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Microsoft rumored among suitors for Activision Blizzard

Microsoft rumored among suitors for Activision Blizzard

Wed 11 Jul 2012 3:11pm GMT / 11:11am EDT / 8:11am PDT
Business

Will MS buy the house of Call of Duty?

Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online...

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Vivendi chief executive Jean-Bernard Levy stepped down last month amidst growing concerns about the company's debt and flagging share price. One of the rumored ways that Vivendi could bolster its financial position is to sell off its 60 percent stake in video game behemoth Activision Blizzard, and today more fuel has been added to that fire, as Reuters has reported that Vivendi is now actively testing the waters.

"It's nothing official yet, but they've asked a bank to go and talk to possible buyers for Activision," said a source close to the Vivendi board, according to the report.

The idea is that by selling Activision Blizzard the French media conglomerate could raise about $10 billion. Those who may be interested include cash-rich firms like China's Tencent, media giant Time Warner, Microsoft, as well as private-equity heavyweights KKR, Providence and Blackstone, according to banking sources.

There already is an existing relationship between Tencent and Activision as the two recently announced a partnership to offer Call of Duty as a free-to-play online game in China. The report notes, however, that buying Activision outright may not make sense for Tencent and its very different business model.

"They have two big franchises, Call of Duty on the console side and World of Warcraft on the MMOG (massively multiplayer online game) side. And China is not a big market for console businesses; online games are much bigger for various reasons," said a banker.

Microsoft, on the other hand, may want to add some more blockbuster IP to its arsenal on Xbox, and making Call of Duty 100 percent Xbox exclusive is likely appealing, but the company may not want to invest so much when it's gearing up to launch a next-gen console in the next year or so.

"They probably don't want to distract themselves too much, but they are the ones who, if they want to stay in games, would think about owning some of these big franchises, not just providing the consoles," a banker source said.

Wedbush Securities analyst Michael Pachter recently said that Vivendi is more likely to spin off Activision than selling the gaming firm outright.

13 Comments

Klaus Preisinger
Freelance Writing

1,029 908 0.9
Microsoft buying them up would be sort of ironic for Bungie.

Posted:2 years ago

#1

James Brightman
Editor in Chief

221 248 1.1
@ Klaus, it would be but at the same time, it's not like MS would own Bungie again, as Activision doesn't own them or their new IP. ATVI simply has the publishing rights.

Posted:2 years ago

#2

DeShaun Zollicoffer
Editorial Director

18 17 0.9
This would make for one interesting console generation. I don't care for any of their IPs, but making Call of Duty and Xbox exclusive wouldn't be wise (profits would take a nose dive). Even if they buy it -- keep things multiplatform.

Posted:2 years ago

#3

Klaus Preisinger
Freelance Writing

1,029 908 0.9
Mircosoft does not need to own more than the publishing rights to make it a platform exclusive. Sure, Bungie can do what they want, as long as they do it for a platform their publisher is supporting.

Posted:2 years ago

#4
Microsoft just needs to create and use their great IPs, they dont need to buy a giant company to do it. I really dont know yet WHY IN HELL a Killer Instinct sequel isnt in my Xbox right now.

Posted:2 years ago

#5
Thats because microsoft went for the middle strategy (family centric) with a few established hitters to appease the core title fans...

Posted:2 years ago

#6

Doug Paras

117 61 0.5
I wouldn't say that, I wouldn't be surprised ig far more CoD games sold for Xbox then say PS3. All this would to is make those who love CoD buy Microsof to play it rather then sony if they didn't already.

Posted:2 years ago

#7
MS buying them may not work. There are another 40% of owners out there that want maximum returns on their investment - and that means keeping CoD multiplatform.

And what about WoW? Doesn't that generate $1bn in profits every year?

Both Activision & Blizzard are highly profitable. I think Vivendi would be crazy to sell for $10bn, possibly significantly more ($20-$30bn).

It would be interesting if Google or Apple bought them...

Posted:2 years ago

#8

Klaus Preisinger
Freelance Writing

1,029 908 0.9
We forget that Activision has $3 billion in cash reserves according to their financial statements.

See for yourself:
http://investor.activision.com/secfiling.cfm?filingID=1104659-12-35264&CIK=718877

You buy for $10, you get $3, means you are still $7 in the hole, so your question is how fast can Activision make that money back and start printing money again? Without shipwrecking the stock price.

Is the tail end of WoW that long? Is the tail end of CoD that long?

You turn to page 26 of the report and see that the online subscription business is down 35% year on year. Everything is down year on year and you realize that Vivendi is not selling Activision-Blizzard because they are forced at gunpoint. They do it because they think they can still sell for more than ActiBlizz is actually worth.

Posted:2 years ago

#9

Terence Gage
Freelance writer

1,288 120 0.1
Is this definitely for Activision Blizzard as a whole, or just Activision alone? I've read a few conflicting reports on the internet.

As for the MS buy-out, if I had that kind of money knocking around I would say that buying up both Capcom and Ubisoft would be much better investments, both from the perspective of getting lots of major franchises, as well as having sustainable brands which are unlikely to burn out as quickly as COD.

I think Tencent are quite a likely candidate. They've been wanting to expand west for a while now, and this would be a good way of both straddling American/European gamers with COD and the Asian market with Blizzard's output (again, assuming the sale is for both Acti & Blizz).

Posted:2 years ago

#10

James Prendergast
Research Chemist

730 411 0.6
I can't see MS buying Activision-Blizzard. It makes no sense given their shift away from 1st party studio-centric development over the last 5-7 years. It also makes no sense to get this huge company when whoever buys them will continue releasing games on MSes 'nextbox' either way. MS can't lose by *not* buying ActiBliz...

Posted:2 years ago

#11

Dominic Jakube
Student

92 13 0.1
I get the feeling that buying Rare didn't work out to well for MS,of hand I can't think of one blockbuster they released not counting stuff like kinnect sports.

I think there trying to offload Acti/Blizz because WOW is slowly winding down and Blizzards next MMO will be very expensive to develop and as Star Wars:TOR showed there's no such thing as a sure thing in MMO's and Starcraft/Diablo 3 are out now and Blizzard apart from starcraft expansions will take years to make anything else new.

On the Activision side you only have Call of duty and Skylanders, cod has shown signs of slipping and Skylanders has a rather fickle childrens market.

And don't forget no one knows their liability in the cod litigation, they may be limited on what cod games they can release or have to give royalties to West and Zampella.

Posted:2 years ago

#12

Barrie Tingle
Live Producer

349 116 0.3
@Leandro Rodrigues Rocha

Probably because Midway or Nintendo own the IP rights to Killer Instinct and not RARE.

Posted:2 years ago

#13

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