Microsoft has not been making money on xbox. They're not investing money made with xbox. They're using Office/Windows/Azure funds to boost Xbox, and it's not a fair fight. Sony and Nintendo don't have that kind of money.
I get Sony has acquired studios too, but by comparison they seem carefully planned. They're usually studios already making (mostly) playstation exclusives (e.g. devs of Returnal, Spider-Man and Dark Souls).
Torn on this. On the one hand I completely agree. I doubt there'll be any anti-trust action, first because that doesn't seem to be a thing anymore and second because I can't imagine the American authorities getting in the way of Microsoft's competition with what are, at the end of the day, Japanese companies.
As a gamer who's loved Activision's franchises since childhood, they've run them all into the ground and if Microsoft can do better with them then let them try.
Side thought - maybe Nintendo and Sony will finally join forces to compete, as they almost did in the 90s.
No antitrust action will be taken because even after all these acquisitions, Microsoft still competes with Take-Two, EA, Nintendo, Square Enix, Sony, Tencent, etc., plus a vast number of smaller players (Paradox, Sega, the sixteen gazillion indie developers on Steam...).
The purpose of antitrust law is to prevent anticompetitive behaviour by limiting the accumulation of market power. The most extreme case of this is monopolies.
I agree that no action will be taken, though. The current status quo is so full of market power abuse that this acquisition looks normal.
Notably: Rocket League, Minecraft, Fortnight, Apex Legend, Overwatch
The interesting one here for me has always been Nintendo, they are a still a pure gamers play, and have managed to thrive in a world of shifting sands, sometimes bucking entire trends in the industry with success, like going all in on the Nintendo Switch form factor (a lot of the industry people thought mobile gaming consoles were dead in the water)
I think there's a lot of competition in this space still, and while I don't like consolidation either, its also hard to say Activision Blizzard is a well managed company at this point
[0]: https://www.nytimes.com/2013/05/28/business/global/sonys-bre...
[1]: https://www.cbr.com/spider-man-no-way-home-sony-most-profita...
But I imagine Sony execs are struggling to comprehend what's going on. They've done so much right in the last few years. They've built some of the best studios in the world. They've delivered the best exclusive AAA content. Just in the last few years: The Last of us Part 2, Ghosts of Tsushima, God of War, Horizon Zero Dawn, Uncharted.... And despite that, they still might not come out on top. Life isn't fair :).
>> Sony spent 20+ years building up and planning their 1st party studios. Microsoft could do that too, but it would take 20 more years.
Ironically, the Xbox (OG) was released 20 years ago.
First, the price they are paying is insane. The investors will be demanding the results eventually.
Also, buying studios won't fix the culture in Microsoft. They've had so many years and still can't make consistently good games. There are some gems in between but they are usually form partnerships or newly bought studios. Their in-house development seems like actual hell (Halo).
I also suspect that game pass will make them focus on GAS games (service games) with microtransactions, optimised for profit instead of fun.
I wish I had time to dig into Activision's financials to get a better feel on this.
They earned $2B last quarter, with over $500m going to Cost of Revenue. For a software company, I'm guessing a lot of this is in multiplayer gaming infrastructure. Cost of Revenue is another $716m, with half going to R&D (engineering) and half going to G&A (rent, administration, etc.).
In other words, if Microsoft can absorb the Cost of Revenue into Azure and optimize the G&A a bit, they can increase quarterly revenue by almost 33%. That's $10B/year. Plus, putting Activision's back catalog on GamePass might drive up GamePass subscriber count/retention and back catalog sales (see the first article linked below).
It would be tough to show this as hugely profitable over the short term, but I think they could model out a 5 year ROI very very easily.
> I also suspect that game pass will make them focus on GAS games (service games) with microtransactions, optimised for profit instead of fun.
I'm not a subscriber, but as a casual follower of GamePass I haven't seen it drive more MTX. On the contrary, it seems to have opened the door to more niche-y games that would have a hard time finding an audience elsewhere.
These two articles give developer quotes that are very interesting insights into both gamer behavior and the economics of putting a game on GamePass:
https://www.forbes.com/sites/davidthier/2021/03/19/game-pass...
https://www.gameinformer.com/2021/03/24/deathloop-dev-opens-...
Yes, these are probably MSFT sponsored and it's not all roses, but even if there's a core of truth to them it's encouraging.
If they want to go that route, charging by the month isn't the way to do it. There's a reason exploitative mobile games are free at point of sale. I predict that MS stays the course of putting decent first and third party titles on Game Pass and chooses to raise prices rather than mandate that Game Pass games be more exploitative.
EDIT: They tried to buy Nintendo, too: https://news.ycombinator.com/item?id=25672443
When Zenimax was acquired, it was coming off a couple of failed fallout games, a meh ESO and delayed Elder scrolls 6. Similarly, Activision-Blizzard has been in the midst of COD and Overwatch losing their gaming monopoly to Fortnite, Blizzard failing to create a good game for about 5 years and the big workplace lawsuit.
It feels like Microsoft is taking on the challenge of reviving these companies back to being the powerhouses of old. In that sense it is a big challenge and not as simple as just buying the future of gaming.
If they wanted to do that, they'd probably try to buy Naughty Dog or Fortnite.
It's like acquiring Fiat Chrysler or General motors. Still big names, but clearly not the 'brands of the decade'. You wouldn't buy them to form a monopoly. You'd buy them to revive the brand.
The #1 and #2 titles of 2021 are has-beens? And they also had the #1 and #2 of 2020.
https://venturebeat.com/2022/01/18/npd-the-top-20-best-selli...
https://venturebeat.com/2021/01/15/npd-reveals-the-best-sell...
COD is admittedly not a has been, but it is like a top athlete in the twilight of their career. Still performing at the top, but no more #1 and the trends aren't looking great.
[1] https://vgsales.fandom.com/wiki/Call_of_Duty
[2] https://vgsales.fandom.com/wiki/List_of_highest-grossing_vid...
Activision/Blizzard certainly had a big sales tag on their forehead.
On what day? Looks like they dropped from 70bn last year same time to ~50bn at the start of the year and then sold for 69bn.
What are you talking about? Microsoft is embracing PC and cross play more than ever.
It also really should be the target of anti-trust action if that was a thing anymore. It's going to be a reality fairly soon that anyone who wants to play all the latest AAA titles will have to own at least two gaming devices.
That's not only annoying from a consumer perspective, but it's counter-productive from the perspective of how much redundant hardware it means in the midst of a chip shortage.
Microsoft has been releasing their PC games on Steam the same day they do on their own store for a few years now.
MS's track record seems to be only to be pro-consumer so long as it helps their bottom line.
This is an excellent point. You can argue that the Switch is so different, it can make sense to own a Switch plus a PS5. But the PS5 and Xbox Series X are so similar it is wasteful to be arbitrarily requiring you to buy both if you want 2 sets of exclusives.
That's ultimately why Microsoft did this. Previously it made sense to just get a PS4/PS5. You get the excellent Sony exclusives, and all the cross-platform games. You missed out on very few good Xbox exclusives. Not anymore.
I'm hopeful this stuff will still come to steam. I'm done having multiple consoles. I have a PS5 and a PC. I'm hopeful that's enough to not miss out on too much.
Specifically Windows, it has to be pointed out these days.
I wish they could use the Java version to do that, because bedrock is awful in a lot of ways. Microsoft seems entirely focused on merchandising, paid DLC, and driving users toward their paid server offerings. The game itself feels like it has been largely in maintenance mode for a long time, other than the recent caverns update.
It blows my mind when I think about how much money Minecraft must be worth, and how big MS is. Compare that to an indie game like Terraria, Stardew Valley, or Factorio and the difference in quality is night and day.
Source on this? They have said in the past that they lose money on xbox unit sales but are very profitable from software/game sales. As far as I know there is no public information to suggest otherwise.
https://www.vgchartz.com/article/448650/microsoft-the-xbox-d...
I hear Horizon: Zero Dawn was great. Didn't play it. Didn't pick it up when it stopped being an exclusive because it was no longer new by the time it hit PC.
My dance card is so full of Steam Early Access that I don't even have time for exclusives these days.
