Microsoft's acquisition of Activison Blizzard

[Zeroing]

Because it's the logical turn of events when this acquisition fails. The money earmarked for this acquisition comes with strings attached - it's not a blank cheque for Xbox to spend however they wish. The inability to accelerate their growth is inevitably going to lead to their decline as a business unit as Sony grows. With companies, opportunity cost is a real consideration, and the accountants will determine that the money will be better spent on AI, Azure, and modelling Xbox to be more like the rest of MS: software only.

That makes sense, I’ve always been surprised by how long they kept Xbox despite it has outperforming for so many years.

Also that article of Phill Spencer could be a way to make the brand not loose prestige while behind closed doors MS is contemplating selling Xbox brand or part of it.

 

[thicc_girls_are_teh_best]

MS might have to abandon the series S version as a requirement for devs and just have the series X version streamed to that console.

I thought about this too, but a few people on GAF mentioned that MS would be open to a class-action lawsuit if so. And I doubt MS want that.

IIRC Sony had one filed against them for removing "Other OS" from the PS3. It's just very tricky to revamp the purpose of a device after selling it on initial features and promises, without getting dragged into court.

Also this thread moved kinda fast in a couple hours...did something big happen today news-wise on this? Guess I'm about to find out

The problem is that the vast majority of Xbox consoles sold ARE the Series S. So that is the de facto console for most xbox owners. I do not see them dropping the requirement without a class action lawsuit coming their way.

Yep; they can't really do it unless they're ready to pay (potentially) billions. And MS aren't going to do that for a division that's already eating up a lot of money and doesn't bring in a lot of profit.

 

[AshHunter216]

I thought about this too, but a few people on GAF mentioned that MS would be open to a class-action lawsuit if so. And I doubt MS want that.

IIRC Sony had one filed against them for removing "Other OS" from the PS3. It's just very tricky to revamp the purpose of a device after selling it on initial features and promises, without getting dragged into court.

Also this thread moved kinda fast in a couple hours...did something big happen today news-wise on this? Guess I'm about to find out



Yep; they can't really do it unless they're ready to pay (potentially) billions. And MS aren't going to do that for a division that's already eating up a lot of money and doesn't bring in a lot of profit.

More insights from Idas and others came out about the chances of this deal.

 

[thicc_girls_are_teh_best]

Ah okay so in 10 years everyone will have to worry about ALL ABK games potentially leaving their platforms, not just COD. Cool

I'm only half-joking. If MS's intent is to never remove these games from competing platforms, why are they offering 10-year deals? 10-year deals of what? To get the exact same content they'd be getting anyway if ABK remained independent? How does a company acting as a 3P licensee on platforms of competitors get to dictate the terms of a licensing agreement? Especially if it only pertains to the basic type of access that is expected of 3P publishers on devices and services of platform holders?

We should keep in mind that these lawyers providing these insights could and most likely are Microsoft's own lawyers, so of course they would have an optimistic read on Microsoft's proceedings with the EC. It's all just speculation on their end, from their own POV. We'll only actually know what the EC's decision is when they announce it. However, one of the lawyers Idas quotes bringing up a previous acquisition the EC accepted behavioral remedies on, doesn't necessarily bear relevance to the MS-ABK one. There would have been time between that acquisition's approval and this one to see the actual market effects of the previous one and to ascertain whether it was worth approving the way they did at the time.

The same can be said of Disney's acquisition of 20th Century Fox; theoretically it can be argued that due to Disney's ownership of the X-Men characters for movie rights now (thanks to that acquisition), we are getting less X-Men film and television content than we would have gotten if 20th Century Fox were not acquired, as Disney are literally sitting on that IP for a latter phase in their MCU franchise of films. It can be argued that in such being the case, we've actually seen LESS competition in the superhero film market due to that acquisition, as if 20th Century Fox were still their own thing, we'd be getting X-Men films and shows sooner (whereas now we have to wait until maybe 2025 at the earliest for any new X-Men films)!

If regulators like the EC aren't cognizant of this, if they aren't even considering these factors, then again, they need new members to their regulatory body. Because it can already be argued that MS acquiring ABK (and COD) will mean less market competition for the COD franchise; Microsoft will have less incentive to push Halo as a COD competitor, when they own COD itself. They may also have less incentive to push DOOM or Quake, or Wolfenstein, to genuinely compete against COD as there is no longer a market condition for Microsoft to actually require that to be the case. Instead those incentives will be heightened upon Sony, so theoretically it still results in a market of increased competition, but simply through the transfer of ownership of a larger IP that, going by MS's own 10-year-deal offers, eventually seeks to remove conditions for favorable licensing of the IP to competitors, conditions that would have existed for both them and Microsoft if the IP and its publisher stayed independent and non-acquired.

More insights from Idas and others came out about the chances of this deal.

Yeah, I'm catching up on them now. I'd just encourage people to exercise extreme caution when reading them; most of these sources and perspectives are going to come from people who are generally favoring the deal to go through.

Meaning they are instinctively (in most cases) going to have a bias to speculate in terms that are generally favorable. That would coincide with the fact that Microsoft is the only company that has been sharing their arguments publicly since the meeting with the EC. If there are any sentiments among regulators at the EC less than favorable for the deal on the terms Microsoft want, you won't hear that from a lot of these folks :/.

 

[FatKaz]

Ah okay so in 10 years everyone will have to worry about ALL ABK games potentially leaving their platforms, not just COD. Cool

I'm only half-joking. If MS's intent is to never remove these games from competing platforms, why are they offering 10-year deals? 10-year deals of what? To get the exact same content they'd be getting anyway if ABK remained independent? How does a company acting as a 3P licensee on platforms of competitors get to dictate the terms of a licensing agreement? Especially if it only pertains to the basic type of access that is expected of 3P publishers on devices and services of platform holders?

We should keep in mind that these lawyers providing these insights could and most likely are Microsoft's own lawyers, so of course they would have an optimistic read on Microsoft's proceedings with the EC. It's all just speculation on their end, from their own POV. We'll only actually know what the EC's decision is when they announce it. However, one of the lawyers Idas quotes bringing up a previous acquisition the EC accepted behavioral remedies on, doesn't necessarily bear relevance to the MS-ABK one. There would have been time between that acquisition's approval and this one to see the actual market effects of the previous one and to ascertain whether it was worth approving the way they did at the time.

The same can be said of Disney's acquisition of 20th Century Fox; theoretically it can be argued that due to Disney's ownership of the X-Men characters for movie rights now (thanks to that acquisition), we are getting less X-Men film and television content than we would have gotten if 20th Century Fox were not acquired, as Disney are literally sitting on that IP for a latter phase in their MCU franchise of films. It can be argued that in such being the case, we've actually seen LESS competition in the superhero film market due to that acquisition, as if 20th Century Fox were still their own thing, we'd be getting X-Men films and shows sooner (whereas now we have to wait until maybe 2025 at the earliest for any new X-Men films)!

If regulators like the EC aren't cognizant of this, if they aren't even considering these factors, then again, they need new members to their regulatory body. Because it can already be argued that MS acquiring ABK (and COD) will mean less market competition for the COD franchise; Microsoft will have less incentive to push Halo as a COD competitor, when they own COD itself. They may also have less incentive to push DOOM or Quake, or Wolfenstein, to genuinely compete against COD as there is no longer a market condition for Microsoft to actually require that to be the case. Instead those incentives will be heightened upon Sony, so theoretically it still results in a market of increased competition, but simply through the transfer of ownership of a larger IP that, going by MS's own 10-year-deal offers, eventually seeks to remove conditions for favorable licensing of the IP to competitors, conditions that would have existed for both them and Microsoft if the IP and its publisher stayed independent and non-acquired.



Yeah, I'm catching up on them now. I'd just encourage people to exercise extreme caution when reading them; most of these sources and perspectives are going to come from people who are generally favoring the deal to go through.

Meaning they are instinctively (in most cases) going to have a bias to speculate in terms that are generally favorable. That would coincide with the fact that Microsoft is the only company that has been sharing their arguments publicly since the meeting with the EC. If there are any sentiments among regulators at the EC less than favorable for the deal on the terms Microsoft want, you won't hear that from a lot of these folks :/.

I find the timing a bit suspicous aswell, just before the cma hearing this week. Maybe adding more pressure to the CMA.

 

[AshHunter216]

I find the timing a bit suspicous aswell, just before the cma hearing this week. Maybe adding more pressure to the CMA.

I could see them doing another PR blitz/ media tour touting how amazing and generous their latest offer is and how foolish they think one would have to be to still oppose the deal.

 

[thicc_girls_are_teh_best]

Yeah he is a lawyer. He specialized in corporate m&a so his stances sometimes seem ludicrous because they are based on the viewpoint of how a corporation would act, because corporations have legal advantages that don't seem like they would be reasonable under american law. So this type of extortion would maybe sway a US regulator in the past despite defying all logic.

They aren't ridiculous when you consider he has 1: never handled a M&A anywhere near this size and, 2: gets his pockets buttered by very Xbox-leaning fans with lots of cash, like Hargeet Chani (or however you spell his name).

He knows who his customers on this acquisition stuff are and placates to what they want to hear, more or less, as often as he can. He's just more measured in that (given his actual profession as a lawyer) than some of the blatant types online like Jez Corden or Timdog.

Like you said, he is acknowledging to an extent an actual truth that may end up happening (unfortunate as it is), and we know lots of politicians are bought off (lobbying is basically another form of that, these days). But him openly entertaining it in a way he knows certain Xbox fans are going to have go over their heads, is somewhat crass to say the least.

But like was said, he knows his audience and knows what to say to placate them.

Because it's the logical turn of events when this acquisition fails. The money earmarked for this acquisition comes with strings attached - it's not a blank cheque for Xbox to spend however they wish. The inability to accelerate their growth is inevitably going to lead to their decline as a business unit as Sony grows. With companies, opportunity cost is a real consideration, and the accountants will determine that the money will be better spent on AI, Azure, and modelling Xbox to be more like the rest of MS: software only.

The only area on this I somewhat disagree with is them making Xbox wholly software-only; I think they would definitely prioritize the software side prominently, but they would just (IMO) shift Xbox into general computing devices and merge that side with the Surface department.

If MS tried selling Xbox at the end of 360 gen to companies that didn't want it then, what chance is there any company is really going to want the Xbox hardware division now? Them putting it on the market for a buyer would look much less attractive today than at the end of the 360 generation, especially if the buyer doesn't get any of the software teams, OS, or IP alongside that.

I just can't picture MS 100% jettisoning the Xbox hardware business altogether, if they are forced to make a choice in the case the acquisition not going through. Other than that, agreed with everything in the post.

 

[thicc_girls_are_teh_best]

I find the timing a bit suspicous aswell, just before the cma hearing this week. Maybe adding more pressure to the CMA.

I could see them doing another PR blitz/ media tour touting how amazing and generous their latest offer is and how foolish they think one would have to be to still oppose the deal.

Good points. Hell of a timing for these "leaked positive sentiments" to come out right before MS meet with the CMA.

Keep in mind, members of the CMA, EC and FTC do in fact converse with each other (certainly more than in the past); for all we know these sentiments coming out of late are just a smokescreen to boost up public morale for those already wanting the deal to go through (with minimal behavioral remedies; basically what Microsoft themselves want).

So whether the EC are actually leaning okay with MS's proposals, if the CMA eases off on their PF structural remedies, if the FTC bails on their stance...the truth will come out soon enough and historically that hasn't been to Microsoft's favor .

 

[nongkris]

We know the FTC/CMA/EU all talk to each other. FTC vehemently opposes to deal thanks to queen Lana Khan, CMA seeks divestment or nothing, I just don't see EU being any more lenient than the UK or US, and even if they are fuck em.

Even if it comes down to the US they will have to wait until early 2024 for a court decision, by that point they'd be so far in last place thanks to Spiderman 2 it would've even matter.

Whatever remedies that would cause this deal to pass with the CMA means that COD will still be on Playstation for the foreseeable future and makes it an even more pointless acquisition, except giving Bobby and Lulu their golden parachute.

 

[KiryuRealty]

They aren't ridiculous when you consider he has 1: never handled a M&A anywhere near this size and, 2: gets his pockets buttered by very Xbox-leaning fans with lots of cash, like Hargeet Chani (or however you spell his name).

He knows who his customers on this acquisition stuff are and placates to what they want to hear, more or less, as often as he can. He's just more measured in that (given his actual profession as a lawyer) than some of the blatant types online like Jez Corden or Timdog.

Like you said, he is acknowledging to an extent an actual truth that may end up happening (unfortunate as it is), and we know lots of politicians are bought off (lobbying is basically another form of that, these days). But him openly entertaining it in a way he knows certain Xbox fans are going to have go over their heads, is somewhat crass to say the least.

But like was said, he knows his audience and knows what to say to placate them.



The only area on this I somewhat disagree with is them making Xbox wholly software-only; I think they would definitely prioritize the software side prominently, but they would just (IMO) shift Xbox into general computing devices and merge that side with the Surface department.

If MS tried selling Xbox at the end of 360 gen to companies that didn't want it then, what chance is there any company is really going to want the Xbox hardware division now? Them putting it on the market for a buyer would look much less attractive today than at the end of the 360 generation, especially if the buyer doesn't get any of the software teams, OS, or IP alongside that.

I just can't picture MS 100% jettisoning the Xbox hardware business altogether, if they are forced to make a choice in the case the acquisition not going through. Other than that, agreed with everything in the post.

Why would they hang onto a hardware division that has historically never, ever turned a profit?

There’s no logic in doing that when they can just shut it down and walk away. Everything is made by contract manufacturers, so it isn’t MS’ problem to spin down lines or retrain workers.

 

[AshHunter216]

We know the FTC/CMA/EU all talk to each other. FTC vehemently opposes to deal thanks to queen Lana Khan, CMA seeks divestment or nothing, I just don't see EU being any more lenient than the UK or US, and even if they are fuck em.

Even if it comes down to the US they will have to wait until early 2024 for a court decision, by that point they'd be so far in last place thanks to Spiderman 2 it would've even matter.

Whatever remedies that would cause this deal to pass with the CMA means that COD will still be on Playstation for the foreseeable future and makes it an even more pointless acquisition, except giving Bobby and Lulu their golden parachute.

Only thing I would add is that they could close without FTC approval in the event that the other regulators OK'd the deal, but if the FTC were to somehow win their court case later on, they could undo the acquisition. I don't think it will come to the court case however as the CMA have taken a very strong stance against the deal, almost as strong as the FTC, but with more power to actually block the deal.

 

[anonpuffs]

Why would they hang onto a hardware division that has historically never, ever turned a profit?

There’s no logic in doing that when they can just shut it down and walk away. Everything is made by contract manufacturers, so it isn’t MS’ problem to spin down lines or retrain workers.

So if they sell xbox who are we thinking picks it up? Amazon? Tencent? Apple?

 

[Fenton]

Florian Muller's blog claims that MS are actually meeting with the CMA tomorrow and Activision meets with them Wednesday with everyone else later. The rest of his post is nonsense biased spin though.

View attachment 685

 

[AshHunter216]

Oh I'm well aware of his ties to MS and Blizzard, which is why I advise one ignores 99% of what he says.

 

[thicc_girls_are_teh_best]

Why would they hang onto a hardware division that has historically never, ever turned a profit?

There’s no logic in doing that when they can just shut it down and walk away. Everything is made by contract manufacturers, so it isn’t MS’ problem to spin down lines or retrain workers.

I'm glad you brought that up because it ties into this next point: Microsoft wouldn't keep Xbox as it is today, if they decided to keep it around.

My thinking is, they would completely shift the model. They would not even market it as a console anymore but more like a gaming-centric NUC mini-PC. So they would be able to price the hardware to where it makes a profit off hardware sales, and merge the Xbox hardware team with Surface (IIRC the Surface team were involved in the development of the new consoles anyway so it's not exactly out of left-field for them).

Doing that would let MS do two things: one is actually sell Xbox hardware at a profit. The second is, they'd have an excuse to cut down on the total volume of Xboxes manufactured. They wouldn't need to sell 50 or 60 million Xboxes a generation to make it work; they could make like 2-5 million Xbox devices a "generation", keeping in mind something like GPU generations, then phase those out and make newer models two years later. As-is they're going to have a very difficult time making new Xbox systems in this "Series" moniker but if they operated it more like a mini-PC business line they'd be able to justify that and also make good on one of the appeals of their All-Access program.

But to move Xbox in that direction, Microsoft would have to actually make it capable of running full-on Windows. No gimped features, no roadblocks, no barriers. You run Windows on Xbox the same way you can on any other PC device. That means they can't prevent users from using Steam, EGS, GOG etc. on Xbox systems anymore, either. That would naturally create even more a reason to make their internal games truly multiplat, so no more stuff like locking Starfield or TES6 as Xbox console-exclusives because Xbox would no longer "be" a console with this approach.

I mean if you think about it, one of the pushes people in the community have made for the Series S and X are actually them being emulation systems; that's something typically reserved for PCs. And MVG put up this video just today:

More than any other console, Xbox Series practically are "just" PCs in a console-style form factor box. The only thing preventing them from running full-on Windows is Microsoft still wanting to run the console side on the traditional console business model. But IMO, that is what's holding Xbox back from having its own actually unique identity amid the current market.

I don't trust MS to be able to compete with Sony even if they get ABK; they've just had too many times now to show they can't really "get" this traditional console business model to work for them, when companies much smaller than them have succeeded. Maybe it's just not in Microsoft's corporate DNA to exist in gaming in that capacity, but IMO that doesn't mean they can't still be a platform holder. They already are: with Windows. Why not just shift Xbox to serve the needs of Windows more directly, and have the Surface team handle the hardware side of things like they already kind of did for Series S & X?

Besides, you already highlighted how even during the end of 360 gen, no one wanted to buy the Xbox division and that is with what I'm presuming was the software side too and maybe owned IP? So whatever Samsung, EA & that 3rd company didn't like at that time, there's going to be magnitudes more of that unfavorable stuff for any company looking to buy Xbox today, especially if it's just the hardware side. No one will want to buy a divested Xbox hardware unit. But I think Microsoft could do more with it as a mini-PC NUC-style gaming brand device than simply shutting the hardware down altogether, IMO.

So if they sell xbox who are we thinking picks it up? Amazon? Tencent? Apple?

I honestly can't see any of them being interested in buying a hardware-only divested Xbox division. Maybe desirability shoots up if it includes studios and IP, but that's a lot of potential revenue & profit Microsoft would be giving up.

Just hardware-only, only Tencent would probably be seriously interested. Amazon less so, but still on the radar. Apple wouldn't give a shit, TBH. If it included the studios and IP, all three would be a lot more interested, particularly Tencent & Amazon; Apple would probably only want the studios & IP and either not want the hardware or, if forced to buy to get what they really want, immediately shutter or spin off the hardware to some random company.

But really this is all theory-crafting if things play out to where MS doesn't acquire ABK. I think even if they do acquire them, though, they may make some big changes to the Xbox division and still pivot to acting more as an actual 3P publisher; how else is Xbox as a division ever going to realistically make up for $150+ billion in sunk costs & losses in any realistic lifetime?

 

[KiryuRealty]

I'm glad you brought that up because it ties into this next point: Microsoft wouldn't keep Xbox as it is today, if they decided to keep it around.

My thinking is, they would completely shift the model. They would not even market it as a console anymore but more like a gaming-centric NUC mini-PC. So they would be able to price the hardware to where it makes a profit off hardware sales, and merge the Xbox hardware team with Surface (IIRC the Surface team were involved in the development of the new consoles anyway so it's not exactly out of left-field for them).

Doing that would let MS do two things: one is actually sell Xbox hardware at a profit. The second is, they'd have an excuse to cut down on the total volume of Xboxes manufactured. They wouldn't need to sell 50 or 60 million Xboxes a generation to make it work; they could make like 2-5 million Xbox devices a "generation", keeping in mind something like GPU generations, then phase those out and make newer models two years later. As-is they're going to have a very difficult time making new Xbox systems in this "Series" moniker but if they operated it more like a mini-PC business line they'd be able to justify that and also make good on one of the appeals of their All-Access program.

But to move Xbox in that direction, Microsoft would have to actually make it capable of running full-on Windows. No gimped features, no roadblocks, no barriers. You run Windows on Xbox the same way you can on any other PC device. That means they can't prevent users from using Steam, EGS, GOG etc. on Xbox systems anymore, either. That would naturally create even more a reason to make their internal games truly multiplat, so no more stuff like locking Starfield or TES6 as Xbox console-exclusives because Xbox would no longer "be" a console with this approach.

I mean if you think about it, one of the pushes people in the community have made for the Series S and X are actually them being emulation systems; that's something typically reserved for PCs. And MVG put up this video just today:

More than any other console, Xbox Series practically are "just" PCs in a console-style form factor box. The only thing preventing them from running full-on Windows is Microsoft still wanting to run the console side on the traditional console business model. But IMO, that is what's holding Xbox back from having its own actually unique identity amid the current market.

I don't trust MS to be able to compete with Sony even if they get ABK; they've just had too many times now to show they can't really "get" this traditional console business model to work for them, when companies much smaller than them have succeeded. Maybe it's just not in Microsoft's corporate DNA to exist in gaming in that capacity, but IMO that doesn't mean they can't still be a platform holder. They already are: with Windows. Why not just shift Xbox to serve the needs of Windows more directly, and have the Surface team handle the hardware side of things like they already kind of did for Series S & X?

Besides, you already highlighted how even during the end of 360 gen, no one wanted to buy the Xbox division and that is with what I'm presuming was the software side too and maybe owned IP? So whatever Samsung, EA & that 3rd company didn't like at that time, there's going to be magnitudes more of that unfavorable stuff for any company looking to buy Xbox today, especially if it's just the hardware side. No one will want to buy a divested Xbox hardware unit. But I think Microsoft could do more with it as a mini-PC NUC-style gaming brand device than simply shutting the hardware down altogether, IMO.



I honestly can't see any of them being interested in buying a hardware-only divested Xbox division. Maybe desirability shoots up if it includes studios and IP, but that's a lot of potential revenue & profit Microsoft would be giving up.

Just hardware-only, only Tencent would probably be seriously interested. Amazon less so, but still on the radar. Apple wouldn't give a shit, TBH. If it included the studios and IP, all three would be a lot more interested, particularly Tencent & Amazon; Apple would probably only want the studios & IP and either not want the hardware or, if forced to buy to get what they really want, immediately shutter or spin off the hardware to some random company.

But really this is all theory-crafting if things play out to where MS doesn't acquire ABK. I think even if they do acquire them, though, they may make some big changes to the Xbox division and still pivot to acting more as an actual 3P publisher; how else is Xbox as a division ever going to realistically make up for $150+ billion in sunk costs & losses in any realistic lifetime?

They already have a hardware division that doesn’t have the toxic brand image XBox does, and not a single point of what you said provides any good reason for them not to just kill the hardware part of XBox.

 

[Gods&Monsters]

So if they sell xbox who are we thinking picks it up? Amazon? Tencent? Apple?

A nuclear waste disposal company

https://www.usecology.com/services/treatment-disposal/radioactive-waste-solutions

 

[Swift_Star]

I find the timing a bit suspicous aswell, just before the cma hearing this week. Maybe adding more pressure to the CMA.

Forums add shit. Forums have no weight whatsoever in the real world. Really, nobody cares about forums.

 

[thicc_girls_are_teh_best]

They already have a hardware division that doesn’t have the toxic brand image XBox does, and not a single point of what you said provides any good reason for them not to just kill the hardware part of XBox.

But that "toxic brand image" of Xbox still sells more in hardware than pretty much all of their Surface devices combined. Even if that number reduced by moving to a min-PC NUC-style approach, they would have most of the same userbase, who have already been conditioned to view Xbox as less and less as "just" a console with the PC Day 1 push and now Game Pass.

Most of them would still buy those Xboxes even if they costed a bit more, especially if it meant they could run Windows on them. Also look at it this way: if Microsoft shifted to that type of business model, they'd have little incentive to continue the type of messaging they are currently engaged in. So theoretically, a lot of the toxicity part would just fade away (you would still have those faithful to the Xbox brand but they wouldn't be doing it as something "against PlayStation" anymore, especially if MS making such a change with Xbox coincided with being more openly multiplatform than they currently are).

 

[Deleted member 417]

So if they sell xbox who are we thinking picks it up? Amazon? Tencent? Apple?

Steam/valve