Top of mind: Happy Sunday! I know for sure that this email will be ignored for the next 90 minutes by my Nigerian audience because Nigeria is going head-to-head with Tunisia at AFCON.
Go Naija, we no dey carry last! 🇳🇬
3 big things:
- Microsoft buys Activision
- Meta & NFTs
- Netflix is suffering
Microsoft makes its biggest acquisition
The short: Gamers around the world are either celebrating or cringing at Microsoft’s acquisition of gaming company – Activision Blizzard, publishers of Call of Duty for $68.7 billion! It’s the company’s largest deal yet.
Not-there-yet: Acquisitions this size need to be cleared by regulators. The deal is expected to close in 2023, subject to gritty regulatory approvals, but Microsoft wants this bad enough and has agreed to pay a $3 billion breakup fee if the deal falls through.
Big deal: This deal lands Microsoft as number 3 on the world’s largest gaming leaderboard by revenue, behind Tencent and Sony. Activision Blizzard has nearly 400 million monthly active players in 190 countries and is expected to bring the company’s coveted game titles – Call of Duty, World of Warcraft and Candy Crush! – into its over 25 million subscribers Game Pass portfolio.
Why did Activision sell? Welp, another company faces the consequences of failing to address several sexual harassment and discrimination reports within its ranks. Investors weren’t happy about Activision’s handling of the reports, which affected the company’s relationship with the stock market. Microsoft only offered a way out.
Not all gamers: Some gamers are concerned about the consolidation in the gaming industry because if Microsoft makes Activision games exclusive to its Xbox Game Pass subscribers, PlayStation console owners will lose access to those games.
Eyes on the metaverse: Microsoft is gunning for the metaverse. While announcing the acquisition, CEO Satya stated that gaming “will play a key role in the development of metaverse platforms.” Activision’s immersive gaming technology and talent are huge incentives for Microsoft’s future metaverse plan.
Final Thoughts: Microsoft is clearly acquiring Activision at a discount. However, Activision’s current sexual harassment lawsuits and potential anti-trust concerns will open up another web of issues. So, let’s see what regulators say about this acquisition.
Meta bets big on NFTs
The short: Facebook and Instagram users will soon be able to create and sell Non-Fungible Tokens (NFTs), according to the Financial Times.
What it means: Instagram’s CEO Adam Mosseri has been teasing NFT features for a bit and fueling speculations about a potential NFT marketplace. According to the report, the new features will allow users to display NFTs as profile pictures across both platforms and mint new NFTs.
Mark leads the charge: NFTs have been described as critical to building a future digital marketplace in the metaverse, and Meta is looking to capture a share of the$40 billion industry.
Final Thoughts: NFTs are the new craze in town. Nobody fully gets it yet except Gary Vaynerchuk, but nobody wants out.
OpenSea’s recent market valuation is a testament to the market’s viability. In addition, more social platforms are integrating NFTs – Twitter just rolled out its Twitter Blue feature on iOS, allowing NFT owners to display their art as profile pictures. Meta is next.
Is Netflix failing or is the market overreacting?
The short: Your favourite streaming service, Netflix, suffered a significant 20% stock dip last week. Investors are concerned about its inability to meet the projected target of new subscribers post-pandemic.
By the numbers: Netflix reported 221.84 million subscriptions in 2021, compared to its target of 222.06 million paid subscriptions. The company added 18 million subscribers in 2021 compared to the 37 million subscribers in 2020 – no thanks to the family and friends sharing your account.
Deep Dive: Netflix has been unable to keep up with its growth targets. The company experienced a stall in growth in its core US and Canadian market. At some point, it lost 400,000 subscribers in 2022.
A lot of Netflix’s growth has come from international markets, where it provides its services at a significant discount. Still, Netflix dominates the market through its aggressive spending and investment in content production and acquisitions. However, the company’s revenue can’t catch up, leading to frequent price hikes to existing customers.
For example, Netflix’s standard plan at $15.49 is almost double its rivals, and it’s hiked up prices three times in three years. As a result, concerns are mounting over the company’s ability, a huge beneficiary of the pandemic lockdowns, to retain customers with the world opening back up.
The good stuff: Netflix can pat itself on the back as it achieved a significant milestone in international markets – the company attained a record quarterly revenue that exceeded $2.5bn for the first time in the EMEA region!
Final Thoughts: The 20% dip in Netflix’s value is a classic market overreaction. Netflix is a verb and is going nowhere for now. Netflix recently signalled interest in making a strong gaming play (building a gaming unit from scratch), and its international expansion could potentially pay off in the long term.
In the meantime, the company would have to figure out how to keep investors convinced of its progress and earn their patience.
Good luck to them.
That’s it for the week. Please do us a solid by sharing the newsletter with your network of tech enthusiasts. Invite them to join the party 🙂
See you next Sunday!