive posting isn’t constructive discussion. The reality is that just because Microsoft has a massive war chest of cash to spend doesn’t mean that all these acquisitions are efficient uses of capital imvestment. There are major risks baked into a deal of this magnitude, and while it’s not going to make a dent into their bottom line, the risk is that the investment is kind of an albatross of studios that MS does not have the resources to manage effectively, and their output dwindles.
They should be alright I reckon but I had this same thought the other day of Xbox getting too big and the difficulty in delivering consistently good content with such a huge army of studios.
One thing is certain is that these developers will be allowed to continue in their own capacity at this point in time.
Whatever happens in future I hope we get some new IP's from these acquisitions. I'm getting a little tired of the same stuff lol
 
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