4 ms·

Honest question, how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down

Honest question, how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down the line? Just buying Activision and then continue to run it as if they were neutral surely makes no sense. That's clearly not why they want to buy them. I am glad that this deal has been blocked. In fact Microsoft is already too big. It shows in their products.

AmericanChopper 3y ago
> how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down the line? It makes perfect sense. These huge companies have a lot of unused capital, which they have to find productive uses for. Acquisitions in markets they already have competencies in are a rather obvious way to make use of it. Internal R&D and launching new products is the best use of this capital (as it’s the most tax efficient), but it’s difficult to infinitely scale that spending efficiently (but acquisitions can effectively be one way of scaling this over the long term). The alternative is dividends, or the much more tax efficient stock buy back. But long term, acquisitions are better for shareholders.
etempleton 3y ago
Microsoft also owns Minecraft and they put that everywhere. For Microsoft it is all about GamePass. They want to be the Netflix of games, but to do that they need a large library of games on their service that people want to play to make it a no-brainer subscription.
- dustedcodes 3y ago
  > They want to be the Netflix of games, but to do that they need a large library of games You don't need to buy Activision for that to happen. Netflix hasn't bought Universal or MGM. They purchase the rights to offer movies on their platform and at the same time produce their own content via their own production. Also Netflix doesn't own the hardware. That makes it very different to Microsoft, who own the hardware, the platform which you speak of (game pass) and also wants to own the production companies. This stinks of anti-competitive behaviour from miles if you ask me and is nothing like Netflix.
  - etempleton 3y ago
    You do if you want day and date releases. And Amazon bought MGM and Netflix pays for exclusives regularly. The video game space has always been about exclusives. Nintendo publishes no where else. Sony just started to publish on PC for some games. What is the difference?
  - caskstrength 3y ago
    > You don't need to buy Activision for that to happen. Netflix hasn't bought Universal or MGM. They purchase the rights to offer movies on their platform and at the same time produce their own content via their own production. I think Blizzard infamously refused to release their games on any other online distribution platform besides their in-house battle.net launcher. Don't know how it is with other Activision titles, but the only way to get Diablo 4 in MS library of games is apparently to buy the whole company.
  - bagacrap 3y ago
    Netflix isn't very profitable. If you have to license content then the content owner is going to continuously squeeze you for as much of your profit as possible (especially when direct competitors crop up --- and there's no shortage of Hulus out there trying to eat Netflix's cake).
coldpie 3y ago
> how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down the line I'm also not a fan of this deal, but I think this is a good question worth an answer. I think you'd need to suggest exactly what practices they may want to implement. For example it's not hard to see why they would continue to want to put COD on PlayStation systems: that brings in a ton of money. You can imagine a world where yanking it helps Xbox, but I don't think that's an inevitable result; would they really want to give up $X Billion in revenue from PlayStation if that only brings in $Y Million in new Xbox sales? Obviously it all depends on the numbers, but it's an example of why they can still benefit from this transaction without implementing anti-competitive practices.
Hamuko 3y ago
Microsoft said that it wouldn't have an incentive to withold games from other platforms in 2021 when they acquired ZeniMax. >"[Microsoft] submits that Microsoft has strong incentives to continue making ZeniMax games available for rival consoles (and their related storefronts)." 2023/01: Hi-Fi Rush is exclusive to Xbox and Microsoft Windows. 2023/05: Redfall is exclusive to Xbox and Microsoft Windows. 2023/09: Starfield is exclusive to Xbox and Microsoft Windows. So yeah, I'm gonna err on the side of "they'd probably restrict a lot of games afterwards". Maybe some big existing properties like Call of Duty might be available, much like Minecraft, but I don't foresee Microsoft-ABK being a win for competition.

AmericanChopper 3y ago

> how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down the line? It makes perfect sense. These huge companies have a lot of unused capital, which they have to find productive uses for. Acquisitions in markets they already have competencies in are a rather obvious way to make use of it. Internal R&D and launching new products is the best use of this capital (as it’s the most tax efficient), but it’s difficult to infinitely scale that spending efficiently (but acquisitions can effectively be one way of scaling this over the long term). The alternative is dividends, or the much more tax efficient stock buy back. But long term, acquisitions are better for shareholders.

etempleton 3y ago

Microsoft also owns Minecraft and they put that everywhere. For Microsoft it is all about GamePass. They want to be the Netflix of games, but to do that they need a large library of games on their service that people want to play to make it a no-brainer subscription.

dustedcodes 3y ago
> They want to be the Netflix of games, but to do that they need a large library of games You don't need to buy Activision for that to happen. Netflix hasn't bought Universal or MGM. They purchase the rights to offer movies on their platform and at the same time produce their own content via their own production. Also Netflix doesn't own the hardware. That makes it very different to Microsoft, who own the hardware, the platform which you speak of (game pass) and also wants to own the production companies. This stinks of anti-competitive behaviour from miles if you ask me and is nothing like Netflix.
- etempleton 3y ago
  You do if you want day and date releases. And Amazon bought MGM and Netflix pays for exclusives regularly. The video game space has always been about exclusives. Nintendo publishes no where else. Sony just started to publish on PC for some games. What is the difference?
- caskstrength 3y ago
  > You don't need to buy Activision for that to happen. Netflix hasn't bought Universal or MGM. They purchase the rights to offer movies on their platform and at the same time produce their own content via their own production. I think Blizzard infamously refused to release their games on any other online distribution platform besides their in-house battle.net launcher. Don't know how it is with other Activision titles, but the only way to get Diablo 4 in MS library of games is apparently to buy the whole company.
- bagacrap 3y ago
  Netflix isn't very profitable. If you have to license content then the content owner is going to continuously squeeze you for as much of your profit as possible (especially when direct competitors crop up --- and there's no shortage of Hulus out there trying to eat Netflix's cake).

coldpie 3y ago

> how does this deal make any financial sense to Microsoft if the plan wasn't eventually to implement anti-competitive practices much later down the line I'm also not a fan of this deal, but I think this is a good question worth an answer. I think you'd need to suggest exactly what practices they may want to implement. For example it's not hard to see why they would continue to want to put COD on PlayStation systems: that brings in a ton of money. You can imagine a world where yanking it helps Xbox, but I don't think that's an inevitable result; would they really want to give up $X Billion in revenue from PlayStation if that only brings in $Y Million in new Xbox sales? Obviously it all depends on the numbers, but it's an example of why they can still benefit from this transaction without implementing anti-competitive practices.

Hamuko 3y ago

Microsoft said that it wouldn't have an incentive to withold games from other platforms in 2021 when they acquired ZeniMax. >"[Microsoft] submits that Microsoft has strong incentives to continue making ZeniMax games available for rival consoles (and their related storefronts)." 2023/01: Hi-Fi Rush is exclusive to Xbox and Microsoft Windows. 2023/05: Redfall is exclusive to Xbox and Microsoft Windows. 2023/09: Starfield is exclusive to Xbox and Microsoft Windows. So yeah, I'm gonna err on the side of "they'd probably restrict a lot of games afterwards". Maybe some big existing properties like Call of Duty might be available, much like Minecraft, but I don't foresee Microsoft-ABK being a win for competition.