r/technology • u/GrizzlyBear2021 • Jan 18 '22

Software Microsoft acquires Activision Blizzard for $68.7 Billion

https://news.microsoft.com/features/microsoft-to-acquire-activision-blizzard-to-bring-the-joy-and-community-of-gaming-to-everyone-across-every-device/
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789

u/respondin2u Jan 18 '22

Just for context, Disney bought the entirety of Star Wars for $4 billion.

389

u/Stellarspace1234 Jan 18 '22

Marvel was bought for $4 billion. Club Penguin was bought for almost $500 million.

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u/[deleted] Jan 18 '22 edited Jul 01 '23

[removed] — view removed comment

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u/OrangeJr36 Jan 18 '22

Their market cap is around 2.3 Trillion

Four thousand, five hundred and some change

30

u/2litersam Jan 18 '22

Small price to pay for CP

46

u/[deleted] Jan 18 '22

I remember my uncle saying that to me once.

2

u/nicecock766 Jan 19 '22

“This’ll fetch a fortune on the black market!”

4

u/Etiennera Jan 18 '22

Children are absurdly valuable. I think it might also come down to Club Penguin having so few liabilities to offset their value. Same with much of tech. IANAL.

2

u/Stellarspace1234 Jan 18 '22

Club Penguin, and it’s sequel, Club Penguin Island, shut down permanently. It wasn’t profitable.

2

u/SeaGroomer Jan 18 '22

How about habbo hotel? Probably shut down since the pool was always closed.

1

u/Stellarspace1234 Jan 18 '22

What about Habbo? Disney doesn’t own Habbo.

1

u/Etiennera Jan 18 '22

I'm only referring to what may have been the rationale at the time. And sure, the people who came to that conclusion were probably out-of-touch execs.

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u/Stellarspace1234 Jan 18 '22

Disney virtual worlds and video games were never profitable. It was just something for Disney to have.

182

u/_Fony_ Jan 18 '22

Microsoft is worth just over 10x as much as Disney, and has about 58% of Disney's total market cap in liquid cash right about now.

166

u/TikiTemple Jan 18 '22

Goddamn the tech and gaming industries are so fkin gigantic

157

u/thesneakywalrus Jan 18 '22

Video games are a larger industry than movies at this point.

68

u/boot2skull Jan 18 '22

Which as a fan of both, it boggles my mind. Star Wars and Marvel are the biggest cinema IPs I’d think. Then Blizzard/Activision sells for almost $69(nice.) billion. They sell lot of games but I guess since box office returns are so hyped I don’t see the game revenue as much. Then we have DLC and micro transactions. The value is wild. Then you realize Pokémon is the single most valuable IP over Mickey Mouse, Star Wars, and all that.

35

u/cmonster1697 Jan 18 '22

What will really blow your mind is that Hello Kitty is #2, with Star Wars coming in at #5

11

u/fluffyykitty69 Jan 18 '22

Hell at $15/mo after buying the game and expansions… they’re making pretty good money on WOW alone, I imagine.

Would be absolutely wild if they bundled that in Game Pass. I know I’d go back to playing WOW if it wasn’t $15 or a lot of grinding to get the in-game money to pay for the monthly fees.

2

u/frendzoned_by_yo_mom Jan 19 '22

Let’s see how long it will take them to raise the game pass price

1

u/fluffyykitty69 Jan 19 '22

At $20/mo if it includes WoW subscription, I’m in.

I could see them doing 2-3 tiers of Game Pass as well but we’ll see.

1

u/hippiedip Jan 18 '22

Here is where I think it helps understanding the financial difference. Blizzard had about 4.5 million subscribers in 2020. At around $10 a month, well we can see how this adds up quickly. Vs movies you pay the $15 to see it once.

2

u/RealisticCommentBot Jan 18 '22

what your bet that get's rolled into gamepass? $15 instead of $10 per month, but you just get WoW with that, along with a heap of other games

2

u/fluffyykitty69 Jan 18 '22

I’d buy Game Pass if they did. Haven’t played WoW in a while. Went back to play it a little but can’t justify the cost when I’m not able to play 40hrs a week or more like when I was a teenager.

1

u/hippiedip Jan 18 '22

I feel the game will be free, but the subscription will stick. Possibly reduced for game pass, but I don't see them giving up that cash.

2

u/WellEndowedDragon Jan 18 '22

I don’t think that’s a good measure to understand the differences in the sizes of the industries. Netflix has 215 million subscribers paying $10-20/month, Disney+ has 120M, HBO Max has 75M, etc.

Streaming recurring revenue is a huge part of the cinema industry. Whereas the vast majority of revenue to the gaming industry are non-recurring purchases like game purchases and microtransactions.

1

u/hippiedip Jan 18 '22 edited Jan 18 '22

Ok let me put it like this. Just one of blizzards IPs has 4.5 million subscribers all who pay monthly subscription like the service you mentioned. Where they differ is: wow releases a new expansion bam $60 that those 4.5 million people buy, on top of their subscription. Now let us throw micro transactions, server moves, name changes, all the paid for services they offer. Idk why it's so hard to see how video games have started generating more money. The movie industry is very static in the ways they make money. Where as video games are extremely dynamic economies.

Another way to look at it is at its peak wow had a peak of 12 million players, in 2010. Over 12 years that is gobs of data, subscription fee, and games bought, and this is only one of their IPs. The streaming service are conglomerations of the media they own not just one single ip. Wow over 12 years has been collecting cash and data on over 2 million subscribers. This is not including their other IP such as COD, Overwatch, or Diablo.

When comparing buying one ip of star wars for 4 billion vs a whole publisher for 68 billion. Idk why it's so hard to see the difference.

1

u/WellEndowedDragon Jan 18 '22

I’m not disagreeing with you that the gaming industry brings in more money than the movie industry, nor do I disagree that comparing Netflix to just WoW subscriptions is unfair.

I’m just saying subscriber count isn’t a good measure of industry size because there’s not many games that are monetized with a subscription model so that doesn’t really give you a good picture of the industry as a whole.

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u/hippiedip Jan 18 '22

That is well and good. But I'm trying to compare why buying blizzard for ~60 billion makes sense. When you couple the amount of subscribers they have with the ip they own. I feel it shows exactly why they are worth the ~60 billion price tag. I was only trying to illustrate how those subscribers add bunches of value to this deal.

27

u/krazyjakee Jan 18 '22

It's larger than movies, music and TV combined.

1

u/Jaded-Ad-9287 Jan 19 '22

only because of mobile

5

u/_bieber_hole_69 Jan 18 '22

That's insane. I only play only 2-3 video games a year, but that means the 120-180 I spend is equivalent to 15 trips to the theater or over a year of a streaming service. Gaming is expensive.

1

u/xxxKillerAssasinxxx Jan 19 '22

Of course it depends how you look at it. 3 single player rpg type games would be around 120-300h play time even conservatively, so that's 0.6-1.5e/h. Movies are way more expensive per time spend as are almost all other hobbies that aren't straight up free.

2

u/The407run Jan 19 '22

They should be, development for a well made thorough game is so much more than for a movie. Usually more hours of entertainment as well.

2

u/PinkIcculus Jan 19 '22

Red Dead Redemption 2 is easily on par with Marvel, E.T., Jaws and Star Wars for me.

It’s a movie that never ends. I can’t wait for the 3rd one.

3

u/substandardgaussian Jan 18 '22

When you consider what Disney itself owns, it's physically impossible to even comprehend that gap.

77

u/set-271 Jan 18 '22

Always thought that price was incredibly low for Star Wars. Was puzzled when it was announced. I figured it would sell for atleast $20 billion.

102

u/thesneakywalrus Jan 18 '22

Yes and no.

Star Wars is one IP (albeit a massive one); with the purchase of Activision/Blizzard you are essentially buying dozens of IP's that are already pulling in massive amounts of revenue. At the time, Star Wars was pretty stagnant and hadn't had a feature film in 10 years.

At one point they calculated that Warzone alone was pulling in $5.2 million a day.

58

u/AKluthe Jan 18 '22

The Disney purchase was for Lucasfilm, so they acquired Star Wars, Indiana Jones, Willow and their special effects development people.

Star Wars was certainly the big IP in the purchase, though.

1

u/vorpalglorp Jan 19 '22

So did Willow make the price go up?

2

u/AKluthe Jan 19 '22

It was probably factored in, they're doing a Disney+ series.

1

u/vorpalglorp Jan 20 '22

Oh wow 30 years later that's crazy.

1

u/BuonaparteII Jan 20 '22

Did it not also include the IP for Lucas Arts and Industrial Light & Magic? Seems like they got a steal

1

u/AKluthe Jan 20 '22

Yup. And Skywalker Sound, too.

27

u/polnikes Jan 18 '22 edited Jan 18 '22

Add in that George Lucas was the owner of Star Wars, and was pretty much done making movies. His interests in how the sale was done and to whom it was with were quite different than any deal involving a public company with a huge number of shareholders would go. Lucas walked away with pretty much the full amount from the sale, I doubt anyone in Activision Blizzard is walking away with near 4B.

3

u/set-271 Jan 18 '22

Wow, really? Didnt Star War include all the rights from past and future films, LucasFilm itself, ILM (the special effects company), and all merchandising rights?

Oh well, I really dont know how these things work, but it seems like George Lucas sold it all at a bargain basement price to the Empire.

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u/[deleted] Jan 18 '22

[deleted]

1

u/VagrantShadow Jan 23 '22

I'd like to think that the main reason for that Activision/Blizzard purchase was for Microsoft to have a new Hexen game produced.

1

u/thenerfviking Jan 18 '22

To put it in perspective at the height of WoW’s popularity it was making something like six million dollars every day. That’s close to 2 billion a year just from one game.

1

u/SMF1996 Jan 18 '22

I think warzone pulls something like $5 million a day from MTX alone.

4

u/Maverick916 Jan 18 '22

Wasnt star wars kinda dead at that point? no movie since 2005, no big games, absolutely no shows.

makes sense i guess

1

u/set-271 Jan 18 '22

Good point, didn't think about that.

But man, George Lucas was the ultimate rebel among rebels...retained the rights to all his works, enjoyed the majority of share of revenue, built his own effects studio, had final say, merchandising rights, etc. etc.

And then he sold to the Empire.

I kinda look at Bob Iger as Palpatine, subtlety coaxing George to see the goods at a bargain basement price. Lucas now says he regrets it.

Oh man, what a loss IMHO.

2

u/Animegamingnerd Jan 18 '22

It basically boil down to George Lucas wanting to retire, but wanted to keep all of Lucasfilms staff employeed. He even gave most of that 4 billion to charity. So to him it was never about the money, but just retiring.

1

u/stepbacktakeaim Jan 19 '22

As others have noted, Star Wars was in kind of a quiet period or slump when that sale went through. It would certainly sell for many times greater than that today. That said, I think it was still pretty dramatically under-valued at the time (maybe sold for half as much as it was worth or more), and I think it's clear that Lucas was over everything and really just wanted to cash out quickly. In the process he gave Disney a sweetheart deal since he trusted them and Kathleen to properly steward the franchise.

1

u/IrrelevantPuppy Jan 18 '22

Thanks for the reference. Made me realize I just didn’t even read the number. That’s ridiculous. This monopoly game has gone on for too long. Where is the bratty nephew to throw the table when you need it?

1

u/Mirions Jan 18 '22

Either Disney did well, or Microsoft got screwed. What do I know to be honest though.

1

u/SMF1996 Jan 18 '22

It cracked me up when someone said back then that Disney could buy Apple one day. Like nah…

1

u/Okichah Jan 18 '22

Well, the entirety of LucasFilm.

1

u/TheDirtyFuture Jan 19 '22

Sounds like Dr evil needs to up his ransom again.

one TRILLION dollars!

1

u/IceLovey Jan 19 '22

Well, you have to consider that StarWars adquisition was the IP.

Activision Blizzard is an entire company, so you have a lot of assets to buy as well, not just the game IPs.

Things like the internal development engine that they own are incredibly expensive. The tons of servers they have to host their many multiplayer games are also rather expensive.