This morning, Microsoft announced that they were acquiring Activision-Blizzard . Like most deals of this size and magnitude, there’s a long timeline to it, with an expected closure happening sometime next summer or so. The total price is just shy of $69 billion dollars.
Here’s some quick thoughts on the topic.
1.This is about exclusives. Microsoft were very bad losers in the XBox One/PS4 generation because Sony kicked the shit out of them in terms of Exclusive Content. Exclusives are what win console wars, and Microsoft just could not compete with a exclusive lineup that contained Spider-Man, God of War and Horizon Dawn. Microsoft is determined to not make the same mistake again. Last year, they famously bought Bethesda Zenimax and shortly afterwards confirmed that the upcoming Starfield will be a PC/XBox exclusive. It’s also driven acquisition of several studios since 2018, including Obsidian, Ninja Theory, inXile, the Initiative, and Double Fine. This isn’t just about making money off those titles, it’s also about taking oxygen away from Sony Playstation.
2. Gamepass is the real disruptor in the games industry now. For all the talk about blockchain in games, the real sea change to the games industry in the last few years has been a movement towards subscription-based gaming. Sure, Microsoft isn’t the only ones doing it – both Apple and Netflix are wading into the space in mobile, and it seems to be the preferred business model of some cloud gaming platforms.
Still, Microsoft’s GamePass is the clear front-runner in the space. And that’s important! Most people are not going to have several game subscriptions, and so being so big that you’re the ‘default’ choice is a huge deal. One could say that this is them trying to become The Netflix of Games, which is fair. But one could also that by buying up all the primo IP, they’re also trying to be the Disney Plus of games as well.
3. This could also be a frontal attack on Steam and Epic as well. What, were you not AWARE that your gamepass also got you the games on PC? And while I don’t expect for Microsoft to be so brazen as to remove titles from Steam, they can compete effectively with Steam with their Try-Before-You-Buy strategy. Microsoft has always considered PC to be territory they should own, and I wouldn’t be surprised to see this heat up more after the Activision deal goes through.
4. This may add new challenges for indies on GamePass. GamePass has been a revelation for indie gamers, as it gives devs a new platform for discovery. Countless games have gotten the ‘try before you buy’ treatment as players try stuff for ‘free’. However, Microsoft-owned titles don’t rotate in and out of the store, which means that indies have to compete with always-available titles like Forza and Skyrim. The more that Microsoft packs GamePass with AAA offerings, the harder it may be for indie games to find oxygen.
5. This is probably a good thing for Activision’s current culture problems. Look, I’m not saying that Microsoft is perfect and has never had a major-league fuckup – indeed, part of working in the games industry is usually trying to find a place with crazy that is compatible with your crazy. And I know that there’s some disappointment that embattled CEO Bobby Kotick likely won’t leave until the deal is completed. Also, as far as I know of, there’s no Microsoft union, and I suspect game devs passionate about that goal will find it further away once all is said and done.
All the above being said, firing Kotick probably wouldn’t have fixed the culture problems, but getting a new corporate overlord will probably result in massive changes. Most people I know who work at Microsoft believe that their heart is in the right place on these issues, and they’re not afraid to fire people who are being obstacles to true change.
The above being said, there may be some disappointment in the RATE of change. One of the things that companies like EA and Microsoft try NOT to do is to ruin the magic of the studios they buy, at least for a couple of years. So it remains to be seen whether or not Microsoft results in a sledgehammer to these problems, or a Light Touch With A Promise That They Will Get Involved If You Don’t Take Care Of Your Own Shit. But one way or another, I expect the toxic forces that may still be lurking in ACTI to be discovering it’s a lot harder to hide.
6. This is probably a good thing if you don’t want to see Call of Duty in-game NFTs.
Microsoft HAS dabbled in blockchain stuff, and in the realm of NFTs have done some experiments that includes even gaming that flew mostly under the radar. That being said, head of Xbox Phil Spencer seems to be a pretty big skeptic of the concept. Microsoft has been hyperfocused on creating gamer good will in order to create energy and momentum for GamePass, and as such I’d expect their studios (including ACTI) to steer clear of the concept – at least until someone else demonstrates a use of the technology that has wide market favorability.
But before I get ahead of myself on this one, let’s keep in mind that the press release announcing the deal called it the building blocks of the metaverse.I mean, that’s PROBABLY just them using Wall Street friendly buzzwords, but I guess we’ll see.
7. Activision/Blizzard is about to enter a weird year-long ‘don’t make waves’ purgatory. One of the fun things about being in this ‘pending’ state – and I’ve seen it many times over the years – is that the number one overriding goal for the entire organization becomes ‘Don’t blow up the deal!’ As an example, I was working on SWTOR when Disney was maneuvering to buy Lucas, and it was about then that our community manager decided to tell players inquiring about same-sex romances in SWTOR that, if you think about it, there really aren’t gay people in Star Wars. It was a thing, and would eventually lead to pissed off conservatives when we backpedalled and ultimately the “Gay Planet”. Whoopsie.
Anyway, was LucasArts mad at us? You betcha! Was it for soiling George Lucas’ vision? Was it for not having gay romances? Was it for eventually including gay romance? Was it for pissing off conservatives? None of the above. It was for making news. All that mattered was that we didn’t blow up the deal. As far as they were concerned, they didn’t care HOW this little fuckup went away, just so long as it did, eventually, go away.
Anyway, just something to think about the next time there’s disquieting Activision/Blizzard news.
8. So it’s probably mostly good news but…. l know a lot of people are disquieted when giant behemoths get bigger, and I won’t lie, that’s a concern. It’s not really a monopolistic concern – Microsoft will only be the third biggest gaming company after this deal goes through, after TenCent and Sony – but it will dramatically increase the clout of one of the biggest companies in the world. Concentration of power is not usually very great, especially if you’re a smaller company trying to compete or get a deal.
That being said, one interesting mental exercise is to think about the next Blizzard RPG, the next Bethesda RPG and the next Obsidian RPG. Will corporate influence push these titles to be more similar due to shared corporate goals? Will corporate influence push these titles to be more different – even in cases designers don’t want to go that direction – to create further differentiation inside the same company? Or will corporations do the right thing and keep their hands off the wheel and let designers and teams make these decisions. I know what lip service we’ll get, but only time will tell for real.
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