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Destin Legarie: Xbox Buying Activision Was Pointless
- Thread starter LectureMaster
- Start date
- Opinion
Pegasus Actual
Member
Not really sure who this soyperson is, some kind of fanboy LARPing as an analyst?
ChorizoPicozo
Member
pointless for whom?
Gears of War, Halo, Forza, Project Dark, and Fable are PlayStation games now.
"When everybody plays we all win"
and with this acquisition, Xbox has become the biggest publisher on planet earth, taking over the PlayStation storefront too.
It was a great success. a great success in all key metrics for sure.
Gears of War, Halo, Forza, Project Dark, and Fable are PlayStation games now.
"When everybody plays we all win"
and with this acquisition, Xbox has become the biggest publisher on planet earth, taking over the PlayStation storefront too.
It was a great success. a great success in all key metrics for sure.
Sooner
Member
They did. And it only cost them almost 100 billion dollars and the imminent death of their closed ecosystem.
They are going from making 100% profits for first-party games and 30% third-party games, to 70% first-party and 0% third-party. They are also sabotaging GamePass as fewer and fewer Xboxs are being sold.
Since they've shifted to releasing their games on PS5, Xbox went from being outsold 2 to 1, to being outsold 5 to 1. And it's only getting worse.
GamePass, which was nowhere near the numbers they expected or needed will get even worse, as there are fewer and fewer Xbox consoles, and GP is not on PlayStation, Nintendo or Steam.
what about the sp campaigns?
rm082e
Member
I think Phil and Satya knew Xbox was doomed back in 2018 or 2019. I think they looked at the business and knew they needed to buy something that would let them morph that part of the business into something else because they they couldn't compete with Sony and Nintendo anymore.
This narrative that Phil is dumb seems like it's based in an underlying assumption that his job is to drive the console war. I think he's the guy tasked with managing the impending failure of one business while trying to replace it with a new revenue stream.
onnextflix5
Member
The only way the whole thing makes sense if ms make call of duty exclusive to xbox, but that’s not happening as they are done losing money from the Xbox business, think the xbox is finished after this gen, are they even willing to sell their handheld at loss i wonder, well if they don’t it has no chance.
Mattyp
Not the YouTuber
An acquired asset isn’t required to ‘pay for its self in some non existent time line’ this asset is still worth $80+ billion dollars, they could offload that side of their business tomorrow.
You aquire assets to grow revenue and increase net worth both of which has happened with this purchase.
Activision makes more in revenue than the interest Microsoft would have made from the cash reserves it has sitting there along with owning those popular assets and growing Gamepass.
It allowed them to become the largest video game publisher in the world.
larrybrady
Member
Haven’t watched a Destin video in about a year( honestly forgot all
about him)…. He has really aged…this console waring is really important to him,and is stressing him out next level.
about him)…. He has really aged…this console waring is really important to him,and is stressing him out next level.
DeltaPolarBear
Member
But under your theory of what came to pass, you are implying Phil was lying his mouth off for years and years planning an escape route for himself while betraying the few loyal customers he had left. That he never really though Xbox could be saved and it was all to make sure he personally survive as the head of Microsoft Gaming. And that all along his fans are suckers for believing in him.
Activision was bigger and makes more money than the Xbox Division itself. By purchasing Activision, Xbox got absorbed by the purchase. Xbox never had the clout to run Activision to begin with so when the purchase went through, Activision just carried on doing what it wants to do and tell Xbox to go fuck itself.
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Sky-X
Neo Member
We are only forum users, we can't say such an accomplished individual is "dumb".
However, watching from outside he failed to win against the competition, and yes, winning the console war, for quite sometime, was his job. This acquisition wasn't only meant for mobile but also for Xbox to be relative again, them not wanting to offer multi-platform guarantees for CoD more than 3 years initially do say everything, they really wanted to win the next generation with Xbox. They have managed to secure the deal but it didn't go as planned.
The approach to make money and the direction of Xbox only changed because of this failure against the competition.
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EverydayBeast
ChatGPT 0.001
The Xbox Activision deal is still fresh, it’s easy to talk crap about it.
YeulEmeralda
Linux User
Ha in my absolutely non expert opinion:
If you pay 70 billion for Call of duty you want it to run on everything. So that you can make that money back.
If Activision wanted WoW on Consoles they would have done it 10 years ago. Redesigning the game around a gamepad and likely banning add ons would cause an awful exodus on PC to gain some short term console gamers who will probably just go back to Fortnite and COD after a month.
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ChorizoPicozo
Member
But you understand that Xbox basically lost 30% of every single transaction inside their storefront, right? Becoming "the biggest video game publisher in the world" by paying close to $100 billion (including ZeniMax and the studios they’ve bought since 2018) is meaningless when they are set to make much less money than if they had an actually healthy platform/storefron
Hide the pain Destin
RafterXL
Member
If you are Microsoft, buying it wasn't pointless, they print money and that's all Microsoft's now.
If you are a gamer, it was absolutely fucking pointless. The fact that we still don't have every one of these games on GP is an embarrassment, and Microsoft completely dropped the ball on this. The fact that they've done nothing, and are currently doing nothing, with Activision IPs is also a huge black eye. The fact that under Microsoft Blizzard and Activision games have gotten worse in the monetization dept. is another huge black eye. Also, regardless of what people think about WoW, it should have 100% been ported to Xbox by now. The MMO market on consoles is dogshit and it would have had a home there.
Frankly, Microsoft has nothing done positive with the Activision/Blizzard/King acquisition, not a single thing.
If you are a gamer, it was absolutely fucking pointless. The fact that we still don't have every one of these games on GP is an embarrassment, and Microsoft completely dropped the ball on this. The fact that they've done nothing, and are currently doing nothing, with Activision IPs is also a huge black eye. The fact that under Microsoft Blizzard and Activision games have gotten worse in the monetization dept. is another huge black eye. Also, regardless of what people think about WoW, it should have 100% been ported to Xbox by now. The MMO market on consoles is dogshit and it would have had a home there.
Frankly, Microsoft has nothing done positive with the Activision/Blizzard/King acquisition, not a single thing.
Current day WoW is less complicated and has significantly less abilities than FFXIV. It would be simple to port to consoles. In fact, there is a very well done mod called ConsolePort that is made for controllers and that people have been using for years.
reinking
Gold Member
Seems like revisionist history.
I think Phil and Satya thought they would buy ABK without restrictions on COD. When they had to make concessions, they had to pivot strategy. If I remember right, that is when the messaging first started to change.
The narrative that "Phil is dumb" seems to be based on the fact that he has been with Xbox since 2001. He has been at the man in charge of Xbox since 2014(?). I do not think he is dumb but I do believe he lacked focus and lost sight that the games matter the most.
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Incorrect. In M&A businesses pay a premium to acquire other businesses over the fair market value that breaks even at the synergistic break even point when it comes to generating positive cash flow as a result of the acquisition.
Additionally, premiums paid over fair market value are recorded as goodwill and face annual impairments. This means that unrealistic overpayments or overvalued acquisitions are written down. Just because you pay $80B doesn’t mean that the asset is worth $80B.
Syphon Filter
Member
millions still play WoW. its not like there are many good games to play these days.
PurePlatinum
Member
It was pointless for Xbox but not for Microsoft gaming.
Their business is changing. Buying Activision was the death of one Xbox and the birth of another.
Their business is changing. Buying Activision was the death of one Xbox and the birth of another.
awwr999999
Member
Bill's still running the show and he's always hated the idea of Xbox and game consoles in general.
MacReady13
Member
So basically cause they haven’t integrated the games onto the rental service like he wants it’s been a failure?! Fuck gamepass! I mean, do these idiots understand what gamepass has done to Xbox? It’s fucked them so far up their asses it’s not funny, and this clown continues to want more shit on that service? Make people fucking BUY your games! Why is that concept so hard to comprehend for these xbots?
I think the crazy xbox fans drove this assumption too much which ultimately backfired on them to now think Phil is dumb. I still remember the "I believe in Phil Spencer" memes. About how he was going to save the console where Don failed. It became "it's only been 2 years give him time", "its only been 5 years", "it's only been a decade", till finally it became clear it simply wasn't happening. so now Phil's reputation as the saviour of xbox is in tatters.
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Mattyp
Not the YouTuber
You realise that’s exactly the way activision became the largest publisher in the world right accepting the 30% to publish on every platform?
70% is better on 200m consoles than 100% on 50 million.
I still remember telling people they will likely drip feed this stuff to keep subs going longer and people arguing and giving me examples of what they did with Zenimax. I'm sure you can guess which people. Good times.This guy really thought they were going to spend 80 billion so that he could get a bunch of handouts on gamepass?
Mattyp
Not the YouTuber
Activision was at one of its lowest share points due to the sexual allegations and work place conditions racking the company when the offer was originally made.
It had nothing to do with their revenue or turn over that had continually increased, so Microsoft offering $95 when it previously had been $105 before these allegations seems like good business no? They get the write downs while buying a business when it’s down.
The $8.8b in revenue that was reported by Activision puts Microsoft’s cash purchase of only $69b is a good deal and not over valued at all compared to other tech purchases. (also not sure why $80 billion and close to $100billion kept being thrown around)
That said people said Microsoft overpaid even for Minecraft
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GHG
Gold Member
Well with the amount of time they've made people wait and keep their subs going, they could have purchased these games many times over whenever they've been discounted.
And even if they were to drip feed these games on to gamepass, do these people really think that there are many people out there who will subscribe (or even keep their sub going) for games like prototype and the older COD games?
Honestly, it's all hilarious to witness.
Setsuna Mudou
Member
Thanks professor, now could you explain the concept of overvaluing assets?
The importance of the payback time comes from the fact gaming was in an investment bubble when they made the offer, so there is a real chance that (depending on the management) the value of activision over time will significantly decrease.
Activision was generating around 1.5B yearly profit, assuming phil will manage that shit as well as bobby k (lol), will take them around 46 years to generate 70B, that's not even counting for the inflation of the next 46 years. Just did a quick google check and seems over the last 46 years we're looking at 3 to 4x loss of purchasing power of the USD.
Mattyp
Not the YouTuber
Now read my above post, they value company purchases that size based on revenue and future profits not by actual posted profits. Otherwise Netflix, Spotify, Airbnb, uber etc are all worthless I guess not even worth a billion dollars…?
Inflation isn’t linear or able to be predicted. Google paid $1.6b for YouTube 20 years ago ridiculous amount at the time, what would a company willingly pay now, $100billion? The same will be said about Activision in 20 years as much as people hate it CoDs eternal.
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Setsuna Mudou
Member
Nothing is eternal, that's the first mistake right there. And yes, theoretically a competent management should keep and expand the profitability of the company. But you got Phil in charge
For every successful investment you'll have many more that were written off... Microsoft's Nokia purchase flushed 7B down the toilet too I'll remind you.
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Mattyp
Not the YouTuber
Nothing is eternal, that's the first mistake right there. And yes, theoretically a competent management should keep and expand the profitability of the company. But you got Phil in charge
For every successful investment you'll have many more that were written off... Microsoft's Nokia purchase flushed 7B down the toilet too I'll remind you.
They purchased Nokia for the patents, they were making $2 billion a year in Android royalties at nearly 100% gross margin before signing a deal with the Open Software Institute? Can’t remember if that name is correct exactly… sure they figured the more Android handsets the more people they can push into Office and cloud subscriptions.
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Puscifer
Member
I mean the xbox supports keyboard and mouse
Activision was at one of its lowest share points due to the sexual allegations and work place conditions racking the company when the offer was originally made.
It had nothing to do with their revenue or turn over that had continually increased, so Microsoft offering $95 when it previously had been $105 before these allegations seems like good business no? They get the write downs while buying a business when it’s down.
The $8.8b in revenue that was reported by Activision puts Microsoft’s cash purchase of only $69b is a good deal and not over valued at all compared to other tech purchases. (also not sure why $80 billion and close to $100billion kept being thrown around)
That said people said Microsoft overpaid even for Minecraft
I think you need to first understand what goes into the market value of a company and the concept of cash flows. Just because the price earnings ratio drops doesn’t inherently mean the buyer is getting a good deal. This is all beside the point.
The core point being discussed here is that businesses pay a premium to acquire another business and as was stated that premium has a break even point to justify that purchase. Telling someone they have “brain dead financial understanding” when you don’t understand that concept is uncalled for.
Stafford
Member
I don't care at all about WoW myself, but I don't get at all how very few ABK titles they've added since the whole deal was finished. Where are the two TH remakes? Where is Crash 4? First half of March for Game Pass is meh'ish, add some ABK to that ffs. 
Add some older CoD and what not, give BC some love with Prototype 1 and 2.
Add some older CoD and what not, give BC some love with Prototype 1 and 2.
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Have you forgotten the emails? This wasn't the plan.
Mattyp
Not the YouTuber
I understand that point entirely, my point is they paid significantly less than what they would have just 12 months prior due to ‘news’ and the stock dumping.
Do we really believe a company generating $8billion in revenue isn’t worth the $69b asking? Microsoft to me purchased at the right time, it helps being one of the only companies in a position even able to make that offer there is no huge premium here.
The fact of it is if none of this ever gets reported bobby never looks for a way out and the company never hits the market to begin with. Right time right place for once. The same as steam isn’t going to sell tomorrow even if Microsoft turn up with $69b at the doors.
My frustration is reading the same comment repeatedly on here every single day about how Microsoft has somehow lost $69b in money and that needs to be generated in the next 3 years.
DeltaPolarBear
Member
The problem isn't that Activision purchase is overpriced, the problem is that Activision dwarf Xbox Division in revenue and profitability.
The original plan was to sacrifice Activision profits to make Xbox have exclusives that they desperately needed. But Xbox failed to hold Activision down on the sacrificial altar, and the table got turned. Instead Activision turned to Microsoft and argued that they are far more financially successful by remaining the way they are, and that Xbox division doesn't deserve to call the shots.
Pedro Motta
Gold Member
It was not pointless, it was their best move to save the business and stay relevant.
Setsuna Mudou
Member
Seems like the final cost was closer to 75B... hard disagree on doing it at the right time, they made the offer right during the gaming / covid bubble. And it's not about the revenue, it's about yearly profits. Sure, Microsoft can stand to lose a lot of money, but they are definitely taking a bath on this one.
Btw, Sony also took a big bath on the Bungie price... they were also not worth the money invested.
HeWhoWalks
Gold Member
Xbox hardware, at least for now, is irrelevant. Now what they do going forward (because more hardware is certainly in the way) is another matter.
But, I agree that the overall move was not pointless.
Cyberpunkd
Member
Google WoW on Steamdeck, it would work exactly like that.
Cyberpunkd
Member
Revenue doesn't equal profit, but it's fun to see some people never fucking learn the difference. Probably same people that think you should earn less, since making more will put you in a higher tax bracket. #lifehakz
ABK acquisition did jack shit for Microsoft, if anything it accelerated their third party initiatives since Uncle Nadella told Phil that after dipping into the coffers it's time to stop being a pussy and start making money, and Phil being the idiot he is went straight to the easiest solution available, even though this in effect kills the Xbox brand.