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Microsoft / Activision Deal Approval Watch |OT| (MS/ABK close)

Do you believe the deal will be approved?

  • Yes, will be approved without changes.

    Votes: 221 24.9%

  • Yes, will be approved but with structural changes to ABK.

    Votes: 102 11.5%

  • Yes, will be approved but only with behavioral concessions.

    Votes: 262 29.6%

  • No, will not be approved.

    Votes: 301 34.0%
  • Total voters
    886
  • Poll closed .
Status
Not open for further replies.
DeepEnigma

DeepEnigma

Gold Member
DarkMage619 said:
MS will honor everything stipulated in contracts they enter into. Nothing more, nothing less like any other business.
Click to expand...
What a Phil Spencerian like answer.
Suspicious Buffy The Vampire Slayer GIF


Are regulators ignorant know nothings still? Asking for a friendo!
 
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feynoob

feynoob

Gold Member
IFireflyl said:
Let's assume that everyone on ResetERA is a fucking retard.

With that in mind, is this actually stated inside of the CMA's responses? Not the "new math" part, but the part about CMA completely disregarding Microsoft and solely listening to Sony. Because if that's stated somewhere, then the CMA should be on a hot seat for not validating the information prior to right now.

From what little I saw on the CMA document (I've had a crazy day, so I haven't sunk my teeth into it yet), it seemed like the CMA said that Microsoft actually provided new figures. And that by itself blows my mind, because where the hell was that math when they first submitted their findings to the CMA?
Click to expand...
Its from CMA documents.
I read the full 17 page report.

That math error. AFAICT, it's not what many assumed. The mistake was they took a single year expected loss from console switching in a foreclosure situation, and multiplied that by five to get a five year expected loss. A competitor (Sony?) pointed out that user spending drops over time, so the LTV over five years would be lower, i.e. greater incentive to foreclose than the CMA model suggested. But wait, that same competitor proposed an alternative solution for calculating five year LTV of losses, and that solution massively understated the potential losses, i.e. trying to make it look like MS had even greater incentive to foreclose. CMA acknowledged the mistake and also saw through that alternative solution.

CMA's acknowledgement:

2.3 (a) In terms of losses, the $[] used in the Provisional Findings expresses an estimate of the average yearly gross profit per CoD gamer that Activision makes on PlayStation; it does not estimate the lifetime value that this gamer would generate for Microsoft by playing CoD on a PlayStation (or a PC or an Xbox already owned) over time. This implies that there is a mismatch in the relevant reference period for the incentive analysis. Gains are computed based on 5 years of anticipated gross margin from a new Xbox gamer. Losses are computed based on a single year of foregone gross margin on content sold to a CoD gamer on PlayStation.

A competitor spotted the error, and fixing the error would increase MS' foreclosure incentive. However, that competitors proposed solution was investigated by the CMA and by the looks of it, would have increased MS' foreclosure incentive even more. The CMA saw through that.

3.1 A competitor in the console gaming market [] submitted that, given the use of LTVs to measure gains, it would be inappropriate to take the losses for one year and multiply them by five to get a five-year LTV. According to this competitor, individual gamers tend to reduce their spending over time, so this approach for estimating losses would overstate Microsoft's losses through lost sales on [], and thereby understate Microsoft's incentives to foreclose. 21 This competitor suggested that taking the losses for one year and multiplying them by the expected number of game purchases over five years would better reflect actual purchasing patterns, but that this approach would omit spending on add-ons, including add-ons on free-to-play releases like CoD Warzone, and thereby may not capture all lost sales on [].22 This competitor therefore suggested that the most consistent approach would be to track a given cohort's actual CoD spending on [] over the course of five years to calculate CoD LTVs that are analogous to the LTVs used to measure gains.23 According to this competitor, Microsoft will have the incentive to withhold CoD from [] post-Merger.

The competitors massively flawed LTV suggestion "forgot" to include all IAP spending, including on F2P, LOL:

4.9 Although we recognise that gains and losses from a total foreclosure strategy should be calculated over a similar timeframe, we consider that this Parties' proposed calculation remains inaccurate; in particular, the suggestion to multiply average margin per CoD MAU by [] games purchased over 5 years does not seem to be a sufficiently accurate proxy for losses during that period, since gamers not only spend on CoD by buying games, but also through ingame purchases (which can be a significant proportion of overall spend, especially in free-to-play games such as CoD Warzone). Similarly, we do not agree with the approach of calculating losses proposed by the third-party competitor (ie, to estimate losses by tracking a cohort's actual CoD spending on PlayStation over the course of five years) because we consider that the opportunity cost of withholding CoD from PlayStation amounts to all relevant profits that would be lost from this strategy, not just the lost profits on a single cohort of gamers. As such, we consider that it is more appropriate to account for five years of foregone profits from CoD on PlayStation.

So if the math error being fixed showed lower LTV losses for MS, what else changed? It seems the main thing is they got revised data from MS which they sided with.

4.5 Microsoft submitted new and more recent figures to calculate the Xbox LTV.28 These figures were lower than the LTV figures that we used in our model for two reasons: (a) Our LTV was based on early data from Microsoft of a cohort of users who bought an Xbox []. More recent figures show that [], meaning that []. (b) Given that the Xbox Series X|S was launched in November 2020, []. Microsoft explained that []. Microsoft's internal data suggests [].

4.6 We consider that using Microsoft's most recent LTV data for the user cohort that we originally measured is likely to produce more accurate results, given Microsoft's submission that it contains more robust data on the spending patterns of this cohort. As such, we updated our LTV model on that basis, which yielded an updated Xbox LTV figure of $[].

The CMA made a huge error here though. They actually assumed a potential switching rate for non-COD players (i.e. the majority of PS players) to be the same as for very active COD players, in a COD foreclosure scenario. Why would you do that? Also they surely had a typo here, it should read "switch from Playstation".

4.11 We do not have sufficient evidence to precisely estimate the switching rate of non-surveyed PlayStation CoD gamers. In our Provisional Findings, we assessed different scenarios, one in which non-surveyed gamers did not switch to PlayStation at all, and one in which they switched at the same rate as surveyed CoD gamers. We considered these scenarios to represent two extremes of a possible range of switching rates for this group and presented both possible outcomes. Since these gamers would have played CoD for a more limited time and/or spent less money on it than surveyed gamers, we now consider it appropriate to focus on an outcome in which these gamers would not switch consoles in response to a total foreclosure.

The CMA made another error here. They effectively double counted (not literally double):

4.12 Fourth, in our Provisional Findings, we weighted our survey results by spend and gametime on CoD to reflect that gamers spend different amounts of time and money on CoD. We now recognise that LTVs already reflect the value of gamers (including the value of gamers who would switch from Xbox to PlayStation in response to a total foreclosure strategy). As such, it is not necessary to adopt a further weighting to approximate that value more closely.

I think they could have fixed the errors and still kept the same conclusions if they wanted to. I also think they would prefer they hadn't made such obvious mistakes in the first place, and they wouldn't want MS appealing this to CAT on those grounds and likely winning, as that would be a bad look.

This almost reads like an apology @Idas @Pixis @KnowinStuff :

4.17 ... we considered that it would be appropriate to revisit our interpretation and the weight that we place on Microsoft's broader strategic incentive to engage in a partial foreclosure strategy...
Click to expand...
 
C

C2brixx

Member
It was always curious to me why Phil Spencer always seemed positive about this deal ultimately going through. Even when what seem like bad news came out he'd appear in interviews saying, "he's confident because of actual discussions he's having with regulators".
 
thicc_girls_are_teh_best

thicc_girls_are_teh_best

Member
DeepEnigma said:
Down 1%, just like the rest of the tech markets. MSFT was down today too.
Click to expand...

We should probably watch to see what happens later in the day and over the next 4-5 days to determine what impact these new developments have on Sony's stock valuations. I can't picture a scenario where the deal seemingly getting approved with no major concessions has no impact on Sony's valuation; remember when the deal was simply announced last year and they lost $20 billion in market value?

Not saying something that drastic will happen again if/when the deal's approved but I think a lot of that depends on Sony's response. They're probably going to need a real response to this because long-term outlook seems like Microsoft will have a path to yet more publisher acquisitions and at some point, that will curtail Sony's ability to compete long-term.
 
sainraja

sainraja

Member
splattered said:
Well i mean... it's a matter of parity. If Playstation wants exclusive perks for its fanbase then it's only fair that Xbox gets the same for its users. I more see this as a "Xbox won't have exclusive perks as long as Playstation doesn't" but i can't envision a world in which Sony doesn't have something like that in place, they LOVE it.
Click to expand...
Umm...Bungie?

We shouldn't be so quick to forget MS and the Xbox 360. They LOVE it too. They are both businesses. That shouldn't be a surprise to you or anyone.
 
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Yoboman

Yoboman

Member
ToadMan said:
Partly …. they agree with MS that the way they determined the value of a person switching platform wasn’t accurate.

That led them conclude it would be fiscally unsound for MS to remove COD from other platforms, and that instead MS Will operate COD like Minecraft - i.e. permanently multiplat.

Then they dismissed the partial foreclosure scenarios as not insurmountable for competitors.

So now we await the cloud decision.

What this means for consoles? Well if MS do as they say and take a Minecraft approach with CoD then Sony will probably be happy - that’s basically multiplat with no time limit, and the offer to the EC of third party monitoring gets Sony parity.

So because the CMA erased the SLC for consoles there’s no more to this unless they receive new information.
Click to expand...
There is nothing fiscally sound about Xbox to begin with, it has been a loss leader for 20 years now. MS can and will take the revenue hit as soon as they can, and they can afford to do it.
 
DeepEnigma

DeepEnigma

Gold Member
thicc_girls_are_teh_best said:
We should probably watch to see what happens later in the day and over the next 4-5 days to determine what impact these new developments have on Sony's stock valuations. I can't picture a scenario where the deal seemingly getting approved with no major concessions has no impact on Sony's valuation; remember when the deal was simply announced last year and they lost $20 billion in market value?

Not saying something that drastic will happen again if/when the deal's approved but I think a lot of that depends on Sony's response. They're probably going to need a real response to this because long-term outlook seems like Microsoft will have a path to yet more publisher acquisitions and at some point, that will curtail Sony's ability to compete long-term.
Click to expand...
Everyone lost massive market value last year. The whole stock market did. My entire portfolio is down over 33%.

But you do make good points about wait and see.
 
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sainraja

sainraja

Member
Yoboman said:
There is nothing fiscally sound about Xbox to begin with, it has been a loss leader for 20 years now. MS can and will take the revenue hit as soon as they can, and they can afford to do it.
Click to expand...
Yeah, people shouldn't completely rule that out. MS is a company that can certainly do it.
 
T

tpieman2029

Member
Sony fucked up. If they had played their cards right they could have ensured non exclusivity for other Activision games or at the minimum worked out a deal for CoD to be on ps plus for a reduced cost. No the only thing xbox has to do to "keep their word" is keeping pumping out cod on playststion with parity to xbox. Team green got what they wanted.
 
thicc_girls_are_teh_best

thicc_girls_are_teh_best

Member
SEGAvangelist said:
I don't care about that. I just want to play SEGA games day one on Game Pass. It's entirely self-serving.
Click to expand...

If you like their games so much, why not just buy them when they come out, or wait for a sale? Hell, you could rent them through Game Fly, a 3P game subscription service, without needing to incidentally cheer for more industry consolidation along the way.

feynoob said:
Square maybe, but not take 2.
Sony cant buy them financially, unless they want to risk their business.

Take 2 is like 1/5th of their business.
Click to expand...

They could take out loans. Companies take out bank loans, remember? Or they could do a mixed offer of cash & shares. Companies do that as well,...remember?

Disney did at least the former when they bought Fox.
 
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DaGwaphics

DaGwaphics

Member
GHG said:
Ah yes, the American mobile phone owning, mcdonald's eating Japanese consumer.

wNzI5EE.jpg


https://www.counterpointresearch.com/top-5-smartphone-model-share-8-countries/

Such nationalists.

snake-salute.gif


Don't mistake Xbox's failures in that country for being indicative of the sentiment and habits in the country as a whole. Maybe talk to Xbox's marketing and product design teams, you might get your answer.

And travel more.
Click to expand...

I like the way you use products that Japan does not produce an alternative for (Mobile OS) :messenger_beaming:.

I don't follow the Japanese market, but they did used to have a pronounced habit of supporting their homegrown industries (from VCRs to Cars, whatever). It certainly could be possible that this is no longer the case today (I already acknowledged how this behavior is largely dead in the US).
 
Thirty7ven

Thirty7ven

Banned
thicc_girls_are_teh_best said:
We should probably watch to see what happens later in the day and over the next 4-5 days to determine what impact these new developments have on Sony's stock valuations. I can't picture a scenario where the deal seemingly getting approved with no major concessions has no impact on Sony's valuation; remember when the deal was simply announced last year and they lost $20 billion in market value?

Not saying something that drastic will happen again if/when the deal's approved but I think a lot of that depends on Sony's response. They're probably going to need a real response to this because long-term outlook seems like Microsoft will have a path to yet more publisher acquisitions and at some point, that will curtail Sony's ability to compete long-term.
Click to expand...

Big brains over there are more invested in anime and the music industry. Spending money on EVs? Are they serious? PlayStation became their biggest division and they only started aggressively buying studios once MS started buying publishers. I get it that they want to play it smart but VR?

Ken Kutaragi said all the way back that MS was PlayStation’s biggest threat. Bethesda was the alarm bell ringing.

You think Jim Ryan and co went out there trying to convince regulators to stop this acquisition because they don’t see where this is going? Now you wanna buy IP and it’s at a premium.

I don’t know man, sure a decade from now many of us will be old enough to not give a flying fuck but Sony got caught building sand castles during work hours.
 
thicc_girls_are_teh_best

thicc_girls_are_teh_best

Member
DaGwaphics said:
I like the way you use products that Japan does not produce an alternative for (Mobile OS) :messenger_beaming:.

I don't follow the Japanese market, but they did used to have a pronounced habit of supporting their homegrown industries (from VCRs to Cars, whatever). It certainly could be possible that this is no longer the case today (I already acknowledged how this behavior is largely dead in the US).
Click to expand...

Did it ever entertain you that maybe such "pronounced habit" was due to the fact it was Japanese companies that happened to make the best-quality products in those fields and served the interests of customers in that market the best? What American company was providing for gaming in Japan what Nintendo and Sony did in the '90s and '00s? What American camcorder or VCR was competing in quality with the best that Sony, Matsushita etc. were providing in the day?

Instead of trying to suggest it was just blind nationalism, maybe consider the products that were best just happened to be made by Japanese companies. To the point where many customers in the West reached similar conclusions with things like TVs.
 
Banjo64

Banjo64

cumsessed
DaGwaphics said:
I like the way you use products that Japan does not produce an alternative for (Mobile OS) :messenger_beaming:.

I don't follow the Japanese market, but they did used to have a pronounced habit of supporting their homegrown industries (from VCRs to Cars, whatever). It certainly could be possible that this is no longer the case today (I already acknowledged how this behavior is largely dead in the US).
Click to expand...
? Google Pixel is on that list. You can’t just put it down to the OS (as if people only look at software and not hardware) when Sony make high end smart phones.
 
Yoboman

Yoboman

Member
feynoob said:
Disney is not Sony.
Sony has multiple business with multiple competition. Spending that much money on PS business would have some consequences on their business.
They can risk it, but that will mean losing grounds to other competitors.
This is Sony business.
img_EN_20220520.jpg
Click to expand...
None of that is relevant, the question is whether Sony could afford it and they absolutely could.

Those other sectors are already being carried by Gaming revenue anyway
 
Yoboman

Yoboman

Member
Thirty7ven said:
Big brains over there are more invested in anime and the music industry. Spending money on EVs? Are they serious? PlayStation became their biggest division and they only started aggressively buying studios once MS started buying publishers. I get it that they want to play it smart but VR?

Ken Kutaragi said all the way back that MS was PlayStation’s biggest threat. Bethesda was the alarm bell ringing.

You think Jim Ryan and co went out there trying to convince regulators to stop this acquisition because they don’t see where this is going? Now you wanna buy IP and it’s at a premium.

I don’t know man, sure a decade from now many of us will be old enough to not give a flying fuck but Sony got caught building sand castles during work hours.
Click to expand...
I mean Sony have bought the biggest IP so far in the acquisition cycle with Bungie and Destiny. Though COD will overtake that once closed
 
phil_t98

phil_t98

#SonyToo
TheGodfather07 said:
yeah. it would be defensive acquisitions to ensure PS still has 3rd party games but i feel they've already lost some of the biggest ones. elder scrolls, fallout, doom, call of duty. microsoft even own crash bandicoot!! this is embarassing for sony. what could they even do that would compare? GTA is the only thing left.
Click to expand...

It isn’t embarrassing for anybody. Sony don’t have the finances for this type of deal. They will defiantly be on the look at at who they could buy and somebody like cap com would fit perfectly for them.
 
feynoob

feynoob

Gold Member
Yoboman said:
None of that is relevant, the question is whether Sony could afford it and they absolutely could.

Those other sectors are already being carried by Gaming revenue anyway
Click to expand...
Take 2 stock valuation is at $19b-$20b. Sony valuation is at $100b-$110b valuation.

That is just base take 2 without any set of price. Take 2 would demand more than $20b, due to Activision sale.

If Sony somehow managed to get that price, they will still have to compete with other big giants.
Activision shopped itself, when MS put $81+ per share price. Then they comeback and demanded current price.

That is what take 2 would do.

Sony would have to pay more than $30b just to buy take 2, assuming they take out a loan.

I don't think current Sony is willing to risk that. They aren't MS who have a stable printing business.
 
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