Sony Expects Activision Games to Remain on PlayStation Following Microsoft Deal

On the heels of Microsoft’s mega $69 billion acquisition of video game publisher Activision Blizzard, scuttlebutt suggests the deal could see the elimination of marquee Activision franchises such as “Call of Duty” and “Warcraft” from the Sony PlayStation platform.

While the speculation of the deal valued at $75 billion sent Sony’s stock price tumbling, the media giant quickly issued a statement contending it expects its PlayStation platform will continue to have access to Activision games going forward.

“We expect that Microsoft will abide by contractual agreements and continue to ensure Activision games are multiplatform,” a spokesperson told The Wall Street Journal.

The deal undoubtedly faces regulatory scrutiny over exactly such issues before it is approved sometime next year. Regardless, Wedbush Securities media analyst Michael Pachter contends Microsoft/Xbox’s market leverage increases exponentially going forward.

“[The acquisition] has great potential to hurt PlayStation, and that is likely to be [a] sticking point with regulators,” Pachter said in an email. “Who would buy a PS5 if they aren’t assured that future Activision games will be available on the platform?  That is a problem, and I expect regulators to raise it.”

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The analyst contends regulators would (if the merger is approved) likely mandate a consent decree that requires Microsoft to continue to offer Activision games on PS5 for a number of years.

“But until the regulators look at this, we won’t know for sure,” Pachter said.

While issues involving Activision titles made available for PlayStation generate news, Microsoft’s goal behind the deal appears more cloud based than console. The tech giant, along with most of its competitors, has been transitioning many of its products to a subscription-based business model.

With an eye toward replicating the success Netflix had creating the SVOD market, Microsoft is aiming significantly up its Game Pass subscription service. The Activision deal would make Microsoft the No. 3 game publisher in the world. Media reports suggest 400 million gamers engage with Activision titles on a monthly basis — a tally, if converted into subscribers, would exceed the combined subscriber bases of Netflix and Disney+.

“Together with Activision Blizzard, we have an incredible opportunity to invest and innovate, to create the best content, community and cloud for gamers to build substantial new value for our shareholders,” Microsoft CEO Satya Nadella said on a Jan. 19 media call.

Microsoft Buying Video Game Giant Activision for $69 Billion

Microsoft Jan. 18 announced plans to acquire Activision Blizzard, a leader in video game development and interactive entertainment content publishing, for $68.7 billion in cash.

Activision properties include the “Call of Duty,” “Candy Crush,” “Diablo,” “StarCraft,” “Warcraft” and “Overwatch” franchises. The acquisition aims to accelerate the growth in Microsoft’s Xbox gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse — described as a virtual-reality space in which users can interact with a computer-generated environment and other users.

With 3 billion people actively playing video games, including 200 million Americans, and fueled by a new generation of interactive features, gaming is now the largest and fastest-growing form of home entertainment.

Microsoft will acquire Activision Blizzard for $95 per share, inclusive of Activision Blizzard’s net cash. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition also includes Activision’s global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees.

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Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Satya Nadella, chairman/CEO of Microsoft, said in a statement. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”

Inclusivity and diversity remain a hot button issue at Activision, which saw thousands of employees reportedly sign an online petition last summer seeking improvements to a company culture that reportedly bordered on operating like a frat house. Activision has denied the claims.

Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment.

“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” said Spencer. “Together we will build a future where people can play the games they want, virtually anywhere they want.”

The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.

“The combination of Activision Blizzard’s extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry,” said Bobby Kotick, CEO of Activision Blizzard.

The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s shareholder approval. The deal is expected to close in fiscal-year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard.

Government approval could be a sticky issue, says Michael Pachter, media analyst with Wedbush Securities in Los Angeles.

‘[The deal] has great potential to hurt PlayStation, and that is likely to be the sticking point with regulators,” Pachter said in an email.

Specifically, the analyst contends consumers could be leery buying a PS5 if they aren’t assured that future Activision games would be available on the platform.

“That is a problem, and I expect regulators to raise it,” Pachter said. “The ultimate solution is likely to issue a consent decree [merger allowed] that requires Microsoft to continue to offer Activision games on PS5 for a number of years, but until the regulators look at this, we won’t know for sure.”

Jaime Pollack Named Chief Revenue Officer for Fight Media Group

Anthem Sports & Entertainment June 25 named longtime video game/pro wrestling executive Jaime Pollack as chief revenue officer for Fight Media Group. In this newly created position, Pollack will oversee all revenue generation for Fight Media, which includes Fight Network and IMPACT Wrestling promotion. Pollack will report directly to Ed Nordholm, president of Fight Media Group and chief corporate officer for Anthem. He joins Anthem on July 1 and will be based in Los Angeles.

“Jaime truly has a wide breadth of experience in all facets of the sports spectrum — from the cutting-edge realm of esports to the most popular mixed martial arts promotion in the world,” Nordholm said in a statement. “He brings an incredible pedigree to the table, having forged worldwide success with major brands such as the UFC and Activision Blizzard. This unique skill set could not be more relevant today and, as Fight Media Group continues to grow and expand, his unparalleled expertise and diverse network of connections in these arenas will accelerate our revenue growth.”

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Prior to joining Anthem, Pollack served as VP of media and business development at Activision Blizzard. He was directly responsible for esports media and distribution around the launches of the Overwatch and Call of Duty Leagues, including negotiating the first major e-sports digital streaming deal on Amazon’s Twitch platform, securing esports linear television broadcast partnerships with ABC, Disney XD and ESPN, and creating new cross-Atlantic media distribution in key European and Asian markets.

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Jaime Pollack

Prior to Activision Blizzard, Pollack held several different high-level positions with the MMA powerhouse UFC for over a decade. As SVP, global content and GM of Latin America, Pollack helped take UFC from a domestic fight promoter to a mainstream multi-billion-dollar global sports property. He spearheaded the UFC’s landmark launch in Brazil and helped rapidly expand the organization across Latin America. Under his direction, UFC launched UFC Network, conducted major live worldwide-televised events, created platforms for blue-chip sponsors, and developed local fighter talent. Pollack also drove production of the first international seasons of the reality series “The Ultimate Fighter,” leading to successful ratings, brand awareness, business growth and mainstream embracing of MMA on television. Additionally, he served as president of Pride Fighting Championship in Japan after UFC’s takeover, and he has established dozens of other major media, marketing and brand partnerships globally. Prior to joining the UFC, Pollack was a media attorney at NBCUniversal Television Group.

Activision Sheds 800 Jobs Amid Record Sales, Earnings

Video game maker Activision Blizzard on a Feb. 12 earnings call with analysts confirmed rumors of big job cuts – rumors first floated last week in a Bloomberg report.

Executives on the call revealed plans to slash 8% of the company’s 9,600-employee workforce, despite “record” sales of $7.5 billion in 2018, up from $7.02 billion in 2017. Earnings per share, too, were a record $2.35, compared with $0.36 in 2017.

In an earnings release issued earlier in the day, CEO Bobby Kotick said that “while our financial results for 2018 were the best in our history, we didn’t realize our full potential. To help us reach our full potential, we have made a number of important leadership changes. These changes should enable us to achieve the many opportunities our industry affords us, especially with our powerful owned franchises, our strong commercial capabilities, our direct digital connections to hundreds of millions of players, and our extraordinarily talented employees.”

But on the afternoon earnings call, COO Coddy Johnson revealed some 800 of those employees would soon be gone, mostly in non-developmental roles.

“Our restructuring plan sheds investment and less productive non-strategic areas of our business and will result in a net headcount reduction of approximately 8% while also driving a significant increase in investment, focus and capabilities around our biggest franchises,” he said on the call, according to a transcript provided by Seeking Alpha.

The publisher began notifying those who are being laid off across its various divisions, which include Activision, Blizzard and King.

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At the same time, Activision promised a 20% spike in the number of developers working on marquee game franchises such as Call of Duty, CandyCrush, Overwatch,  WarcraftHearthstone and Diablo over the course of 2019.

“We have worked with our new business unit leaders to undertake a comprehensive examination of our business to determine the changes we need to make to improve execution and capitalize on the substantial long-term growth opportunities for our company,” Johnson said on the call. “We determined that we need to refocus our best resources on our biggest opportunities and to remove an unnecessary level of complexity and duplication that is built up in certain parts of the business.

“We have, therefore, developed a clear plan for this year to refocus and reinforce the foundation for growth. This refocus includes initiatives developed by our new business unit leaders, each of whom has demonstrated the ability to combine creative excellence with the commercial focus on profitable growth.

“First, we are investing more in development for our biggest internally owned franchises across upfront releases, in-game content, mobile and geographic expansion. Second, we are deprioritizing initiatives that are not meeting our expectations and reducing certain non-development and administrative-related costs across our business. Third, we are integrating our global and regional sales and go-to-market partnerships and sponsorships capabilities across the business, enabling us to better leverage talent, expertise and scale on behalf of our business units.”

For the year ended Dec. 31, 2018, Activision Blizzard’s net revenues from digital channels were a record $5.79 billion.

For the quarter ended Dec. 31, 2018, Activision Blizzard’s net revenues were a record $2.38 billion, up from $2.04 billion for the fourth quarter of 2017. Net revenues from digital channels were a record $1.79 billion. Earnings per diluted share were a record $0.84, as compared with loss per share of $0.77 for the fourth quarter of 2017.

Activision Blizzard generated $1.79 billion in operating cash flow for the year ended Dec. 31, 2018, as compared to $2.21 billion for 2017.

Activision Blizzard’s Spencer Neumann Expected to Become New Netflix CFO

Netflix is reportedly set to announce the hiring of Spencer Neumann as its new CFO, replacing long-time chief executive David Wells, who is leaving the company, according to Reuters, which cited sources familiar with the situation.

Neumann, who has been CFO of Activision Blizzard for less than two years, was put on paid leave Dec. 31 by the Los Angeles-based video game publisher, according to a regulatory filing.

Prior to Activision, Neumann held management positions at Disney’s theme park and television units.

A Netflix spokesperson wasn’t immediately available for comment.