U.S. Supreme Court Refuses to Block Microsoft-Activision $69 Billion Merger

An emergency appeal to the U.S. Supreme Court by a group of video gamers seeking to block Microsoft’s pending $69 billion purchase of publishing giant Activision Blizzard (publisher of Call of Duty) has been denied by the high court. An application for injunction ahead of the midnight termination deadline tonight had been submitted to Justice Elena Kagan, who denied it on July 18.

The denial comes on the heels of the Federal Trade Commission’s failed effort to block the deal last week when a federal appeals court judge in San Francisco denied the government’s request. It remains to be seen whether the FTC seeks alternative avenues to block the deal it said would pose an unlevel playing field to video game-playing consumers.

Tonight’s deadline is expected to pass with closing of the deal. An extension will likely be granted to deal with ongoing regulatory concerns in the United Kingdom. Should the deal fail, Microsoft is on the hook to Activision for a $3 billion break-up fee.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

MPN Podcast: Ongoing WGA Strike; ‘Mario’ and ‘Avatar 2’ Make Digital Debuts; Xbox CEO Hints at Bowing to Sony

 

On this month’s episode of the Media Play News podcast, hosts Charles Parkman and Charlie Showley lead with a review of the new “Guardians of the Galaxy” movie having just released in theaters. More impactful is the writer’s strike currently underway by the WGA. The last strike was in 2007 and lasted for 100 days, causing millions in losses to studios. Grievances of writers today include advocacy for better pay given the new economic model of streaming doesn’t grant the residuals that the cable TV model used to. Late night talk shows have already been affected, going on hiatus until further notice the day after the strike began. It remains to be seen how much longer this strike will go for.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

On streaming, The Super Mario Bros. Movie has become available to rent on Amazon Prime, and Avatar: The Way of Water is scheduled to come to Disney+ on June 7. Both movies did extremely well commercially and Charlie and Charles have lots to say about them. Last in this episode is the rumor that Xbox may sunset its console in light of the stickiness of video game audiences to other consoles. Xbox CEO Phil Spencer appeared on a podcast to talk about difficulties Xbox has been facing lately, and with PlayStation’s library of compelling IP and Nintendo’s consistent success (and likely foray into more licensed movies given Mario’s success) the hosts can see a scenario where Xbox goes the way of Sega and transitions only to developing games at the expense of sunsetting future iterations of the Xbox.

Microsoft Concedes in Video Game Console War, Focusing on Subscription Gaming

Microsoft Corp. may be on the verge of waving the white flag in the video game console wars.

Speaking  May 4 on the Kinda Funny Xcast webcast, Phil Spencer, CEO of Xbox Gaming, said the company’s attempt to win the video game hardware battle against Sony PlayStation 5 and Nintendo Switch is a lost cause. Microsoft launched the Xbox console in 2001.

Spencer didn’t mince words, saying that 90% of gamers are committed to their existing console. And that would be No. 1 PlayStation 5, followed by the Nintendo Switch, according to Circana data.

The concession follows a rough quarterly financial week in which Microsoft reported a 13% decrease in Xbox revenue (including a 5% drop in hardware sales) and a British regulatory agency temporarily blocked Microsoft’s $68.7 billion acquisition of game publisher Activision Blizzard.

Sony, in its most recent financials, reported a record fiscal year for PS5 sales (19.1 million), above a projected 18 million units. In the quarter ended March 31, Sony sold 6.3 million PS5 units alone.

For Xbox Games’ Spencer, the writing on the wall is clear.

“It’s just not true that if we go off and build great games, all of a sudden you’re going to see console share shift [from PS5, Switch] in some dramatic way,” Spencer said on the webcast. “It’s just the truth of the matter when you’re third place in the console marketplace and the top two players are as strong as they are.”

In February, Microsoft announced it would allow its Xbox video games to be played on the rival Nintendo platform.

Video game analyst Michael Pachter with Wedbush Securities in Los Angeles, agrees unit sales of Xbox Series X and Series S trail the PS5 an Switch by “a wide margin.”

“They are doing fine with Game Pass subscriptions, however, and they seem focused on building that business at the expense of their console business,” Pachter said in an email.

Indeed, Xbox Game Pass subscriptions hit a record 120 million monthly active users during the quarter.

“We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices,” Microsoft CEO Satya Nadella said on the fiscal webcast.

Microsoft Q2 Xbox Gaming (TVOD) Revenue Drops 13%, Game Pass Subs Hit Record High

Microsoft Jan. 24 reported its second-quarter (ended Dec. 31, 2022) Xbox gaming segment revenue decreased $684 million (13%) to $4.76 billion, from $5.44 billion in the prior-year period, driven by declines in Xbox content, services and Xbox hardware — which includes Microsoft Movies & TV content transactions.

Xbox is part of Microsoft’s “More Personal Computing” business segment, which saw Q2 revenue drop almost 19% to $14.2 billion, from $17.5 billion in the previous-year period.

Microsoft attributed the content and services revenue decline due to strong prior-year revenue from first-party game launches, undermined by drops in first-party content and a lower rate of monetization in third-party content, and a 13% decrease in Xbox hardware revenue, offset in part by growth in Xbox Game Pass subscriptions.

On the positive side, Xbox Game Pass subscriptions hit a record 120 million monthly active users during the quarter.

“We saw new highs for Game Pass subscriptions, game streaming hours, and monthly active devices,” CEO Satya Nadella said on the fiscal webcast.

Through six months of the fiscal year, overall gaming revenue is down $667 million, or 7%, driven by declines in content and services and Xbox hardware. Xbox content and services revenue decreased 8%, driven by declines in first-party content and in third-party content, with lower rate of monetization and engagement hours, offset in part by growth in Xbox Game Pass subscriptions. Xbox hardware revenue decreased 5% driven by lower price of consoles sold.

Microsft, which said it plans to cancel 10,000 company positions in 2023, said it recorded $800 million in severance related costs in 2022.

Microsoft Response to FTC Lawsuit: Activision Acquisition Expands Video Game Access to More Consumers

Microsoft has responded to the Federal Trade Commission’s lawsuit seeking to block the software giant’s $69 billion acquisition of Activision Blizzard, publisher of the popular “Call of Duty” video game franchise.

The FTC, earlier in December after a 3-1 vote said the mega merger would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

Microsoft, in a Dec. 22 legal filing, countered that the acquisition would in fact expand consumer access to Activision’s portfolio of video games.

“The acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry,” Microsoft wrote in the filing. “That is particularly so when the manufacturer has made clear it will not withhold the game. The fact that Xbox’s dominant competitor has thus far refused to accept Xbox’s proposal does not justify blocking a transaction that will benefit consumers.”

That competitor is Sony Interactive Entertainment, whose PlayStation 5  has been the top-selling video game console since the the PlayStation brand inception. Sony contends the deal would favor the Xbox console and Xbox Game Pass streaming service over PlayStation, putting the latter at a competitive disadvantage.

Bloomberg earlier this month reported that Microsoft was willing to let Sony sell the “Call of Duty” franchise titles on its PlayStation streaming service. While the FTC trial is set to take place in 2023, the merger is also getting antitrust pushback from regulators in the U.K. and the European Union.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Sony PlayStation Joins Video Game Industry Boycott, Stops Selling Hardware, Software in Russia

Sony Internactive Entertainment, corporate parent behind the PlayStation franchise, joined a growing boycott by video game companies to stop selling hardware and software in Russia due to President Vladimir Putin’s unprovoked invasion of neighboring Ukraine.

“Sony Interactive Entertainment is participating in the global community to call for peace in Ukraine,” the company said in statement. “We have stopped shipping software, hardware, launching Gran Turismo 7, and operating the PlayStation Store in Russia.”

The Gran Turismo franchise has generated more than $4 billion in sales since launching in 1997.

Sony Corporation said it has sent $2 million to the United Nations High Commissioner for Refugees and Save the Children, an international non-profit to help victims of the tragedy.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Microsoft on March 4 stopped selling its branded Xbox Series X/S gaming consoles and related software in Russia, a move mirrored by other publishers. Sony joining Microsoft in halting business in Russia has been an objective for Ukraine officials since the hostilities began.

Ukraine’s Deputy Prime Minister Mykhailo Fedorov last month called Microsoft, Sony and the e-sports market to cease operations in Russia.

“In 2022, modern technology is perhaps the best answer to the tanks, multiple rocket launchers and missiles,” Fedorov wrote in a March 2 tweet.

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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.”

Xbox Adding Ubisoft Game Subscription Streaming Service

Ubisoft Jan. 5 announced it plans to add its Ubisoft+ video game subscription service to the Xbox platform. The software publisher also plans to offer Tom Clancy’s Rainbow Six Extraction, a tactical first person-shooter (FPS) title, to Xbox Game Pass and PC Game Pass members when the game launches on Jan. 20.

Ubisoft+ offers more than 100 Ubisoft games, including the latest releases, DLC and classic games, rewarding users with customization items, boosters and other in-game perks. Ubisoft+ is currently available on PC, Stadia, and Amazon Luna.

“We’re demonstrating that we believe in the value and choice that game subscriptions offer to players,” Chris Early, SVP of strategic partnerships and business development at Ubisoft, said in a statement. “Rainbow Six Extraction for Xbox Game Pass and PC Game Pass members is just the beginning. Ultimately, we will offer the Ubisoft+ subscription service to Xbox owners so that they can enjoy the full extent of our Ubisoft+ game library, including new releases, on their consoles.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Rainbow Six Extraction builds on all the tactical gameplay elements introduced in Rainbow Six Siege. Ubisoft shared that Siege also will be available for PC Game Pass and Xbox Game Pass Ultimate members starting January 20 and will see its availability on Xbox Game Pass extended.

“With Rainbow Six Extraction, Xbox Game Pass and PC Game Pass members are getting another blockbuster added to their library on the same day the title launches,” said Sarah Bond, corporate VP, Game Creator Experience and Ecosystem at Xbox. “And because Rainbow Six Siege will be on both Xbox Game Pass and PC Game Pass as well, the Rainbow Six community and fans of tactical shooters will have plenty to look forward to playing together, no matter where they play.”

Movies Anywhere Available on Xbox Consoles

The cloud-based movie library service Movies Anywhere is now accessible on Xbox One, Xbox One S, Xbox One X, Xbox Series X and Xbox Series S.

Xbox users can download the Movies Anywhere app through the Microsoft store to access their movie collection on their console.

Users can playback their movies via their Xbox and purchase more movies from the Microsoft store once their retailer account is connected to their Movies Anywhere account.

Video playback on Xbox via Movies Anywhere supports 4K, HDR 10, Dolby Vision and Dolby Atmos.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Movies Anywhere participating studios include Sony Pictures Entertainment, Universal Pictures Home Entertainment (including DreamWorks and Illumination Entertainment), The Walt Disney Studios (including Disney, Pixar, 20th Century Studios, Marvel Studios and Lucasfilm) and Warner Bros. Entertainment. Other participating digital retailers include Apple TV, Prime Video, Vudu, Google Play/YouTube, Xfinity, FandangoNow, Verizon Fios TV and DirecTV.

JustWatch Bows App on Microsoft Xbox

JustWatch, an international streaming guide with more than 20 million users across 52 countries, has launched a branded app on Microsoft’s Xbox platform. The app allows Xbox and Series X and Series S console users to search for movies, TV shows, and where to watch from their gaming systems.

JustWatch posts weekly Top 10 lists of most streamed movies and television shows, in addition data analytics on specific platforms’ performance compared to their competitors.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The recommendation software has apps for Netflix, Amazon Prime Video, Disney+, Apple TV+, FuboTV, Hulu, HBO Max, Peacock, Paramount+, Discovery+, AMC+, The Roku Channel, IMDb TV, Starz, Epix, Showtime, YouTube, Tubi, Pluto TV, BritBox and Sundance Now, among others.