Although Elon Musk’s purchase of Twitter has put it on the back burner, the acquisition attempt that should really be considered the most in 2022 is that of Microsoft’s purchase of Activision Blizzard for more than 68,700 million dollars. If it comes to an end.
Right now the purchase is paralyzed under the antitrust lawsuit of the Federal Trade Commission (FTC) of the United States. And, in Europe, it will pass its own filters.
Microsoft, with Xbox, would become a larger ocean liner than it already is right nowand with the turn towards the world of video games in the cloud with Xbox Game Pass, it would hit the table against its main competitor: Sony.
Microsoft’s strategy responds to what has been an eternal war for years in the world of video games that has its roots in the original Atari, pioneer of video game consoles. This strategy can be summarized in something that may be simple, but which is certainly not easy: be something that the rest is not, but that can be used by the users of the competition.
The origin of Activision and how it changed the history of video games
The Atari 2600, released in 1977, it was the first commercially successful console to bring video games in cartridge format —previously Fairchild Channel F had done it. Until then, the machine and the video game were linked, but at that time the door was open for other developers to create video games. And, also, that a company could generate new products (video games) that would extend the relationship with the customer beyond when they buy the console.
That console worked very well. Atari made $100 million from cartridge sales, but 60% of it came from four or five blockbuster titles… that were created by the same four men: David Crane, Larry Kaplan, Alan Miller, and Bob Whitehead.
Seeing that Atari depended on them in such a percentage, they asked for a commensurate commission. It was denied them, so they left to create their own studio. Guess which one? Yes Activision.
Crane, Kaplan, Miller, and Whitehead felt that the video game industry should function more like the book, music, or movie industries, where the creative talent behind a project earned a larger share of the benefits based on its success.
And so the first studio was born, and then a video game company separate from the companies that had the software.
From the Nintendo model to the Sony model
Right at the beginning of the 80s, investment in companies in the video game sector skyrocketed, causing a bubble that caused many to go bust. The disaster was such that Nintendo did not want to call its console a console Nintendo Entertainment System, the well-known NES. Activision survived that purge, specializing in the first video games focused on personal computers.
The Nintendo model is well known and it cemented it in those years, creating its own games that had to be played on its own consoles, and only allowed games to third-party studios that passed various tests and paid them 30% of each license profit ( Reminds no one of Apple?).
A vision that over the years has ended up being valid only for the Japanese company and for no other. Today Sony or Xbox and of course the studios are playing more and more to be liquid for any platform.
Yes indeed, while Nintendo grew with hardly any competitors in the world of consoles that did not want to be called consolesvideo game studios were getting tired of all these obstacles… And there a new competitor appeared in 1989: SEGA.
In principle, SEGA was born with the same standards as Nintendo in terms of restrictions, but Electronic Arts threatened to leave it aside from its games, and it ended up giving in.
SEGA had its good years, but they passed and the company that actually took the opposite approach to Nintendo was Sony. After having an initial approach with Nintendo to collaborate, the other Japanese giant set out to create its own console, which would change the CD-ROM for the cartridges. The problem was that Sony was not a game developer, so it became completely dependent on third parties.
A new change of model.
The hegemony of PlayStation, the appearance of Xbox, and the failure of Nintendo’s GameCube
Since Sony had never developed video games, he proposed to Namco, then a benchmark in arcade games, to collaborate. Sony would have its games for PlayStation and Namco its technological support for its arcade machines. That worked, making Tekken and its console version a success.
The years passed again, and the PlayStation generations too. Sony not only opened up to developers, it also gave facilities that Nintendo did not give. Thus, with the turn of the millennium, the launches of PS2, Microsoft’s first Xbox and Nintendo’s new bet coincided: Game Cube. Today we all know which one lost out.
Sony’s opening to video games, from Xbox to software (since it was basically a PC to play) in the face of Nintendo’s closure, it made GameCube a disaster that the house of Super Mario would not overcome until the concept changes that Wii brought about and entrenched Switch. But when those consoles arrived years later, they were no longer competing for the same audiences or most of the same games as PS and Xbox.
In that time of triple competition, the studios began to develop their games trying to make them compatible with all consoles. For example, the first call of dutyfrom Activision, available in all of them.
And from the commitment to exclusivity to the cloud
The following years, however, would leave changes. Among them, Activision’s merger with Blizzard in 2008 to give rise to the huge studio that Microsoft intends to buy with franchises like Warcraft or Diablo.
At that time, Sony changed its policy seeking the exclusivity of some video games coinciding with the launch of the PS3. The time came when the consoles became almost distributors, brands, like the role of Paramount or Warner in the cinema.
That, along with the technological failure that was Kinect on the Xbox One, gave PS hegemony during that generation. It was time for a change, and there, everyone, also including several Big Tech arrivals in the sector with the intention of taking their piece of the cake, bet on the cloud, the era in which we are now and that has already left some corpses like Stadia.
That is why the purchase of Activision Blizzard by Microsoft is being so watched: it represents a new change of model. While Nintendo has always defended its product from the vertical, Sony is now still working defending the exclusive. However, the purchase could give Microsoft two options:
- Generate Activision Blizzard games now only for Xbox with exclusivity
- Develop an ecosystem that is horizontally open for all consoles, and therefore become something new. Being both a provider and competition from others.
Returning to the beginning: to be something that the rest is not, but that can be used by the users of the competition.