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recap

The Biggest Stories Of The Week (July 27, 2013)

by Mike Futter on Jul 27, 2013 at 04:00 AM

This was a busy week, with Microsoft's shift in self-publishing policy, Activision's newfound parentless existence, and a report about the PlayStation 4 that has some gamers concerned that the system isn't as powerful as once thought (hint: both next-gen consoles are going to blow you away). Before we get to any of that, I want to draw your attention to something special that Mechwarrior Online developer Piranha Games and Infinite Game Publishing are doing in memory of one of the game's youngest fans.

Sarah Marie Alida Parries passed away at the age of five after a fight with cancer. In her memory, the MechWarrior Online team has designed a special Mech, Sarah's Jenner. It's currently being sold for $10 and it's usable in game. All of the proceeds (net credit card fees and taxes) are being donated to the Canadian Cancer Society. The story has caught international attention, with the campaign at over $60,000 so far. If you are interested in learning more and contributing, you can see the mech and read the story on the official site.

Microsoft opens its arms for indie development.

It's getting to the point where I feel a little bad for Microsoft. It's not because they've made so many communications errors. That was the company's own doing. No, it's because no matter what announcements are made, the house of Xbox can't seem to catch a break with gamers.

On Wednesday we broke the story that Microsoft would not only be shifting gears on its long-held stance on independent developer self-publishing, but a lot of other changes were coming down the line. The Xbox One can be configured as a devkit (via hardware provisioning), beta tests would be streamlined through this same method, and the lengthy certification process facing developers would be boiled down to something akin to Apple's App Store (with a 14-day turnaround).

This is all good news (even if we don't know the details). Even if there are strings attached (aren't there always?), this is a major improvement from the current policy that requires a publisher to get in front of gamers. Furthermore, we understand that developers will be able to set their own release dates and prices. This will do much to reduce the craziness of the Xbox Marketplace release schedule (as detailed by editor Joe Juba recently). 

The fact that some gamers are laughing and deriding Microsoft for this move (regardless of whether it was planned or reactionary) is petty. We should want companies to be responsive to the consumer base. How about we cut Microsoft a break on this one and just celebrate that more indie developers (and their games) will be appearing on the Xbox One. We'll know more about how this is all going to work next month at Gamescom in Germany.

Activision leverages debt to free itself from an abusive parent.

Early in the week, we ran a report that Activision Blizzard parent Vivendi was about to make its expected move to use the publisher to pay down some of its enormous debt. The plan was to force a "special dividend" through Vivendi's 60 percent control of the company that would have bled $3 billion, $2 billion of which would have gone to Vivendi. Vivendi has been trying to sell its shares of Activision for a while now, but with the success of the company, the asking price was simply too high for most. So, CEO Bobby Kotick did the only thing he could to prevent the parent company from raiding Activision's rich coffers. He bought them out himself.

Pulling together about $8 billion ($5.83 billion from Activision itself financed through domestic cash and a number of major banks, $2.34 billion from independent investors led by Kotick and co-chairman Brian Kelly), Kotick orchestrated a sale of Vivendi's majority stake. The former parent still controls about 12 percent of the company, but it's not enough to pull a move like it was planning. 

There seems to be a lot of confusion about what this means for Activision, so let's run down what's happened financially (so far). Early yesterday morning, Activision held a special conference call to discuss the buyout. We'll know the full details on August 1, when the publisher holds its second quarter earnings call, but right now, the outlook for the remainder of the year is up. Stock prices, likewise, are up at this time (more than 15 percent). Why? 

The CEO of the company has made possible a scenario in which the publisher doesn't lose $3 billion with nothing in return. That same CEO has put up a significant amount of his own money (he and Kelly combined spent $100 million) evidencing confidence in the corporation. The company's offshore money was untouched, which means it still hasn't been subject to taxes (there is still about $3 billion or so in cash overseas). And the debt they've now incurred from three major banks is leveraged well. It's all good news for Activision.

Let's be clear, though. Activision has secured its independence from Vivendi. It is not an "indie." Activision is still a publicly traded company with a multitude of investors (now including Tencent, which owns 40 percent of Epic, and partnered with Activision on Call of Duty Online in China). The next Call of Duty game will not feature voxels. It will not be quirky or charming. It will not turn its nose up at Call of Duty and tell you that Call of Duty is ruining the game industry because ludonarrative dissonance. 

That would be pretty funny though... right?

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