f13.net

Vivendi overhaul gathers pace with $8.2 billion Activision deal (http://www.reuters.com/article/2013/07/26/us-activision-vivendi-idUSBRE96P05120130726)

Sounds like they are going to take all the cash on the balance sheet, I assume issue some new debt, and people who have a lot of money from blizzard's initial sale will kick in too.

And lo, so it was that the next EA was born!

 :why_so_serious:

I'm selling my shares today. I bought in at 11.79 back in the days of "Will GW2 be the thing that kills WoW!?"

It's jumped almost 40% since then. It's been a good ride.

And just in time for WoW to dip into pre-TBC subscriber numbers!

http://wow.joystiq.com/2013/07/26/world-of-warcraft-down-to-7-7m-subscribers/

Down from 8.3 million in March.

Set mine to sell too, at 17.35, might be shooting high, but who knows.  Bought right before Cataclysm since it looked so awesome. :cry2:

Edit: it shot up to the 17.40s already, yeesh.  Well, I hope they sell fast enough before it falls back down.

It'll continue to dip from this point forward. There's no stopping it now. I'm getting out now not because of the jump, but because they flubbed Titan, and they flubbed D3 by trying to focus on console (which I honestly don't think will be a huge draw).

I can't wait for Blizzard's response to be "more dynamic" daily hubs, alternate unfun grinds to get catchup gear, and some brand new iteration of raid-type (even after flex-raid) instead of just you know, making the normal raids easy enough for most guilds.

If the stock goes back to $12 again? I'll buy. I have confidence at that price point they'll continue to deliver long term, but it will be just that, a long term hold.

They have to fix D3 and put a good face on that, or the franchise is effectively dead. They have to come up with a multiplayer successor to WoW, and it doesn't necessarily have to be a full blown MMO. They have to position themselves in the market to be ready for the shift to the new consoles, and also understand that all their side stuff may not pan out (Hearthstone jumps to mind).

They also need WC4. I'd love to see them rip off and polish some ideas from Total War on that to revolutionize the game. The TW guys have never been able to produce a product that wasn't buggy as fuck, but Blizzard could.

I blame Ghostcrawler.

With Vivendi no longer protecting the goose laying the golden eggs (Blizzard) I fully except Kotick to fuck things up even more than he already has.

Yes.

On the upside to that, expect some more great studios to spin-off from the folks who flee the ship before it goes Full EA.

I think the 'before it goes full EA' ship has sailed.

Considering Vivendi was ramping up to start pumping Activision for pure cash dividends to pay off Vivendi's absurdly large debt and damn the consequences, the only thing they were going to be doing to the golden goose was strangling it.

This is what worries me.  Activision has a bunch of cash right now but that's going away to pay for this, then they will probably have to finance some of it with debt.  So the new, more independent company doesn't have a giant money pile anymore, their main cash cow WoW is on the decline, Blizzard doesn't have anything significant in the pipeline and Activision is mostly just Call of Duty which could be impacted by how well the next gen consoles sell.  It seems kind of wobbly.

To be honest, I think because Blizzard has been sitting on that cash for so long, they've allowed a lot of dead weight in their overhead to run unchecked. Their SGA expenses represent 24% of the their revenues, up from 20% in 2010. That swing is higher by almost $250M in just overhead. That's not a good sign when they've cut R&D by $22M and 2% in the same time period.

EDIT: What I'm getting at is that they're running fatter staffs with less production. They need to trim up and empower the people who are actually doing a good job to keep producing. The products in the 2010>current time period have come up wanting in many regards.

 :oh_i_see:

Empower the People who are Good.

When does that ever happen ?

24% of revenue on SG&A is not really troublingly high, I don't think.

By no means. It's comparative. If the products they were putting out the door weren't flagging in terms of public opinion and subscriptions? I don't think it's an issue at all. When it's growing at the same time that the cash cow is shrinking? Over the long haul that percentage goes up.

We can't fire him, he's a Vice-President!

Maybe - depending on how they categorize things a decent chunk of that 24% is probably the infrastructure (and maybe the CS teams?) that the games actually run on, so you'd expect at least something of a drop in operating costs as usage goes down.

Yeah, because "Studio full of ex-Blizzard" people has worked so well previously.

It did get us Torchlight 1/2.

...and Hellgate, but whatever.

I think it's going to be interesting to see how the business reacts. Do they stop paying dividends? Do they reinvest in higher R&D? These would be things I'd look at in the longer term to see what their product line looks like.

I assume Kotick is still in charge, so Blizzard will continue to fail in slow motion.

Yeah.

Currently articles like this one drive me crazy as a gamer: http://www.insidermonkey.com/blog/there-are-over-100-million-reasons-to-doubt-activision-blizzard-inc-atvi-211668/

The gist of it is this - ACTIVISION ISN'T INTO MOBILE GAMING! DOOOOOOOOM!

"On the company’s last earnings call, CEO Bobby Kotick downplayed the trend towards mobile gaming, saying that they just “don’t see anything” that would support a shift to mobile."

Hate Kotick all you want, but I think he's right. I've never understood the obsession with "mobile gaming" from a AAA concern. There's not enough money in it to want to deal with it, but every time somebody wants to take a shot at Blizzard, it's usually over how they haven't embraced the stupid mobile gaming revolution.

The mobile gaming shit is absurd.

Thing is, mobile gaming IS a cash cow but it's not a market that takes away from console/pc games it's a market that exists alongside it.  No reason to get rid of one to foster the other.

I still don't believe it's a cash cow. I believe there is a demand for it, and that revenue exists, but just saying that their is $8 billion in revenue tells me nothing.

They always point to Zynga in these articles about mobile gaming as the gold standard. Last I checked, that company hasn't made money since 2010, and managed to lose money on over a billion in revenue in prior years. How is this successful exactly?

Zynga does primarily Facebook games, not mobile games, unless I am very much mistaken. The people with the cash cow are the Angry Birds guys, etc.

Lakov pointed out why people are losing their shit.  As you said, AT-B doesn't *have* to get rid of AAA to move in to mobile and mobile is currently making decent money.  

There's little reason they couldn't just divert a few dollars or buy-up a dev team to toss a game or three out the same way EA is. Instead they're choosing to ignore it entirely.

Yes, Zynga does Facebook games.  Mobile games like Candy Crush, Temple Run <whatever> Icon Match, Angry Birds run on Tablets, PCs, Phones and hook-in to Facebook but don't require you to be ON Facebook. They also have steady revenues that people will simply buy in to once you have a good hook on the gameplay.

 Incentivize it without making it ludicrous and suddenly the nickel-and-diming is palatable.  "Oh, I need to get past this level on Candy Crush, I'll drop $.99 for those mallets/ extra moves. I'm sooo close!"  "Oh, a new season of Angry Birds is out! Sure take my $6!"

Hell this site has it's own little 'mobile games' section.

If Blizzard wanted to do a CCG, mobile was the place to do it.  For many reasons.

For EA, ~20% of their Non-GAAP revenue ($104 million) came from mobile games last quarter. That's why people are asking what Activision's mobile strategy is.

Sure as a number that sounds fine. Activision's operating profit has been over a billion for the last 2 years. Not revenues (those were over 4.5B) but actual operating takehome after expenses. EA managed to make a profit of of $121M on $3.8B in revenue.

My point is this: Why should ATVI give a fuck what other people are doing? They aren't operating in the same stratosphere. Mobile gaming, even if you can make $150M in revenues or whatever, that's all well and good, but it's not exactly breaking the bank on returns.

Why shouldn't they?

Because even allocating a single dollar away from a high margin activity to a lower margin activity is silly.

Unless of course there are obvious market trends that indicate that the lower margin activity has a bigger future potential, and you're working in an industry where you have to start working on something 2+ years before you see a product and have the chance to move to more predictable, shorter dev cycles...

So companies should only ever focus on one thing?

In this case I haven't seen anything the suggests mobile is some kind of revolution, other than by people that are obsessed with mobile. Even if it is the case, we're on the cusp of the new consoles.

You can allocate some R&D money to whatever, that's what it's there for, but to decide to actually fund a mobile gaming division because it's got buzz?

Typically, as a company you should focus on your core of products, yes.

In this case, Blizzard doesn't have to be innovative at all. They have the cashflow to play catchup on somebody else's idea, and then polish it for the win. That's what they do.

"Not to mince words, Mr. Epstein, but we don’t like your boys’ sound. Groups are out; four-piece groups with guitars particularly are finished…The Beatles have no future in show business"

Yeah, in spades.

Just so we're clear, you all believe mobile gaming is the future and are willing to bet on with your wallets right? That's the point you're making?

Mobile gaming is demonstrably part of the present. It's growing faster than any other segment. Ignoring it entirely is risky.

I'll gladly change my tune on this if yall are privy to some data I've not seen. Other than people quoting revenues at each other with no regard to costs, most of what I've read is about how companies that are struggling are looking at mobile as the fix.

Are you saying PCs are the future and Consoles aren't being eroded? Of course not, because both are false the stats on Tablets and Smartphone sales say otherwise. Which -coincidentally- fall under mobile.

Things were looking rosy for consoles in Nov. 2012 (http://allthingsd.com/20121129/what-tablet-threat-brisk-sales-keep-consoles-in-the-game-this-holiday/)
But that tide... (http://news.sky.com/story/1122910/nintendo-sees-wii-u-games-console-sales-slump)
... it's turned quickly. (http://articles.economictimes.indiatimes.com/2013-07-24/news/40772133_1_gaming-consoles-ps4-xbox-consoles)

But Mobile gaming is small potatoes anyway, right? (http://www.brighthand.com/default.asp?newsID=20161&news=us_mobile_gaming_revnues_hit_$1.78_billion_in_2013)
Traditional video games aren't going anywhere.  (http://www.zacks.com/stock/news/101793/Massive-Decline-in-May-Video-Game-Sales)
And there's always demand for them! (http://bgr.com/2013/06/18/video-game-sales-may-2013/)
It's not like the TVs are leaving American homes. (http://www.nytimes.com/2011/05/03/business/media/03television.html?_r=0)
 After all, Televisions are The American Experience! Mobile is a fad the youth will forget about! (http://www.theguardian.com/media/2011/apr/19/young-people-tv-mobiles-net)

It's not like major economists think mobile is a market anyone should go in to.  What are the possible returns?! (http://www.forbes.com/sites/terokuittinen/2012/02/14/mobile-game-revenue-math/)
It's not as if they make money. (http://news.yahoo.com/shocker-mobile-games-now-generate-more-revenue-games-130134177.html)
 It's certainly not something a tech company could fall behind in. (http://thenextweb.com/facebook/2013/07/30/facebook-trialling-working-closely-with-mobile-games-studios-in-exchange-for-revenue-share/)

Good points, but again most of them are talking about potential growing revenues (not what those companies made on their products).

Also, hardware sales dropped in consoles? Color me shocked when they just announced the next generation. Also in one of those articles they referenced sliding software sales and then in the same article noted that most of the reason was Activision and EA didn't release anything in May.

I'll still bring up this point though. Even if mobile gaming is taking over and regular gaming is dying, why should Activision get on board now? They didn't get on board with the MMOG market until 3-5 year after most of the "successful" games had already been released and running. Then they came in, polished it up, and changed the entire market. Why wouldn't they let the little guys do the work for them, then sweep in with their giant wallets and polish an idea for billions?

Didn't Activision only merge with Blizzard in like 2008? Years after WoW's release?

Mobile gaming growing does not require regular gaming to be dying. That's where you're looking at this wrong, IMO; mobile is a way for the companies to *grow*, not something they should necessarily shift resources away from PC/console to chase.

I kind of see mobile gaming as a sort of a thing that right now works pretty well to buoy gaming industry segments in sum. I don't think the industry should get too cozy with present day returns on it, though.

We shouldn't put too much stock in books, books will never replace pc games.

http://us.blizzard.com/store/browse.xml?f=c:4,c:17

And we shouldn't worry about tabletop games, those are old news and not worth precious resources.

http://us.blizzard.com/store/browse.xml?f=c:3

Sure, but where is the compelling evidence that this is the case?

It's not like conventional gaming is a dying industry. We're not talking about music companies failing to find/ignoring ways to sell MP3s here.

I agree with Paelos' general argument. If business is good and you have no compelling evidence to believe that it will change because of some fundamental shifts, then why should you throw money at something just because everyone else is doing so? When companies start trying to do many different things then often the core business does suffer - no matter their best interests otherwise.

Once there is a demonstrated reason to move into that market they can do so. It's not an exclusive kickstarter offer - if mobile gaming gets significant enough then they can hire a bunch of people with a demonstrated track record of knowing how to make money from it and jump in wholeheartedly.


Does Activision Blizzard produce those items inhouse?

Would they have to produce mobile games in house?

The more that's come out about Vivendi's relationship with Blizzard, the more it becomes obvious that activision blizzard's only chance for survival was to buy their release from Vivendi.

Vivendi's debt is absolutely staggering. Once the provision that preserved A/B's holdings expired, they were immediately prepared to ransack activision blizzard INTO debt, just to slightly manage and finance their own. They would have killed it in very short order.

I'll be interested to see what happens to Vivendi as time goes on. It's a real shit conglomerate in what looks like a death spiral, where it's eating the shit out of its profitable enterprises just to stay afloat.

I'm happy they are out, and I'm more than happy that Blizzard can get it's own debt to fund operations rather than sub-level debt to fund the parent.

Except it frees up Kotick to go full retard, which is a thing he's wont to doing.

(http://i.minus.com/iSe515l9MhJbe.png)

Bitch please,

(http://wow300.net/icon//spell_holy_resurrection.jpg)

I'm pretty sure Kotick has successfully run Activision for over 20 years and built it from obscurity into a juggernaut.  He didn't do this by being shitty at his job.

Nope, he's evil and everything wrong with gaming. Don't go off script with logical business talk, that gets panned around these parts.  :grin:

Sigh.  Don't start, Monkey.

Maybe not embraced, but Heartstone is going to be released on ios and android as well as PC. I just hope that 1 account carries across the platforms

I only imagine it would be much more of a hassle for blizzard to have a huge amount of players with seperate bnet accounts for each platform.  How does the D3 console version work?

Keep reading. He and I covered that and he altered his position at the top of the page.  That it made more sense for Activision to wait until other people had paid the 'idiot tax' and learned the 'what not to dos' first.   I don't disagree, unless you can become a monopoly as a first starter it's a bad position to be in because you can burn large bucks.

Fine fine, that other thread got my hackles up.