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[Column] General: How Might Tencent's Investment Affect Activision?

SBFordSBFord Associate Editor - News ManagerThe Land of AZPosts: 16,596MMORPG.COM Staff Uncommon

Last week, Activision-Blizzard bought itself out from under Vivendi Universal. One of its heavier investors is Asian games publisher TenCent. In our latest Free Zone, we take a look at the potential changes that might come along as a result. Read on and then leave your thoughts in the comments.

On Friday, we learned that CEO Bobby Kotick figured out a way. Vivendi will sell 49 percent of its current 61 percent holding, receiving $8.2 billion. Most of this amount will be from Activision itself, roughly $1.2 billion from the $4.5 billion it has in cash and investments plus $4.75 billion to be raised by issuing new debt (the company has none right now). The rest, another $2.34 billion, will come from an investment group pulled together by Kotick and Co-Chairman Brian Kelly. Those two are apparently “only” kicking in $50 million each, which means the other partners are funding almost 96% of the latter sub-total. 

Read more of Richard Aihoshi's The Free Zone: How Might Tencent's Investment Affect Activision?

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Comments

  • KonfessKonfess Dallas, TXPosts: 949Member Uncommon

    Oh, Silly Rabbit.  WoW hasn't lost 4.3 Million in Subscribers, MMO gaming has lost 4.3 Million gamers.  When the economy turns around they will all be back, and playing WoW again.  Listen, our Great Grand Children will be subscribers to WoW, before it goes fully free to play.  A/B might even listen to the player base and eliminate the extended free trial from all servers, except for a few remaining free trial only servers.

     

    My question is, does this buy back kill the parasite?  Does Vivendi still have a right to dividends?  Can they still ask for that 4+ Billion?  If Vivendi can't or won't, the World of Halo (aka Titan) is back on track.  I know, "but A/B doesn't own the rights to Halo."  They are just publishing Bungie's next project.  But guess who is shaking in their boots to get an IP Tap into the Cash Cow A/B?  Microsoft, would do anything to turn the Halo IP into a 4+ Million subscriber a month money stream.  The only worry I have, is it will be a Win 8+ & Xbox One only application.

    Pardon any spelling errors
    Konfess your cyns and some maybe forgiven
    Boy: Why can't I talk to Him?
    Mom: We don't talk to Priests.
    As if it could exist, without being payed for.
    F2P means you get what you paid for. Pay nothing, get nothing.

  • TorvalTorval Oregon CountryPosts: 7,204Member Uncommon

    Great article Richard.  I really wanted someone to ask this question.  I didn't see much response to Tencent's participation, but couldn't help but wonder.  I will definitely be watching this closer.

    My guess is that if Tencent continues to be successful they will eventually try to buy controlling interest.

    I also think that sub-free is coming down the pipeline eventually (sooner than not).  They are putting together an in game cash shop.  I think that is telling.  They are losing dedicated subscriptions which in itself doesn't necessarily mean a thing.  However, I think a major factor to its continued subscription numbers is due to the momentum and inertia it has with its core playerbase.  People have been used to subscribing and they are invested heavily into the game so they will continue to subscribe rather than start over fresh in a new game.  The loss of subs is more than a loss of revenue.  It eats away at the inertia the game has.  Once that falls below a certain point players will not consider it the only option in the room.

    Additionally I think the move to sub-free will become more and more attractive due to the large past playerbase they have.  Even if they make more money with 5 million subs than most other games, they could possibly make much more by going sub-free and garnering the cash shop revenue from a wider base.  That potential revenue lost, by remaining sub-locked, will be hard for the board to explain to Fidelity that doesn't care about the gamer morals and mores of revenue models.

    This will be a fun and interesting one to watch.

  • Attend4455Attend4455 BirminghamPosts: 161Member
    Originally posted by Torvaldr

     

    .. snip .. Even if they make more money with 5 million subs than most other games, they could possibly make much more by going sub-free and garnering the cash shop revenue from a wider base.  That potential revenue lost, by remaining sub-locked, will be hard for the board to explain to Fidelity that doesn't care about the gamer morals and mores of revenue models.

    This will be a fun and interesting one to watch.

    well that is the big *if* as in if you were Fidelity would you risk 5 million sub income versus an unknown number of F2P tourists / possible spenders ? I'm sure Fidelity only care about the bottom line and as I have no stake here I'm interested to see how this plays out as well

    I sometimes make spelling and grammar errors but I don't pretend it's because I'm using a phone

  • DauzqulDauzqul Detroit, MIPosts: 1,402Member Uncommon
    Originally posted by Konfess

    Oh, Silly Rabbit.  WoW hasn't lost 4.3 Million in Subscribers, MMO gaming has lost 4.3 Million gamers.  When the economy turns around they will all be back, and playing WoW again.  .

    The economy has very little to do with people not playing MMOs. It has everything to do with people bored of the same stuff. The current trend is this: If you've played WoW, you have pretty much experienced every MMO created post-WoW.

    People get bored and quit. I quit playing MMOs years ago. I think a lot of people are in my boat, where they want to experience something new within the MMO realm, yet become bored of "the new game" after the first week.

  • TorvalTorval Oregon CountryPosts: 7,204Member Uncommon
    Originally posted by Attend4455
    Originally posted by Torvaldr

    .. snip .. Even if they make more money with 5 million subs than most other games, they could possibly make much more by going sub-free and garnering the cash shop revenue from a wider base.  That potential revenue lost, by remaining sub-locked, will be hard for the board to explain to Fidelity that doesn't care about the gamer morals and mores of revenue models.

    This will be a fun and interesting one to watch.

    well that is the big *if* as in if you were Fidelity would you risk 5 million sub income versus an unknown number of F2P tourists / possible spenders ? I'm sure Fidelity only care about the bottom line and as I have no stake here I'm interested to see how this plays out as well

    Yeah, that's the big if.  The complementary question is why would Tencent and Fidelity invest in something so predictable.  There are other pieces of the entertainment industry that are lucrative if they wanted a sure thing.  Why Acti/Blizz?  They do have D3 and their new card game, but their cash cow is aging.  The timing for investment by a venture capitalist, which is about taking risks, doesn't seem right if they were just looking for stable returns.

    While Fidelity might not want to take unrealistic risks, venture capitalists are by nature inherent risk takers.  It seems fairly common for them to come in and purchase an entity, shake it up, and resell it for a nice profit.

    Something isn't quite adding up, but it's hard to say what that something is.

  • KothosesKothoses GalwayPosts: 760Member Uncommon

    In every sub game that has gone free to play the reports coming from those studios in investor calls and such is that income rose post transation, and even once it leveled off it still was higher than sub only.

     

    Tencent already have an investment in Riot IIRC to the sum of $400 million and now have a much bigger investment in Actiblizz giving them leverage and interest in the two biggest online games in the west.  

     

    This is a win win scenario in my opinion for both Tencent and Actiblizz, firstly Tencent get massive insight into how to run a western based mmo, maximised monetization of players, western  marketing and such.  In return Actiblizz gets a company with great insight into esports (Which is something wow has long chased with the arenas) and F2P models.  

     

    Wow may be declining, but its hard to ignore the fact that it shrugged off the loss of more subscribers than all but 2 of its western competitors have.  We all know winter brings players back to MMOs and summer sees them leave so its hard to listen to the latest clarion call of wow is dying.

     

    I predicted about 18 months ago that over the next 4 years we would see wow decline to a position of 3-4 million stable subscribers maintaining its market lead in the west but seeing its share eroded by newer games with interesting USP's and I stick by that, but even that many if you include an ingame cash shop ontop of the subs is a license to print money.

     

    If they go much lower then and only then will they go free to play, but why go f2p when wows players are happy to pay a sub AND pay for "Cosmetic and convenience" cash shop items ontop of the sub.

     

    Promoting thought a new Gaming video blog http://www.youtube.com/user/quinnthalas discussing games, gamers and the internet with gameplay footage as background.

  • KonfessKonfess Dallas, TXPosts: 949Member Uncommon
    Originally posted by Dauzqul
    Originally posted by Konfess

    Oh, Silly Rabbit.  WoW hasn't lost 4.3 Million in Subscribers, MMO gaming has lost 4.3 Million gamers.  When the economy turns around they will all be back, and playing WoW again.  .

    The economy has very little to do with people not playing MMOs. It has everything to do with people bored of the same stuff. The current trend is this: If you've played WoW, you have pretty much experienced every MMO created post-WoW.

    People get bored and quit. I quit playing MMOs years ago. I think a lot of people are in my boat, where they want to experience something new within the MMO realm, yet become bored of "the new game" after the first week.

    Total unemployed______________________________4.9% Sept 1999

    Total unemployed_____________________________13.4% May 2013

    "As a result, the labor force is now at its smallest size since the 1980s"

    There are 4 lights. Ok, I will correct my math for those that quit, because they got board (weren't allowed to grief) WoW hasn't lost 4 Million in Subscribers, MMO gaming has lost 4 Million gamers.  When the economy turns around they will all be back, and playing WoW again.

    That correction now accounts for every gamer out there playing any other MMO right now..  300k have left WoW and are now spread out to form the entire MMO gaming population not subscribed to WoW.

    Pardon any spelling errors
    Konfess your cyns and some maybe forgiven
    Boy: Why can't I talk to Him?
    Mom: We don't talk to Priests.
    As if it could exist, without being payed for.
    F2P means you get what you paid for. Pay nothing, get nothing.

  • jagd1jagd1 istanbulPosts: 281Member
    Originally posted by Konfess

    Total unemployed______________________________4.9% Sept 1999

    Total unemployed_____________________________13.4% May 2013

    "As a result, the labor force is now at its smallest size since the 1980s"

    This is one of worst manipulation try i ever seen . Why do you post 1999 numbers ?  Than how wow made that numbers before decline ( with that small labor size  ) ? Be honest  if you want to play with numbers.

  • zymurgeistzymurgeist Pittsville, VAPosts: 5,211Member Uncommon
    Activision Blizzard isn't Tencent's gateway into the west. Tencent  is Activision Blizzard's gateway into the East. How much of Tencent's buy in was in the form of stocks?

    "Strong and bitter words indicate a weak cause" ~Victor Hugo

  • jesteralwaysjesteralways ChittagongPosts: 1,021Member Uncommon
    Originally posted by zymurgeist
    Activision Blizzard isn't Tencent's gateway into the west. Tencent  is Activision Blizzard's gateway into the East. How much of Tencent's buy in was in the form of stocks?

    they are passive buyers and their payment worth 12% but  the owner of this 12% will be kelly and boby as far as i have read in another website. tencent will be given some services by activision-blizzard which obviously are not disclosed to the press. but i am thinking from now on all of the A-B products in east will be handled by tencent.

    i want an open world, no phasing, no instancing.i want meaningful owpvp.i want player driven economy.i want meaningful crafting.i want awesome exploration, a sense of thrill.i want ow housing with a meaningful effect on my entire gameplay experience, not just some instanced crap.i want all of these free of cost, i don't wanna pay you a cent, game devs can eat grass and continue developing game for me.
    Seems like that is the current consensus of western mmo players.

  • NephaeriusNephaerius Baltimore, MDPosts: 1,539Member Uncommon

    For the first time ever I'm actually pretty skeptical of Blizzard's future success.  While their separating from Vivendi has provided them with current net gains the reality is Vivendi has been trying to get rid  of them for about 2 years now and no one wanted to buy.  Also every one of their titles is struggling with expected performance (I'm not saying they're unsuccessful but they did not meet expectations especailly with long term player retention):

    WoW: Losing subs

    SC2: Dead esports game (you can argue this if you want but it's definitely not meeting expectations and struggles; there's also signs like LoL not running LCS at the same time as large DotA2 stuff while they have no prob running right over top of SC2)

    D3: Sold well but failed to retain players long term.

    Titan: Back to the drawing board.

    Hearthstone: Who knows how this will turn out, but I really don't hold any high hopes.  This game seems like a targeted cash grab with the ability to sell packs of random cards.

    Blizzard All Stars (MOBA): Haven't heard anything in ages and at last report was designed around being easily accessible to casual players and leaving a lot lacking for any sort of competitive scene.  More of an Battle.net game than a stand alone.

    I don't think this is the same Blizzard of the past and I don't have a lot of hope for their long term future.

     
     

    Steam: Neph

  • SpottyGekkoSpottyGekko RotterdamPosts: 3,845Member Uncommon

    When I read the press release about the buyout, the presence of Tencent in the consortium immediately caught my eye. Very intriguing.

     

    Allowing a direct competitor to buy a chunk of your stock is an interesting tactic. But then again, if that is what it took to get away from Vivendi, it may have been worth it in the long run.

     

    Is it a very low profile maneuver, the "thin end of the wedge", so to speak ?

    Or just a "good investment" in an industry they are very familiar with ? Time will tell...

  • ChaosIncChaosInc Reedsburg, WIPosts: 112Member
    Yeah, because those 4.3mil couldn't have migrated to other games. If they aren't playing WoW they aren't playing anything? You are an idiot.

    NEWS FLASH! PAYING THE SUB IN F2P = NO DIFFERENCE THAN P2P GAMES!

    Why the hell can't the whiners comprehend this?

  • TorvalTorval Oregon CountryPosts: 7,204Member Uncommon
    Originally posted by Nephaerius

    For the first time ever I'm actually pretty skeptical of Blizzard's future success.  While their separating from Vivendi has provided them with current net gains the reality is Vivendi has been trying to get rid  of them for about 2 years now and no one wanted to buy.  Also every one of their titles is struggling with expected performance (I'm not saying they're unsuccessful but they did not meet expectations especailly with long term player retention):

    WoW: Losing subs

    SC2: Dead esports game (you can argue this if you want but it's definitely not meeting expectations and struggles; there's also signs like LoL not running LCS at the same time as large DotA2 stuff while they have no prob running right over top of SC2)

    D3: Sold well but failed to retain players long term.

    Titan: Back to the drawing board.

    Hearthstone: Who knows how this will turn out, but I really don't hold any high hopes.  This game seems like a targeted cash grab with the ability to sell packs of random cards.

    Blizzard All Stars (MOBA): Haven't heard anything in ages and at last report was designed around being easily accessible to casual players and leaving a lot lacking for any sort of competitive scene.  More of an Battle.net game than a stand alone.

    I don't think this is the same Blizzard of the past and I don't have a lot of hope for their long term future.

    All good points, but your last sentence stands out to me.  While I'm sure Blizzard has great talent on board right now a good chunk of the creative forces behind their early projects have their own gigs right now.  There is Runic, Arena Net, and many others with early ties to Blizzard.  Right now I think they're very weak with regards to driving creativity and that doesn't bode well.

  • KonfessKonfess Dallas, TXPosts: 949Member Uncommon
    Originally posted by jagd1
    Originally posted by Konfess

    Total unemployed______________________________4.9% Sept 1999

    Total unemployed_____________________________13.4% May 2013

    "As a result, the labor force is now at its smallest size since the 1980s"

    This is one of worst manipulation try i ever seen . Why do you post 1999 numbers ?  Than how wow made that numbers before decline ( with that small labor size  ) ? Be honest  if you want to play with numbers.

    Play with numbers?  Those are real numbers and government source material.  Why did I go back to 1999.  I went back to before the shyt hit the fan is why.  My mistake was discussing Economics with an audience not up to the challenge.

    Pardon any spelling errors
    Konfess your cyns and some maybe forgiven
    Boy: Why can't I talk to Him?
    Mom: We don't talk to Priests.
    As if it could exist, without being payed for.
    F2P means you get what you paid for. Pay nothing, get nothing.

  • KonfessKonfess Dallas, TXPosts: 949Member Uncommon
    Originally posted by ChaosInc
    Yeah, because those 4.3mil couldn't have migrated to other games. If they aren't playing WoW they aren't playing anything? You are an idiot.
     

    What other games?  The next subscription game to break 1 Million is predicted / expected to take 11 years to do so.  Only self deluded businessmen, think they can tap into that missing 4.3 million.  The gaming industry has looked around, and those gamers have not show up on any other games roster.  As far as the game industry can tell, 4 Million gamers aren't playing anything.

    Pardon any spelling errors
    Konfess your cyns and some maybe forgiven
    Boy: Why can't I talk to Him?
    Mom: We don't talk to Priests.
    As if it could exist, without being payed for.
    F2P means you get what you paid for. Pay nothing, get nothing.

  • CnameCname KinabaluPosts: 125Member Uncommon
    Originally posted by jesteralways
    Originally posted by zymurgeist
    Activision Blizzard isn't Tencent's gateway into the west. Tencent  is Activision Blizzard's gateway into the East. How much of Tencent's buy in was in the form of stocks?

    they are passive buyers and their payment worth 12% but  the owner of this 12% will be kelly and boby as far as i have read in another website. tencent will be given some services by activision-blizzard which obviously are not disclosed to the press. but i am thinking from now on all of the A-B products in east will be handled by tencent.

    In China, WoW, SC2 and Hearthstone are handled by NetEase, Tencent's biggest competitor for online games.

    Much like Samsung, Tencent  excels in both competing and collaborating with rivals at the same time.

    "A game is fun if it is learnable but not trivial" -- Togelius & Schmidhuber

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