It’s one of the biggest business stories in years, but many of you probably slept through it, because it’s just a computer game thing.
But computer games are a massive industry — literally bigger than Hollywood, and still growing fast — and Microsoft’s mooted takeover of games company Activision Blizzard is very big potatoes indeed, at a lazy $US69bn.
It’s a classic case of corporate raiding: Activision Blizzard has been in the poo for months, with credible accusations of a toxic workplace culture. More ominously, it means that Microsoft is one against headed for hegemony in a key tech market. The deal will make Microsoft the third-biggest player in the world of gaming.
Market leader remains China’s TenCent, owner of massive online messaging app, WeChat. But TenCent’s dominance is mainly thanks to Mainland Chinese users. Second-runner Sony is bigger in the West, with its near-ubiquitous PlayStation console. Any South Park fan will know that Sony and Microsoft have long been bitter rivals in the Console Wars. This is Microsoft’s Brack Friday Bunderu moment and Sony is feeling the heat.
With a decline of 4 per cent yesterday, Sony’s American depositary receipts are now down 11 per cent since the Microsoft/Activision transaction was announced. The company has shed nearly about $US17bn in market value.
The decline has seen shares of Sony Group under pressure for a second day, as investors continue to assess the risks to the company’s PlayStation business following Microsoft’s agreement to acquire Activision Blizzard for $US69bn ($96bn).
But that’s not the whole story: tech stocks as a whole have fallen, which is not unusual in the wake of a big takeover bid like this.
Citi analyst Kota Ezawa also remains bullish. He wrote in a research note that Sony’s selloff is overdone. There are still many game publishers making PlayStation games, he wrote, and while there’s “remarkable growth” in Sony’s own first-party games.
Ezawa also noted that the PlayStation platform is finding other uses, generating profits from network services tied to animation, music, movies, and TV. He doesn’t think Sony needs to respond to the Activision deal by making an acquisition of its own.
The Australian
But this is about much more than winning the Console Wars. Microsoft is also making a pre-emptive strike to head off Facebook and Apple and own the metaverse.
Tech giant Microsoft has made an all-in bet on the future control of the internet and this time it doesn’t want to get left behind […]
What many of us used to call virtual reality is evolving into the metaverse – a totally immersive online experience. There’s big dollars at the end of this tech rainbow, but no one, including Facebook’s Mark Zuckerberg, is sure how to make them yet or what it will look like.
Microsoft has a bit more of a real-world use for it in the battlefield of tech.
The gaming experience is immersive and titles like shoot ’em up game Call of Duty relies on multiple players – or communities – anywhere in the world. This makes it ideal for when the metaverse eventually arrives.
Then there’s Actvision Blizzard games like World of Warcraft which are already a metaverse of their own.
In the not too distant future games will be streamed through mobile devices and the right hardware including virtual reality headsets and gloves. There is still some way to go. The hardware and devices are still expensive and can’t be worn for a long period of time, while the experience is still very developmental.
But Microsoft, which is the world’s fifth most profitable company, is not paying a 45 per cent premium for Activision’s shares for mere blue sky, it’s got a hard gaming business model in mind where it will own the data and distribution.
The Australian
Unsurprisingly, many people have a great many reservations about the metaverse concept — especially given that most probably only heard of it courtesy of Facebook’s rebrand as “Meta”. As Japanese movie Summerwars anticipated back in 2009, there are good grounds to be suspicious.
The monopolising behaviour of Microsoft isn’t about to make anyone feel any better about it, I suspect.
