☀️☕️ No CoD peace for Activision Blizzard, Microsoft and Sony

28 November 2022

Happy Monday!

📊 IN THE MARKETS

• Black Friday… Online, Richarlison, Apple

📝 FOCUS

• It was Mickey Mouse who said "I'll Be Back", wasn't it?

• Trustbusters! No CoD peace for Activision Blizzard, Microsoft and Sony

📊 IN THE MARKETS

US markets were subdued in half-day trading on Friday with many people, including traders, stretching Thursday's holiday into a four-day weekend. Of shopping. Or not.

Reports trickled in that early Black Friday 🎓 crowds in shops were thin on what is usually the busiest shopping day of the year, and the start of the US holiday shopping frenzy period. Reuters reported that many shoppers said they had been waiting and that their purchases were strategic, not impulsive or splurges. Consumer discretionary stocks, which benefit from spending on retail, restaurants and vacations, as a group went up less than 0.1%.

Weekend retail store data will be watched closely, but ONLINE shopping is already looking better than expected. A record US$9.12 billion was spent online on Black Friday, up 2% from last year, thanks to steep discounts on everything from smartphones to toys.

Meanwhile, retailers in Europe are hoping the Black Friday weekend would get shoppers spending despite the worsening cost-of-living crisis and the stay-at-home-or-in-a-bar distraction of the World Cup. (How about that Richarlison scissor kick?!)

Investors were also concerned that China, applying stricter controls after seeing another day of record Covid cases, was further and further from the reopening that many had been hoping for earlier in the month. But for US investors, that played out in pressure on Apple Inc. given its flagship iPhone 14 manufacturing exposure to China (and in particular contractor Foxconn's borderline rebellious Zhengzhou plant.)

📝 FOCUS

It was Mickey Mouse who said "I'll Be Back", wasn't it?

But at least Shanghai Disneyland reopened to visitors on Friday after being closed for 25 days as some kind of reward to Shanghai for logging fewer Covid cases than other major cities in China.

The US$5.5 billion Shanghai Disneyland park and the Toy Story Hotel reopened with limited numbers of visitors, all of whom need to have negative PCR tests within 48 hours before entering. Some attractions, shows, shops and restaurants didn't open and many will run at limited capacity once they do.

The six-year-old theme park is eleven times the size of HK Disneyland, which opened a decade earlier, and is Disney's only one in Mainland China. It's a joint venture between Disney (43%) and Shanghai Shendi Group (57%.)

HOWEVER…

Growing public anger against China's heavy Covid restrictions led to acts of civil disobedience and protests in more cities over the weekend, including vigils and clashes with police in Shanghai on Sunday. The fresh wave of anger was sparked by a deadly fire that killed 10 people in a high-rise building in Urumqi, capital of the far west Xinjiang region that is home to an estimated 12 million mostly Muslim ethnic Uyghurs. Netizens surmised that residents could not escape in time because the building was partially locked down, which city officials denied.

Trustbusters! No CoD peace for Activision, Microsoft and Sony

Activision Blizzard (ATVI) dropped 4% on Friday as the US Federal Trade Commission is reportedly looking to block Microsoft's US$69 billion acquisition, which was agreed back in January.

But the best way to think of it is that Playstation (Sony's gaming console) is complaining that XBox (Microsoft's gaming console) will control blockbuster games (in particular, Call of Duty, or CoD) that currently work on both platforms, and three key antitrust authorities (see recent Explainer here) think they may have a point.

Sony, the game console market leader, says that the deal will leave consumers with less choice for gaming and developers with less choice for where to publish games. Microsoft's pushback is that it will make CoD available on both platforms ("on the same day") and anyway, even after the acquisition, its gaming division would still be smaller than both Tencent's and Sony's.

Actually, Sony doesn't even have to "win" as Microsoft and Activision only have until next July to close the deal or they'd have to renegotiate, and any lawsuit filed probably won't be resolved by then, potentially forcing the deal to be abandoned. Somebody should make a computer game of this.

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