"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.
NEW RELEASES: This week's major video game release is Ubisoft's (UBSFY) "Tom Clancy's Rainbow Six Extraction," a multiplayer tactical shooter that launches on January 20, 2022 for PC, PlayStation 4 (SONY), PS5, Xbox One (MSFT), Xbox Series X/S, Google Stadia (GOOGL), and Amazon Luna (AMZN). The game will also come out day one on Xbox Game Pass.
MICROSOFT/ACTIVISION: Earlier Tuesday, Microsoft announced plans to acquire Activision Blizzard (ATVI), the gaming giant behind "Call of Duty," "Candy Crush," and "Warcraft," for $95.00 per share, in an all-cash transaction valued at $68.7B, 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 includes iconic franchises from the Activision, Blizzard and King studios like 'Warcraft,' 'Diablo,' 'Overwatch,' 'Call of Duty' and 'Candy Crush,' in addition to global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees," Microsoft said. 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. 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," said Satya Nadella, chairman and CEO of Microsoft. 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.
The Fly notes that the transaction, which would be the biggest in Microsoft's history, follows a litany of M&A for the company in gaming in recent years, including acquisitions of Zenimax, Double Fine, and Ninja Theory.
Additionally, the move comes as Activision Blizzard remains entrenched in controversy over reports and claims of sexual misconduct and discrimination at the company, with workers several months ago calling for the ], who allegedly was aware of such allegations and reportedly was responsible for some of the misconduct as well. In a letter to staff published by The Verge announcing the deal, Microsoft Gaming CEO Phil Spencer attempted to address the issue, saying the the tech giant is "committed" to inclusion in "every aspect of gaming, among both employees and players." "We deeply value individual studio cultures," Spencer said. "We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard."
Several hours after the deal was announced, The Wall Street Journal reported that Kotick is expected to leave after the deal closes, according to people familiar with those plans.
NPD HARDWARE: NPD analyst Mat Piscatella said that December 2021 consumer spending across video game hardware, content and accessories fell 1% when compared to a year ago, to $7.5B. 2021 consumer spending reached a record $60.4B, 8% higher when compared to 2020. December growth in subscription and recurrent spending across PC, console, VR and mobile platforms offset declines in premium game sales to keep content spending flat compared to the same period a year ago. Hardware and accessory spending fell in December 2021 when compared to December 2020. December video game hardware dollar sales declined 3% when compared to December 2020, to $1.3B. Despite the December declines, full-year 2021 hardware spending reached $6.1B, gaining 14% compared to 2020. The Nintendo Switch (NTDOY) was December 2021's best-selling hardware platform in units sold, while Switch and PlayStation 5 effectively tied for dollar sales leadership in the month. Nintendo Switch led 2021 hardware in both unit and dollar sales.
NPD SOFTWARE: On the software side, NPD analyst Mat Piscatella said that Activision's "Call of Duty: Vanguard" was December's best-selling game in the U.S. "Call of Duty" ranked as the best-selling video game franchise in tracked dollar sales for a record 13th consecutive year. Microsoft's "Halo: Infinite" debuted as the #2 best-selling game of December 2021. "Halo: Infinite" ranked as the December's best-selling game on Xbox platforms, while also leading sales among tracked titles on PC. Nintendo's "Pokemon Brilliant Diamond/Shining Pearl" was the 3rd best-selling title of December 2021, ranking 1st on Nintendo platforms for both Dec as well as 2021. 2021 dollar sales of Pokemon franchise physical software reached its highest annual total since the year 2000. Capcom's (CCOEY) "Resident Evil: Village" finished 2021 as the year's #8 best-selling game. Resident Evil franchise dollar sales reached a new all-time annual high for the U.S. market. Sony's "MLB The Show 21" was the 9th best-selling game of 2021, ranking 5th on PlayStation platforms, and 18th on Xbox. "MLB The Show 21" is the best-selling baseball game in U.S. history, Piscatella noted.
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