Activision
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Documents about Activision
109: Fall of Babylon
The cancellation of E3 2022 serves as a focal point for analyzing the shifting landscape of the video game industry’s promotional cycle.
- The cancellation of E3 2022, following the abandonment of in-person plans, marks a potential permanent end to the event as the industry shifts toward direct-to-consumer digital showcases.
- Four U.S. senators, including Bernie Sanders and Elizabeth Warren, have petitioned the FTC to review Microsoft’s acquisition of Activision Blizzard, citing concerns over CEO Bobby Kotick’s accountability and exit package.
- Capcom is raising base salaries for its employees in Japan by 30% following record-breaking financial performance and five consecutive years of projected profit growth.
Failing to Regulate: What's Next When the FTC Loses This Week
This analysis examines the Federal Trade Commission’s (FTC) legal challenge against Microsoft’s $69 billion acquisition of Activision Blizzard, concluding that the regulator is likely to lose the case due to a fundamental misunderstanding of the gaming industry.
- The FTC’s legal challenge against Microsoft’s $69 billion acquisition of Activision Blizzard is expected to fail due to the regulator's inability to prove a credible theory of harm or demonstrate an existential threat to competition.
- Internal evidence from Sony, Microsoft’s primary competitor, undermined the FTC’s core arguments by failing to characterize the merger as an existential threat to the gaming market.
- FTC litigators demonstrated a fundamental misunderstanding of gaming industry mechanics, including the basic distinction between first-party and third-party publishing.
Top 30 Best-Selling Video Game Brands in UK History
An analysis of the top 30 best-selling video game brands in the United Kingdom reveals that Electronic Arts holds a dominant position in the market.
- Electronic Arts is the leading publisher in the UK market, holding nine of the top 30 best-selling game franchises by revenue.
- The top 30 best-selling video game brands in the UK have generated a combined $34 billion in boxed sales revenue since 1995.
- The FIFA series ranks as the number one video game brand in UK history, with 50 titles released since 1993.
Cloud Gaming Is Being Sold as the Next Stage of Video Game Innovation, but Consumers Will Have the Last Word
Cloud gaming is frequently positioned as the next major evolution in video game innovation, yet its long-term success remains contingent on consumer preference rather than technological capability.
- Cloud gaming is projected to reach $12 billion in revenue by 2026, yet it will still account for only 6% of total consumer spending on video games.
- Technological barriers including network latency, capped data tariffs, and inconsistent connection speeds currently prevent cloud gaming from replacing traditional console or PC-based gaming.
- Microsoft is building a 'content, community, and cloud' ecosystem, evidenced by its acquisition of Activision Blizzard and the growth of Game Pass, which reached 25 million subscribers as of early 2022.
Gaming’s Great Convergence: The Influx of New Industry Actors Will Challenge Gaming’s Edge
The gaming industry is currently undergoing a significant transformation characterized by the convergence of traditional publishers, platform holders, and non-endemic corporate actors.
- Major US publishers including Take-Two, Activision Blizzard, and Electronic Arts have seen share prices increase eight-fold over the last decade, significantly outperforming the S&P 500.
- The industry faces a risk of creative stagnation as large conglomerates prioritize margin management and risk aversion over traditional innovation.
- Take-Two’s $13 billion acquisition of Zynga exemplifies a broader trend of established publishers diversifying their portfolios into mobile and transmedia markets.
Game Industry M&A in 2022
The video discussion examines the evolving landscape of mergers and acquisitions within the global video game industry as of early 2022.
- The game industry is experiencing a structural shift in M&A, moving away from mid-tier consolidation toward a bifurcated strategy focused on both larger-scale acquisitions and smaller-scale targets.
- High-profile industry consolidation, exemplified by Microsoft’s acquisition of Activision and Take-Two’s acquisition of Zynga, reflects the ongoing pressure on major companies to drive growth through M&A.
- The supply of 'easy' mid-tier acquisition targets has largely dried up after a five-year bull run in industry M&A activity.
Microsoft X Activision: UK Regulators Become the Terminator?
The primary focus of this analysis is the UK Competition & Markets Authority’s (CMA) decision to block Microsoft’s acquisition of Activision Blizzard.
- The UK Competition & Markets Authority blocked Microsoft’s acquisition of Activision Blizzard due to concerns that Microsoft would leverage its 60-70% share of the cloud gaming market to stifle future innovation.
- Microsoft’s appeal of the CMA decision is expected to take up to nine months, creating a significant barrier to further consolidation in the global gaming industry.
- Despite a record number of monthly active users, Microsoft reported a 30% year-over-year decline in Xbox hardware revenue during Q1 2023.
Come and Get Me
The gaming industry is currently experiencing a significant shift in sentiment regarding corporate independence, driven largely by the high-profile acquisition of Activision Blizzard by Microsoft.
- Ubisoft CEO Yves Guillemot has signaled openness to acquisition offers, marking a significant shift from his previous strategy of defending the company against hostile takeovers.
- PlatinumGames CEO Atsushi Inaba stated that the studio would not dismiss acquisition offers, provided that the company's creative freedom is respected.
- The ongoing industry consolidation trend has continued with Nacon’s $60 million acquisition of German developer Daedalic Entertainment.
The Cards Hold the Future: Some Things Change; Others Stay the Same
This analysis examines the intersection of traditional gaming, emerging revenue models, and the burgeoning market for digital collectibles.
- The North American collectible games market reached $2.9 billion in 2021, marking a 216% increase since 2014, while comic book and graphic novel sales grew 65% year-over-year to $2.1 billion.
- Long-term industry growth favors digital distribution and sustainable ownership models, exemplified by Take-Two’s successful transition to 88% digital bookings.
- Despite high digital engagement on platforms like Steam and Twitch, major publishers including Sony, Nintendo, and Activision Blizzard reported earnings below estimates during the 2021–2022 period.
Capital Idea
The current wave of consolidation in the global video game industry, exemplified by Microsoft’s acquisition of Activision Blizzard, is unlikely to extend to the Japanese market.
- Microsoft is unlikely to acquire major Japanese game publishers like Capcom or Square Enix due to Japan's unique business culture and structural barriers to foreign investment.
- Japan ranked last out of 196 countries for foreign direct investment in 2019, trailing even North Korea.
- The 'keiretsu' business model, where Japanese firms maintain deep, cross-industry partnerships and mutual ownership, creates a protective environment that discourages outside acquisition.
Tell Me More: Issue 92
The gaming industry experienced a period of intense consolidation and volatility in early 2022, characterized by high-profile acquisitions and shifting corporate strategies.
- Sony acquired Bungie for $3.6 billion to gain expertise in live-service game development, aiming to launch ten live-service titles by March 2026.
- Game industry M&A activity in January 2022 alone reached $85.4 billion, surpassing the total value of all deals announced in 2021.
- The FTC has signaled it will investigate Microsoft’s proposed acquisition of Activision Blizzard, indicating a more rigorous regulatory review process.
What the Activision Acquisition Means for the Games Industry
The $68.7 billion acquisition of Activision Blizzard by Microsoft represents a strategic pivot toward securing high-value intellectual property to dominate the emerging metaverse.
- Microsoft’s $68.7 billion acquisition of Activision Blizzard is a strategic move to secure high-quality intellectual property, such as Call of Duty and Candy Crush, to anchor its position in the emerging metaverse.
- While Activision titles will remain multi-platform in the short term due to existing contracts and development cycles, Microsoft intends to transition them into long-term Xbox exclusives to differentiate its brand and drive Game Pass subscriptions.
- The acquisition reflects a broader industry trend where consolidation accelerates ahead of new platform or technology shifts, as evidenced by Take-Two Interactive’s $12.7 billion purchase of Zynga occurring just weeks prior.
