Can someone explain to me why Microsoft needs to own a company like Warner to have a successful trabsmedia strategy? I am genuinely not sure what they get with that. It’s not like the showrunners, directors, actors, and writers are salaried employees at Warner.
They can simply have a group of talented folks within Xbox to manage partnerships with production companies and distributer.
HBO Max has +100 million subscribers and makes it one of the most popular SVOD platforms with Netflix and Disney +
HBO series are among the highest rated.
you have an incredible quantity of IPs the DC Universe, Wizarding World, Rick and Morty, Looney Tunes, Cartoon Network which speaks a lot to the youngest (which XBOX does not have too much apart from Minecraft, Banjo, Crash, Spyro which for me are more aimed at an adult audience today as evidenced by the difficulty of Crash Bandicoot 4) but Cartoon Network gives you access to dozens of characters that children know and if XBOX wants to grow it must reach the new generation.
acquiring Warner or Disney would be the most sensible acquisition to reach a young audience
This discussion was a reaction to the success of Fallout, it’s impact on game sales, and (presumably) how they can do more of that. I am specifically curious how buying this company is the best option to create more ‘Fallout’ moments.
I ask because I am not of the belief that film/TV is an industry where you gain a lot from owning the means of production like you do in gaming. Someone more familiar with how projects originates, are staffed, and produce is free to correct me though as I am no expert.
I think the main two arguments would be:
IP - Even if MS adapt all their video game IP’s they would still need some of those big hitters that are already well known to compete with the competition. IP’s like Batman, Superman, Game of Thrones, Matrix, Harry Potter & Bugs Bunny are known world wide, Batman for example is frequently rated in the top 5 biggest global IP’s.
Well established Platform - Trying to enter the market against Netflix, HBO, and Disney which have already established hundreds of millions of customers would be extremely difficult or near impossible, especially when they don’t have any IP’s which are already well known in Film & TV. Disney managed to enter the subscription market but they had Disney, Pixar, Marvel and Star Wars content! Starting with 95 million subscribers would definitely give them the ability to compete.
Well quite simply you earn more money the revenues from the Fallout series are shared between Microsoft and Amazon I don’t know the percentages. but if Microsoft had total control and their own SVOD platform they would earn 100% of the revenue. they would probably be freer to promote Gamepass or see a Gamepass + HBO merger, they would obtain more IPs for video games. There’s a huge benefit to having control over dozens of important pop culture IPs.
So your thought is that Microsoft has a goal of getting in the streaming TV/movies business?
I don’t necessarily know if it’s their goal but I think to go back to the original point about transmedia then I think it would be the smart thing to do, yes.
However if they are going to do it then I think they need to have a successful TV/Movie streaming service first and foremost. There’s going to be no point making their own new service with video game adaptations and next to no subscribers.
If they have a successful Movie/TV subscription service AND a successful game subscription service they can piggyback from eachother. In this example they could influence 95 million HBO subscribers to play games based on their successful IP’s (potentially signing up to GP or buying the games) and GP subscribers could be encouraged to sign up to watch HBO shows and video game adaptations on their service.
You would be complementing and growing both services, especially if they started a HBO & GP combined subscription.
So a massive acquisition in a risky industry to improve their split in a streaming service that barely makes a profit.
I don’t know about you guys, but signing partnerships and making money from the show and benefiting from the trabsmedia bump seems like the better solution to me.
Agreed. Partnership is the best. Another thing will be to acquire the IP if they can. I would rather Microsoft acquires something smaller that hasn’t been relevant in a while like the CrossGen comics and work with that.
I wouldn’t say it barely makes a profit.
Netflix has regularly been bringing in $4-5 Billion in net income each year. Both Disney Plus and HBO Max wasn’t as successful with $2.3 Billion net income last year but it’s still nothing to sniff at.
And if the aim is transmedia where it grows both markets then it could help make their gaming acquisitions more valuable (and bring more subscribers into the HBO side and therefore more profitable).
Microsoft could probably integrate Xcloud with Max to make it known to the general public. They could promote Microsoft/Xbox products on Warner television channels. They could sell advertising on a large scale. Didn’t they sign a deal with Netflix about this? They could use AI to improve it. I think the benefits go well beyond movies, television, or video games, even if those are the ones that interest us the most. Microsoft and Warner sell services, the synergy between the two companies is more than interesting. It is also the only big acquisition they can still make in the West. Are you saying there are better acquisitions to make? Which ones? I like Japan, but Square or SEGA wouldn’t bring as much to Microsoft as Warner. On the video game side, maybe, but that would ignore 85% of Warner’s business and the advantages Microsoft could get. Microsoft was willing to acquire Warner Games for several billion without any IP and Activision was considering a merger with Warner Bros as part of a transmedia strategy, so I think there must still be some interest. I’m not saying that Microsoft will necessarily acquire Warner, I don’t know, but for a company like Microsoft, Warner makes a lot of sense.
I think a WB acquisition is not a gaming acquisition and there are a billion non-gaming acquisitions/investments they could make with more upside than WB. I’m not comparing WB to to Sega or Capcom, I’m comparing WB to growth industries like cloud and AI.
Of course, it’s not a gaming acquisition, but Microsoft would still get a Bethesda-level publisher and a very big IP. This is not the main aspect of this acquisition, but they could find it interesting since gaming is their third source of income.
Microsoft regularly invests in the cloud and AI, but that has never stopped them from making other acquisitions. It’s a $3 trillion company, they don’t really have to choose where to put their money and I doubt they can make big acquisitions in cloud and AI anymore. They will probably continue to make moderate investments so as not to get in trouble with regulators. As a big non-gaming acquisition, I could expect TikTok if they had the opportunity, but I still think that Warner is a great opportunity that has a better chance of happening.
We have often been surprised by Microsoft’s acquisitions. Xbox was expected to die and they made these acquisitions in 2018. It was said that Microsoft could never acquire a publisher and they bought Bethesda. It was said that Microsoft could never acquire Activision, EA or Take Two, and a few days later they announced the acquisition of Activision. Now “Microsoft won’t buy Warner because the industry is in bad shape”… Dude, they just spent 80 billion on a brand that was dying lol
This.
Although it isn’t a gaming acquisition, it would have huge benefits for Xbox IMO.
One of the main reasons we hear from Xbox that they don’t do ‘pop culture’ games is the licensing costs. If MS acquire some of the biggest global IP’s via WBD then the licensing issues wouldn’t be an issue anymore.
The transmedia options and increased awareness of the Xbox, Bethesda and ABK brands to HBO subscribers would of course be one of the biggest factors.
Then they of course get the talented WB games studios: Avalanche (Hogwarts), NeverRealm (Mortal Kombat), TT Games (LEGO), Monolith (Middle-Earth), WB Boston, WB Montréal and Rocksteady (DC & Arkham Games).
Hogwarts Legacy and Mortal Kombat 1 were two of the top selling games last year, in fact Hogwarts dethroned Call of Duty as the #1 selling game and HBO have a Harry Potter show in development!!!
One thing we know is that MS likes to diversify their business segments, therefore it really wouldn’t surprise me if they opened up another segment to coexist against Windows, Office, Xbox, Azure, AI & Linkedin etc. IMO HBO would actually sit quite well with Xbox and LinkedIn as their other consumer brands.
This is the most important point, MS and Xbox don’t have to risk a massive investment in SVOD when they can reap the benefits from partnership with the current platforms. Fallout ip success is actually due to Amazon prime, Minecraft will be because of Netflix. They have the reach and they incur all the major costs of streaming. Even cloud gaming has been a massive sunken cost, and they realized opening to partnerships who can take the risk and costs.
Also another major reason is the increase in MS employees. Workforce salary, benefits, and compensation is a heavy weight profits. By partnering and contracting they remove that burden.
WBD has 35,000+ employees. for $20B-$60B debt included. Net Income: -$3.2B
I am an xbox gamer who would love WB/DC, I think they have some of the best IP and Quality, but they do not make any sense as an acquisition in their current industry and the overall economy. MS could just purchase a minority stake in WBD without the baggage if the terms are beneficial to both parties.
Yes and in 2022 LEGO Star Wars was at the top of sales. Mortal Kombat is the best-selling fighting game. Multiversus was a huge success. The GOT mobile game made a huge amount of money. Batman is one of the most popular superheroes. There is great potential to develop with the Warner IP. Microsoft could develop a lot more games and make a ton of money. They would also save Warner Games from GAAS. The success of James Gunn’s DC universe could allow certain characters to gain popularity. Warner Games is underrated because it has been mismanaged for years but they are truly sitting on a gold mine.
Thank you! That’s what I’ve been wondering to myself as well when I see all this chatter. No need to own it when you can license it out.
I’ve said it many times and Microsoft should want no parts of WB. I don’t think Microsoft wants to deal with the headache of Warner’s poor management. There’s way too many execs to cut to make things right with Warner. Plus, you have to also look they’re more than film and they also own stuff like music, tv stations and a bunch of other forms of entertainment.
Also, HBO Max is very regional and I believe the app is only available US, and select European and Latin countries. The app itself isn’t global like Netflix, Disney, and Prime.
The only thing that would be valuable about WB would be the IPs they own, but even then there’s a lot of mess surrounding their IPs and I don’t think Microsoft is the company to clean up that mess.
Lastly, you’re better off doing what @pg2g said about licensing out Microsoft IPs and shop projects to studios. However, I think they need to be selective who they partner with, but Microsoft seems to have stuff lined up for transmedia, and hopefully those ventures work out. Anyway, WB isn’t worth the headache, but IPs would be nice to have
Middle-Earth Enterprises & Friends (such a stupid name) looks highly tempting!!!
I think these studios deserve to just get away from Embracer at this point.
https://twitter.com/gameswirtschaft/status/1782311752878670196?t=92wfNA0-vIdu6-iQTEqsbA&s=19
With regards to Middle-earth and Friends it would be smart business for Amazon and MS to come sn pick apart (bad phrasing)what specifically they want to lessen regulatory oversight, in my uninformed opinion.