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Microsoft cancels a video game deal | |
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| Time: 17:05 EST/22:05 GMT | News Source: Red Herring | Posted By: Byron Hinson | ||
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Microsoft hasn't bought any game publishers to bolster the fortunes of its Xbox video game console, but not through lack of trying. This spring the Redmond, Washington, software giant almost struck a deal with Sega Enterprises to buy a controlling stake in the Japanese game publisher. But the deal turned out to be too complicated to pull off before the industry's big trade show, the Electronic Entertainment Expo, which took place in May. The failed deal shows Microsoft's dilemmas as it deals with the expected losses related to the Xbox. According to sources familiar with the matter, Microsoft planned to buy a controlling interest in Sega, which would in turn use the cash to acquire Japanese rival Square. Based on Sega's current market capitalization, a controlling stake in the company would have cost Microsoft more than $1.8 billion. | ||
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| #1 By 20 (143.166.99.242) at 7/16/2002 5:41:44 PM |
| Only 1.8? (Microsoft reaches into pocket, sifts around a little, pulls out some change) Um, here's 5.2, is that close enough? Ah, just keep the change. |
| #2 By 3339 (65.198.47.10) at 7/16/2002 6:02:33 PM |
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daz, a controlling stake, not outright ownership... so that means that it would still have to deal with the complexity of a large minority stake that is opposed to it. That also means that Sega is worth 3.7 Billion + quite a bit more (who knows what a controlling share is)--what percentage of that 3.7 Billion+ comes from Nintendo, Sega Dreamcast, PSOne, PS2 and not XBox? I'd say 80%.
So what value is it to MS to pay for 15-30% of a company in order to kill 80% of it. That's paying nearly 2 billion dollars to turn a company into a <740 million dollar company--a company which can probably no longer survive if you kill off the Sega, PS, and Nintendo business... and remember, they still would only own less than half of it. The rest of the shareholders would be mighty pissed to say the least... pretty likely they would re-seize control, be bought by someone else after being screwed over by their own majority shareholder, or it simply would be too late, and Sega dies off... Realize that both Square and Sega can maintain independence without being bought outright (there's many ways of protecting yourself), but they need investment to take care of their cash problems. In other words, MS is unable to buy Square and Sega outright at this moment. For the typical softy/kill 'em all type that sounds cheap and doable, but it's not just the $ figure, this would have been pure suicide. This post was edited by sodajerk on Tuesday, July 16, 2002 at 20:09. |
| #3 By 20 (143.166.99.177) at 7/16/2002 6:17:56 PM |
| sodajerk: Thanks for the dissertation, but I was just joking about how $1.8 is pocket change to Microsoft who has ~$40 billion sitting in the bank. |
| #4 By 3339 (65.198.47.10) at 7/16/2002 7:33:36 PM |
| daz, don't worry, I don't take you seriously.... whether or not it's a joke. I guess you still can't see the nightmare this would have been... You still think it's just about a dollar figure, huh? No wonder why you come up with such brilliant... and HILARIOUS stuff sometimes. |
| #5 By 3339 (65.198.47.10) at 7/16/2002 8:54:57 PM |
| did you read the article, robin? Sega basically pulled out of it because they realized MS was trying to kill their business. If you are a relatively successful and huge game developer, why would you want to develop games for just one platforms when you have names that are wanted on all three if not more? Sure, MS would have loved to have killed off say 80% of Sega's business, but they couldn't. |
| #6 By 3653 (65.190.70.73) at 7/17/2002 12:07:16 AM |
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and sodajerk makes a couple of new enemies. Good to have you here F-stick!
Regarding the story... WOW! This shows the seriousness that Microsoft has for the console market. WOW! The company puts its money where its mouth is. I bet this has nintendo sweating as msft is not playing around anymore. This is serious. That $1.8B WILL be spent on xbox one way or another. And msft's aim is sound... get sega, get square. They WILL find a way. This post was edited by mooresa56 on Wednesday, July 17, 2002 at 00:10. |
| #7 By 3339 (67.119.193.22) at 7/17/2002 1:23:43 AM |
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Ooh, touchy. My point was: MS failed at grabbing Square (they tried in 99) and would have lost a buttload--everybody since has been sitting in the wings waiting to see who will gobble them up cheap (they had a big artificial run-up because of the FF movie). And they failed in trying to grab at Sega (they tried in 99 and 2000 and again this spring). "I bet this has nintendo sweating as msft is not playing aroung anymore."--No, Nintendo was laughing ther asses off 2 years ago as MS failed time and time again to BUY their way into the game and they are now too, when they failed a third time. Ultimately, it would have hurt them, but they failed anyway, and they should stick to growing and could grow organically the way the real game developers within MS think they should grow. Gates wanted to not only be one of the biggest game dev'ers but also to kill one of the other big guys before they built a console. In other words, they are doing about as well in the game developer acquisition hunt as they are doing at investing in cable. How much do you think four failed attempts cost them? How much attention was taken away from real business? How do you think it reflects on their future attempts to buy other develoeprs and publishers? Yeah, this is great--I can't wait for their fourth attempt. This post was edited by sodajerk on Wednesday, July 17, 2002 at 01:49. |
| #8 By 3339 (67.119.193.22) at 7/17/2002 1:54:17 AM |
| Oh, what's Bungie? I've never heard of... Yeah, whatever, robin, do you think I wasn't fully aware of that the whole time. Bungie WAS a great company. They made cool games... they only make one now, and now they aren't even Bungie. Let me put it a way you still won't understand: Microsoft has been throwing it's money around at broadband, cable, and game developers, and it hasn't helped them one bit. It's hurt them. You're right--thank God they have one game that you can keep falling back on. |
| #9 By 3339 (67.119.193.22) at 7/17/2002 2:08:23 AM |
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--double post--
Really weird, time to go back to Chimera. After having posted and come back to the page, a page refresh, not a hung post, caused the double posts. And then it (IE) crashed. That's what I mean about IE.X sucking. This post was edited by sodajerk on Wednesday, July 17, 2002 at 02:28. |
| #10 By 3339 (67.119.193.22) at 7/17/2002 2:09:09 AM |
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--double post--
"The deal hasn't gone through because it wasn't equally benefical to both sides. It isn't a case of Microsoft couldn't close the deal" How so? I thought you said this is good for MS. I thought they could buy whatever small country they wanted to, and that that was a good thing. This post was edited by sodajerk on Wednesday, July 17, 2002 at 02:27. |
| #11 By 3339 (67.119.193.22) at 7/17/2002 3:18:17 AM |
| Awww, and I was so trying to interest you. Thanks for the permission, but I prefer to do whtever I want. |
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