#87: The morning after
As the dust settles, some further thoughts on what we shall henceforth call Acquisition Blizzard.
Anyone else feel a bit… different when they woke up this morning? A bit weird, as if the ground had shifted slightly, and the living-room furniture had been subtly rearranged? Perhaps it’s just me, or the fact that the family woke to find the dog had pooped on the dining-room rug. I wonder if she too sensed the stress and disruption, and so expressed herself in the only way she knows how. Or she just ate something daft off the floor. Probably that.
While the dust is still settling on yesterday’s industry-shaking news that Microsoft is buying Activision Blizzard for $68.7bn — an amount that a staffer on Activision’s median 2021 wage would take almost 700,000 years to earn — we now know a little more about the specifics of the deal. Microsoft’s approach came in November: not just after the scandal broke, but also after the Wall Street Journal had published its report directly implicating Kotick in it. Great. Great and normal and fun.
Supposedly Kotick was cool on the notion at first, and let it quietly be known that the company was for sale in a bid to attract rival offers; none was forthcoming. He also suggested, as part of a broader image-repair drive, that Activision acquire “gaming-trade publications like Kotaku and PC Gamer,” something I am almost sad did not happen. What a day on Twitter that would have been.
Kotick, by common consensus, is gone once the ink dries, though that process could take 18 months or more depending on how beady the antitrust bods’ eyes prove to be. He says he’ll stick around if needed, though you suspect that both he and his new paymasters will want him gone at the earliest opportunity: after all, one does not break out the Febreze until the poop has been safely disposed of (sorry, still not over it). In a carefully chosen handful of interviews I advise you not to read — particularly this miserable ring-kissing act of submission at VentureBeat — he dresses the deal up as having nothing to do with the misconduct scandal, or his own role in it.
No, it’s about resources, Kotick says; about Activision being unable to compete with the Apples, Tencents and Amazons of the world, and Microsoft being one of the few companies able to give it the necessary leg up. (He also claims the drop in Activision stock that sparked the deal was more about the delays to Overwatch 2 and Diablo 4, and the drop in COD sales, than the misconduct hoo-hah. Depressingly, he’s probably right.)
The subtext to all this — providing that, as a fun thought exercise, we take Kotick at his word — is that, while this is the most eye-watering acquisition the game industry has ever seen, it is far from the last of its kind, and may not be the biggest for long. Kotick will not be the last CEO to fret, for instance, about how a company built around annual-franchise game development can reasonably invest in AI, machine learning and cloud technology, or compete in salary terms with the likes of Tencent, without falling dramatically off the pace.
As Hit Points has observed in the past, consolidation is ultimately about power; about the ability of huge companies to dictate the terms of engagement in the markets and environments in which they operate. If Kotick really thought Activision’s time was up, what does that say for everyone else? How are you feeling this morning if you’re in the big chair at a hitherto successful company worth, say, a suddenly paltry $7bn? I imagine you are looking over your shoulder a little anxiously. Perhaps it’s time you started taking those calls from Microsoft and Tencent, instead of laughing them off. Overnight Take-Two’s acquisition of Zynga — which suddenly feels like a lifetime ago, doesn’t it — has come to feel less like an act of expansion, and more a bid for survival.
There are two big takeaways from yesterday’s news, I think. First, there is no such thing as a ‘scandal’, really. For all the noise and misery around Activision since it all kicked off last summer, Microsoft saw not a company in a dire state of disrepair, but one it could get on the cheap. Secondly, Microsoft is now operating on a completely different plane to the competition. It can do what it wants. Spending $70bn on a deeply flawed and troubled company — not just in terms of conduct and culture, but of product as well — makes that abundantly clear, if it wasn’t already.
Much of the discussion that followed the Bethesda buyout, at least in enthusiast circles, focused on what Sony would do to respond. Speculation was rife that it would buy Square Enix, or Capcom, or whatever. The traditional conversations around who makes the best console, or has the best firstparty lineup, shifted to become one about who had bought the best companies — a weird, unsettling new frontline in the eternal console war.
Once again, I’ve seen plenty of chat about how Sony will respond to the Activision deal. Well, it cannot. There is no response. Sony’s stock price dropped by $20bn overnight; it is quite obvious why, and I cannot personally envisage a realistic acquisition target that would put the company back to where it was two days ago.
It feels almost churlish to even call Microsoft and Sony competitors anymore. They are both in the same industry, sure. They are fighting over the same patch of ground. But one of them just rocked up to a swordfight with that satellite laser-thing from Akira. Where do we go from here? For once, I have no idea. But the whole thing continues to give me the willies. If anyone needs me, I shall be in the dining room for a while.
Microsoft CEO Satya Nadella has acknowledged the scale of the task ahead in repairing Activision Blizzard’s culture. “After close, we will have significant work to do in order to continue to build a culture where everyone can do their best work,” he said, before diving all Scrooge McDuck-like into a pile of gold.
The Activision Blizzard Workers Alliance, the activist group established last summer in the light of the California misconduct lawsuit, says its goals are unchanged despite the proposed acquisition. “We remain committed to fighting for workplace improvements and the rights of our employees regardless of who is financially in control of the company,” the group said in a statement. “We will continue to work alongside our allies across the gaming industry to push for measurable change in an industry that desperately needs it."
Phil Spencer has sought to play down speculation that the deal means the likes of Call Of Duty will be yoinked off PlayStation. “It's not our intent to pull communities away from that platform and we remained committed to that," he parped. You can almost see the smirk, can’t you. (If anyone’s opening a book on it, I’ve got five British pounds on Warzone staying multiplatform at the very least. If I was MS I’d kill the annual COD treadmill entirely and make Warzone the focus, freeing up those talented support studios to do more than just remake Nuketown every two years, but I remain an idealist.)
Game Pass now has 25 million subscribers. Start the clock right now and they’ll have brought in enough revenue to recoup the Activision Blizzard buyout in just 15 years and three months, give or take. (That assumes everyone’s paying monthly and no one has done the $1 upgrade diddle, which of course bears no semblance to reality whatsoever.)
UK VR specialist nDreams is expanding. Dubbed nDreams Studio Elevation, it’s headed up by existing studio art director Glenn Brace, and will be fully remote from the get-go (hurrah!). This isn’t enormous news, no, but I didn’t want to devote the whole day to Activision Blizzard.
There’s… not much else out there. Understandable, I suppose.
Let’s close with a shoutout for Nobody Saves The World, the latest from Guacamelee and Severed developer Drinkbox, the launch of which yesterday flew rather unfairly under the radar. They’re a good bunch. It’s on Game Pass, and I shall check it out this evening. Perhaps you might like to do similar, if only to take your mind off things.
That’ll do. As ever, if you’ve enjoyed this, please do give it a share. Yesterday’s edition did very well on the ol’ socials, and my thanks to those of you who helped, and in so doing justified me rising from my sick bed to crank out some words. Have a grand couple of days, and I’ll see you all on Friday — when, barring any intervening megatons, I think we’ll try and take some positives from the Activision deal.