Gaming Monthly Highlights: Market Sours on Microsoft's Activision Blizzard Deal

Market bets against Microsoft's Activision Blizzard deal

On Thursday (April 28), Activision Blizzard shareholders approved a plan under which the company will be acquired by Microsoft. However, questions are now being raised about whether the deal will actually close.

“Shares of the gaming juggernaut are trading 25% below Microsoft’s $95 offer, indicating investors see risk the buyout won’t close as planned,” Bloomberg reported.

The downturn in sentiment is related to recent discussions on antitrust regulations in corporate America, as well as increased scrutiny from senators in Washington surrounding these types of mega-acquisitions.

Now that shareholders have given their approval, the Federal Trade Commission will review the proposed acquisition. The deal will also need an okay from regulators in the EU and China, according to Bloomberg.

Epic Games gets US$2 billion investment

The video game company behind the gigantic hit Fortnite received a substantial new investment from Sony and Kirkbi, the family office behind Lego, with the companies investing US$1 billion each.

Thanks to this new deal, Epic’s valuation has jumped to US$31.5 billion.

“We are also confident that Epic’s expertise, including their powerful game engine, combined with Sony’s technologies, will accelerate our various efforts such as the development of new digital fan experiences in sports and our virtual production initiatives,” said Kenichiro Yoshida, chairman, president and CEO of Sony.

The investment has predominantly been credited to the success of Epic Games and the metaverse opportunities that its investors will gain by partnering with the game maker.

“This investment will accelerate our engagement in the world of digital play, and we are pleased to be investing in Epic Games to support their continued growth journey, with a long-term focus toward the future metaverse,” Soren Thorup Sorensen, CEO of Kirkbi, said in a statement.

Epic Games CEO Tim Sweeney echoed this enthusiasm for metaverse opportunities, saying these new funds will help the company continue expanding its business interests in the digital landscape.

In addition to its other ventures, Epic Games manages the Unreal Engine, which is a popular game development engine; the firm also has its own online games store from which it creates purchase revenue.

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From around the web

• In a reported opinion piece, GamesIndustry.Biz shares a critical view of the March NPD gaming sales report. “The US sales report made for sobering reading, and suggests that 2022 might not be quite the triumphant year for games a few had hoped for,” the piece notes. Besides a busy release calendar and the continued success of Bandai Namco’s (TSE:7832,OTC Pink:NCBDF) blockbuster Elden Ring, shifts in consumer trends and demand for indoor activities indicate gaming’s momentum may not be the runaway story assumed by experts.

• Xbox saw its best-performing reporting period outside of a holiday quarter. Microsoft’s gaming division is enjoying momentum from the increased availability of its next-gen machines, the Xbox Series X|S consoles. According to Daniel Ahmad, a video game analyst with Nike Partners, Xbox recorded US$3.74 billion in revenue. Despite the analytical praise, Amy Hood, Microsoft's chief financial officer, said the results were “below expectations.”

• The American division of Japanese gaming giant Nintendo (TSE:7974,OTC Pink:NTDOF) has found itself embroiled in a labor complaint. Axios reported that a contract worker filed a complaint with the National Labor Relations Board alleging that they were let go for discussing unionization publicly; they claim that Nintendo and its partner hiring firm Aston Carter engaged in “concerted activities” and made “coercive actions” to block workers' right to organize.

One last thought…

Where have the gamers gone? Nowhere really — the market excitement in the video game industry continues to be present and active in different ways.

But if we take the most recent NPD sales results, it's fair to look at this current period as a bounce-back for the gaming market after a gigantic leap in sales and spending in the initial stages of the COVID-19 pandemic.

“First quarter 2022 spending fell 8% when compared to the same period a year ago, to $13.9 billion,” NPD analyst Mat Piscatella said as part of the firm's most recent report.

Aside from that, gamers are still facing an uphill battle to upgrade their machines. As NPD's report shows, availability of Sony's highly coveted PS5 console is still lagging.

“March 2022 consumer spending across video game hardware, content, and accessories declined 15% when compared to a year ago, to $4.9 billion,” Piscatella said. “Declines were seen across all major categories of spend.”