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Is the Activision-Blizzard acquisition the biggest backfire in gaming history?

Gaiff said:
That's the strange thing to me. Their internal emails revealed they wanted to spend Sony out of business, but it doesn't even seem like they tried to with Activision Blizzard. With Bethesda, they obviously banked on them bringing out bangers and the killer app was meant to be Starfield, aka Skyrim in space, that they were probably hoping would sell 20M+ copies but ended up flopping. However, with Activision-Blizzard, they didn't even try to put obvious winners like Diablo IV or Doom Eternal as exclusives. In Diablo's case I suppose it makes sense because it's a GAAS, but the Xbox division always had that problem of coming up with a strategy, failing, and flip-flopping in the opposite direction without a clear vision or contingency plans.

It's actually shocking how poorly managed it has been for the past decade and a half.
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Their intention was to make future cod games exclusive once the existing deals with Sony expired. They had to promise not to after being taken to court.

Diablo 4 was already on PS5 so I don't think they could have made that exclusive retroactively. But I'm sure they planned to for future entries.
 
StueyDuck said:
almost all the acquisitions were... from all publishers
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Overall I agree with you though I will always stand by some of the acquisitions PlayStation made (not all of them obviously) like Insomniac, Housemarque, and Bluepoint (RIP).

Those acquisitions made sense because they were already essentially "second party" for lack of better words. All three of those studios essentially only made games for PlayStation by the time they were acquired and there was plenty of history between them. I would say Nixxes as well as they filled a specific niche although that niche isn't needed anymore.

Bungie on the other hand obviously didn't have much history with PlayStation, and I would say the vast majority of Xbox acquired studios didn't have any real history in the way that the three aforementioned studios did.
 
I would say that the Activision-Blizzard acquisition caused the biggest backfire acquisition: Sony panic-buying Bungie and basically getting a fermenting pile of excrement that was hastily covered in gold paint by the owners, who then walked away with the money.
 
When the CMA originally refused to approve the acquisition, it was at that exact point that I thought it would be wiser for MS to walk away. It was clear that getting it through was going to cost more and require more concessions - ultimately make it a less valuable acquisition than initially thought. It was a mistake by all of MS too. Phil spearheaded it, of course, but he was backed by all the MS brass at the time.
 
No, one of the biggest, I think it is up there with 3DO selling the rights to M2 tech to Panasonic, the release of the Sega 32x, the release of the Commodore CD32...
 
Elios83 said:
Bungie is absolute peanuts compared to Activision and they haven't damaged anything for Sony.
Their new game failed to become a mainstream hit while Destiny has faded.
So Sony simply overpaid for it imagining a different outcome but this isn't the definition of backfiring.

Activision has backfired spectacularly by killing the Xbox console business and turning it into a third party publisher because the expenses where too big to be sustained by selling games on Xbox alone.
Also COD is declining as well and last year's debacle has forced to them to backtrack on offering it on Gamepass thus proving the financial non sense of the gamepass business model in gaming.
This is a backfire.
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I can get those arguments, but I just think Bungie was part of of an overall horrible strategy for Sony with the entirety of their Gaas focus. Sony has weathered all that due to Phil Spencer's incompetence. The fact that Bungie is peanuts compared to ABK is why I think ABK's demise could very well be a slow burn. ABK is going to completely fall apart in a short period of time. They are too big for that.
 
Comparing the Activision acquisition to Bungie isn't even in the same zip code. Sony could have given away the ~5B they spent on Bungie and it still wouldn't even be close to how badly the Activision purchase is.

The entire reason for the purchase was immediately nullified by going multiplatform before the ink on the contacts even dried.
 
It's hard to say, since not all the figures are published. I think the situation with Bungie is worse. But in terms of purchasing and poorly using acquired positions, Activision-Blizzard is definitely ahead.
In any case, everyone's still a long way from catching up with AOL and Time Warner - those guys simply wrote off $90 billion in losses. So there's still room for improvement. :messenger_tears_of_joy:
 
laynelane said:
When the CMA originally refused to approve the acquisition, it was at that exact point that I thought it would be wiser for MS to walk away. It was clear that getting it through was going to cost more and require more concessions - ultimately make it a less valuable acquisition than initially thought. It was a mistake by all of MS too. Phil spearheaded it, of course, but he was backed by all the MS brass at the time.
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Microsoft should have walked away the moment they were required to keep COD multiplat. What's the point of the acquisition if arguably its most impactful asset cannot be controlled?
 
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Unknown? said:
And was and still is in decline. It was not good at all. Not saying either were worse or better though. Both were stupid.
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Looks pretty good to me. Not exactly trending down that. They had a similar result after 2018 in 2019 and bounced back with records the year after.
 
hououinkyouma00 said:
Overall I agree with you though I will always stand by some of the acquisitions PlayStation made (not all of them obviously) like Insomniac, Housemarque, and Bluepoint (RIP).

Those acquisitions made sense because they were already essentially "second party" for lack of better words. All three of those studios essentially only made games for PlayStation by the time they were acquired and there was plenty of history between them. I would say Nixxes as well as they filled a specific niche although that niche isn't needed anymore.

Bungie on the other hand obviously didn't have much history with PlayStation, and I would say the vast majority of Xbox acquired studios didn't have any real history in the way that the three aforementioned studios did.
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Oh I agree thats why I say almost all, but most have been more of a negative then a positive to the industry and those studios
 
Yes I'd say so because IMO it's a key part of what pushed MS towards going multiplatform, then you combine it with their Gamepass gamble not working and COD seemingly being on a downward trend of popularity and it's quite a backfire.

Bungie is bad but it was basically just Sony burning $4 billion dollars and getting nothing out of it. It's a big hit to their finances, but otherwise doesn't seem to have had a larger effect on the brand or their business model.
 
DonkeyPunchJr said:
It's not that simple though. By that logic, any acquisition is worth it at any price and "funds itself" as long as it generates positive income.

MS paid 28x price-to-cash-flow ratio for ABK, meaning they spent $28 for every $1 ABK brings in annually. That kind of valuation only makes sense if they expect MASSIVE growth. Generally a ratio of 10-20 is considered a "good price" for a large established company. Over 20 is what you'd pay for a rapidly growing tech company.



Anyway I think this question is ambiguous. Bungie is undoubtedly a much shittier company than ABK. But in terms of how much total money was wasted, the ABK acquisition takes the cake.
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Yes, which then only is an issue for when the RoI is realised for the investments. Some of these deals may not have had projected RoI for 5-10 years. The Bungie deal also falls into this bracket. But in the here and now Sony will have to service that debt themselves because right now Bungie are not bringing in money, and have massive overheads. Sony are paying for nothing and have the rent on the table for Marathon.....

But yeah in terms of finance value, the acti deal is huge compared to the Sony deal. But in terms of which debt would likely be more palatable to banks for refinance its clear that its on the side of ABK.


Topher said:
I can get those arguments, but I just think Bungie was part of of an overall horrible strategy for Sony with the entirety of their Gaas focus. Sony has weathered all that due to Phil Spencer's incompetence. The fact that Bungie is peanuts compared to ABK is why I think ABK's demise could very well be a slow burn. ABK is going to completely fall apart in a short period of time. They are too big for that.
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This is also a good point as Bungie was acquired with value attached to expertise to launch Sony's GaaS ambitions which are in the same bin as Xbox's hardware ambitions right now. A strategy that has cratered and been rolled back as a result.
 
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Topher said:
I can get those arguments, but I just think Bungie was part of of an overall horrible strategy for Sony with the entirety of their Gaas focus. Sony has weathered all that due to Phil Spencer's incompetence. The fact that Bungie is peanuts compared to ABK is why I think ABK's demise could very well be a slow burn. ABK is going to completely fall apart in a short period of time. They are too big for that.
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Bungie can't take the fault of stupid Sony executives falling into the gaas trap in 2019-2020 and impacting other Sony studios and first party output in general.
Bungie hasn't damaged PlayStation in any way, even their associated costs and related write offs are peanuts with Sony having record profits year after year notwithstanding them.

Bungie is just an overpaid studio that failed to deliver what they were supposed to, the next big gaas hit. The write offs are telling us that Sony believes they overpaid them by 1 billion but that's it.

Activision destroyed the Xbox console business by increasing expenses to the point a small console business like Xbox could not sustain them and forcing Microsoft to go third party with gaming.
This is a huge damage.
 
In terms of reputation? Acti-Blizzard arguably added to Microsoft. What has Bungie done for Sony? Remember how they also were supposed to lend their expertise to other Sony games? Bungie actively hurt other devs to prop up their own value, hurting Sony much more than just financially.
 
Elios83 said:
Bungie can't take the fault of stupid Sony executives falling into the gaas trap in 2019-2020 and impacting other Sony studios and first party output in general.
Bungie hasn't damaged PlayStation in any way, even their associated costs and related write offs are peanuts with Sony having record profits year after year notwithstanding them.

Bungie is just an overpaid studio that failed to deliver what they were supposed to, the next big gaas hit. The write offs are telling us that Sony believes they overpaid them by 1 billion but that's it.

Activision destroyed the Xbox console business by increasing expenses to the point a small console business like Xbox could not sustain them and forcing Microsoft to go third party with gaming.
This is a huge damage.
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Sony had a $765 million impairment charge because of Bungie my man. That sounds like damage to me. Sony's record profits could have been even bigger without all the failed live service nonsense. Sony benefited from the vacuum of competition created by the incompetence of Xbox management. That's how I see it.

Xbox console was already in the shit long before ABK came on the scene.

I'll agree to disagree at this point.
 
clarky said:
They paid 71 billion in what 2022? Most tech stock has doubled in that time, including MSFT. Looks like it didn't vanish at all.

I don't follow stock super close these days so im sure someone will correct me if im wrong.
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Microsoft is worth over $3 trillion. Their market cap easily goes up or down by over $71 billion on a weekly basis just due to normal everyday market fluctuations. They could've lit $71 billion on fire in 2022 and it'd barely make a difference in their stock price today.

So yeah, they absolutely could've overspent on this acquisition despite their stock price going through the roof. Those things are not mutually exclusive.

And hey, Sony stock is also up since 2022. I guess Bungie was also a smart buy. The only question is which one was the smartest and shrewdest acquisition
 
DonkeyPunchJr said:
Microsoft is worth over $3 trillion. Their market cap easily goes up or down by over $71 billion on a weekly basis just due to normal everyday market fluctuations. They could've lit $71 billion on fire in 2022 and it'd barely make a difference in their stock price today.

So yeah, they absolutely could've overspent on this acquisition despite their stock price going through the roof. Those things are not mutually exclusive.

And hey, Sony stock is also up since 2022. I guess Bungie was also a smart buy. The only question is which one was the smartest and shrewdest acquisition
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Im not into stocks that much, my point was ATVI's value would have beeen a lot more now more than likely if it followed the trend.

No need to be condescending because you might know more on a subject than me.
 
Are you not following the absolute disaster that is the Bungie acquisition?

At least Activision has COD to rely on till the well dries up
 
I think the difference between the Activision acquisition and the Bungie acquisition, even though both ended up being failures, is that in Bungie's case Sony was already planning to move toward live service games anyway. They were already heading in that direction. Bungie was supposed to be the internal studio that would evaluate the quality of those games as a service projects.

The acquisition was terrible, it didn't deliver the expected results, and Sony failed to achieve the level of quality they wanted from those products.

But you don't see Sony having to completely restructure the identity of its games as a consequence of that deal.

With Activision, though, you can at least argue that the acquisition ended up being a shot in the foot for Xbox fans who believed it would push Microsoft in one direction, only for it to lead somewhere completely different.
 
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Topher said:
Sony had a $765 million impairment charge because of Bungie my man. That sounds like damage to me. Sony's record profits could have been even bigger without all the failed live service nonsense. Sony benefited from the vacuum of competition created by the incompetence of Xbox management. That's how I see it.

Xbox console was already in the shit long before ABK came on the scene.

I'll agree to disagree at this point.
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The impairment charge is just a financial way to say the studio was overpaid and they need to lower the value of their assets registered in the balance sheet in light of actual market results.
Of course it could have gone better, the investement didn't have a good return but it ends here with Bungie.
Xbox wasn't in a good condition already since the Xbox One debacle but the Activision acquisition ended up to be the fatal blow making the whole thing collapse by making it unsustainable in light of the new costs and forcing it to go third party.

So yeah I don't get how Bungie can be really compared to Activion in terms of the damages it did to the respective console brands, Bungie is just an overpaid poor investment, the other killed a business the way it was known.

In any case in general the whole thing has showcased how these big acquisitions are a huge risk and they don't guarantee anything because the gaming landscape and people's taste change frequently and unpredictably and there's no guarantee that a team will make something great either just because they have a great previous pedigree/resume.
I dont think Microsoft was happy with how Starfield turned after 7 billions either but Bethesda didn't damage Xbox actively.
 
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DonkeyPunchJr said:
It's not that simple though. By that logic, any acquisition is worth it at any price and "funds itself" as long as it generates positive income.

MS paid 28x price-to-cash-flow ratio for ABK, meaning they spent $28 for every $1 ABK brings in annually. That kind of valuation only makes sense if they expect MASSIVE growth. Generally a ratio of 10-20 is considered a "good price" for a large established company. Over 20 is what you'd pay for a rapidly growing tech company.

Anyway I think this question is ambiguous. Bungie is undoubtedly a much shittier company than ABK. But in terms of how much total money was wasted, the ABK acquisition takes the cake.
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I think Microsoft wasn't even thinking in cash flow or ROI at that time or even now about the acquisition.

Remember that Microsoft had, at the time of the purchase, one of the biggest cash reserves ever in a time of cheap money, between 100-150bi in cash or short terms. What they did was simply asset investment, rotating cheap money into something to "protect value" and consolidate a strategic position in the long run.

IMHO the entire Warcraft, Diablo, StarCraft, Call of duty brands were basically the "fine wine" in the cellar or the paintings on the wall. The 8bi revenue annually was the cherry on top.
 
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For 71 billion, compared to the 7 billion, Microsoft paid for Bethesda, and they couldn't keep it off Sony's Playstation, then yeah it backfired big style.
 
Gaiff said:
In light of Microsoft having to $250M to shareholders due to some funny business regarding the acquisition, it just reminded me of why Microsoft acquired Activision-Blizzard. However, their plans don't seem to have succeeded. Game Pass subscribers numbers have stagnated, COD day 1 will be pulled from the service, and it hasn't had the megaton effect Microsoft were hoping for. Now they're stuck with a $71B acquisition they would have been better off without. Furthermore, that move led to job redundancies that caused the layoffs of thousands of employees. Sony made some bad moves with its acquisition, namely Firewalk with its ill-fated Concord and now Bungie that seems to have become a liability. Those look like pocket change in comparison to Activision-Blizzard though.

Phil Spencer and Xbox's incompetence really shines through when they didn't seem to have a concrete plan for when this acquisition predictably wouldn't yield the expected results. Now it just looks like an albatross in their books they should have never touched.
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COD7 is trash but that $70B deal tells MS is taking care of the industry singlehandedly from the likes of Amazon, Google and other trash corporates that no one wish they enter the gaming Business.
 
Of course. How this is even a question is beyond me.

I know after this kind of debacle memories turn foggy and people dont remember what they were saying or predicting before the acquisition. Just check any thread on the matter, how XBOX was going to crush competition and become the One and Only.

A couple of years later, the whole leadership has been ousted and XBOX is in complete shambles, with their games releasing ON PLAYSTATION.

The backfire is apocalyptic.
 
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People are just comparing the cost of the Activision acquisition to Bungie. It's not just the cost, but the potential profits, and of course the purchase relative to size of the company buying it. Microsoft is a trillion dollar company. It might take 5 years or even 10 years to get a return on ABK, but they could as they own some of the most popular franchises. Sony currently owns two dead games and nothing in the pipeline. There is at this point zero future potential here and if Sony keeps Bungie going that 3.6 billion will become 5 and so on. It will just go up as more money gets poured into it. The cost for Sony has just begun.
 
From a console gamers simple perspective, I would say ABK if we are judging between the two most modern backfires. ABK was originally supposed to boost the XBOX console business. Bungie was a poor investment, but the ABK acquisition has almost killed the XBOX console if it doesn't end up finishing off after the next generation. Money wise, MS will come out ahead. They could drop hardware all together and go full third-party and still recoup that investment. Sony 🤷‍♂️, they are screwed with Bungie as long as they keep messing around with these weird GAAS titles. They have many IPs sitting there that have a good shot at GAAS but instead they keep doing the weirdest stuff.
 
The value of Bungie had to be in consulting and supporting other live service games.

Destiny's users and potential for microtransactions have been out there for over a decade. They may have expected Bungie to quickly become unprofitable and then Sony controlled what the employees did.

I believe the panic at Sony was internal debates on if the live service investments would pan out, what needed to be done, and which projects should live or die. I bet they were even focused on getting Druckman to stick with live service and Bungie inadvertently agreed with him that the project was cooked.

So, perhaps Bungie was authorized as a project to help live service, but the goal of everyone that wasn't named Jim at Sony was to prove they were running the business into the ground.

None of this explains why the Horizon Hunters Gathering has was ever envisioned and allowed to be a cartoon.
 
hououinkyouma00 said:
Bungie is definitely a terrible purchase but I think the difference (and why ABK is worse) is that the ABK acquisition had a much bigger impact on Xbox then Bungie has for PlayStation.

Bungie is obviously losing PlayStation money but I don't think it will change the landscape of PlayStation overall. Xbox buying ABK cemented the fact they had to continue their path as a third party publisher and continue to focus on Game Pass.

I guess what I'm trying to get at is that buying Bungie was obviously a mistake but PlayStation have options because it ultimately didn't change the company much outside of losing money. PlayStation could sell Bungie much more easily then Xbox can sell ABK and wash their hands of it all.
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Who would buy Bungie? You're buying 2 dead games and 800 salaries.
 
splattered said:
I think the biggest backfire here was agreeing to give away exclusivity and streaming rights. Otherwise it wasnt worth it. Keep stuff like cod multi plat but everything else should have been exclusive to be worth it.
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What actually happened with the streaming rights? Aren't Ubisoft supposed to be in charge of them but I don't think anything has happened?
 
Too early to say for the ActiBlizz buyout. In general, both sides weren't in good shape: For ActiBlizz, the latter (Blizzard) is clearly past it's prime. Still generates amazing revenue for sure, but from a creative standpoint it's a shadow of what it used to be. For short term profits, that's probably not a dealbreaker, but longer term (which is important due to the price) I suspect had they put in the money into $SPY, it'd have better ROI. I'd put the former (Acti) in the same camp, but I view CoD as being healthier than the Blizz franches (at the time of the buyout, not now). Microsoft clearly was desperate to make game pass a breakout success, it wasn't working and by tossing truly must-have games behind it, they basically wanted to force the market into their camp via Azure/Office365 money. For the good of the industry, it seems to have failed. My guess is M$ hangs onto the studios for now, if the Microsoft c-suite decides no more gaming, then I suspect they'll break up Xbox and sell it for parts, with ActiBlizz being one of them.
 
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