The Great Video Game Business and Financial (In)Stability Thread

Let me reiterate that this news-story currently is nothing more than a rumor.

Even if it's real, does Gabe or anyone else at Valve even want to sell the company in the first place? Especially to Microsoft?

Oh yeah, well I heard a rumor that Sony is putting together a $32 billion bid to acquire Microsoft's Xbox division. One third of SIE's market cap. They can do it!

Spoiler:

And when I say "heard a rumor" I mean "I heard a rumor come out of my mouth"

BadKen wrote:

I heard a rumor

They say you’ve got a broken heart

The media I see reporting this rumor do not seem to be the most reputable to me so I'm gonna go with hoax until proven otherwise or until a more solid source appears.

The number doesn’t really make sense at all.

Yeah, the Microsoft / Valve rumor seemed like low-grade BS. Just on its face, Valve is obviously worth way more than 16 billion.

polq37 wrote:

Yeah, the Microsoft / Valve rumor seemed like low-grade BS. Just on its face, Valve is obviously worth way more than 16 billion.

Do you have something to base that on? In February of this year, Disney invested $1.5B in Epic, representing a $22.5B valuation, down from a $32B valuation when Sony and Lego invested in it in 2022.

If we go with Epic's value and they own one of, if not the most popular live services games, and probably the best 3rd party game engine now for game development. And yes the Epic store may be far behind Steam Store, but the value potential of IP is the driving force of these valuations, not a store. Valve isn't hurting, but valuations come from an expected future outcome, and Steam has just been churning steadily for years.. not really doing anything to significantly increase its margins or introducing or maximizing any new IP.

$16B sounds fair, if not overvalued if we use Epic as the guidepost.

Source for Epic Valuation

It might be a fair valuation based mostly on IPs, but still way too low an offer to actually make Valve consider it. Because, again, does anyone at Valve even want to sell? To Microsoft? Unless they do, Microsoft can put together any sized bid they want and it won't matter.

Gabe isn't getting any younger. At some point he'll want out.

They say you’ve got a broken heart

Bananarama reference? I'm SHOCKED
Its a cruel summer

I have no idea if Gabe and his investors want to sell to MSFT or to anyone, or what they think their company is worth. As already noted, the news is probably complete fiction, and just a rumor (banarama) but whatever his number is, i'm pretty sure he won't care if its MSFT, Disney, Meta, Alphabet or whoever else wants to put a few billion in his pocket.

edit: sorry.. i wasn't sure where the banarama reference came from, but the punch line was already stolen by Legion a few posts ago now that I read back.

So.. Venus.. that's all i've got now.

I mean it's been a while, but this is the same Gabe Newell who said Valve would "disintegrate" before selling to another company.

Also, Gabe has two sons, he could be inclined to just pass his share of ownership down.

Given the small company size, the staggering amount of revenue they bring in, and how relatively tight they keep their focus (no unnecessary grand expenditures), I'd wager Gabe's taking home large enough chunks of the company's profit to not be excessively concerned about looking for that big sell-off payday.

Gabe is a billionaire last I heard. I don't think he cares that much about getting a big payday from a buy out, and if he was I really doubt Microsoft would be his first stop.

The great thing about privately owned companies is that they can say "no" to a buyout offer if they simply don't want to sell. Gabe's already a multi-billionaire, so the question is really "is he the kind of person who is never satisfied with how much they already have" and would realistically be tempted by a few billion more dollars. If he wants out at any point, he can simply step back as president, he wouldn't need to sell his share of Valve. He reportedly owns less than 25% of Valve, so it's not just him they'd have to convince anyways, though he's probably be the one who would need the most convincing since no amount of money they offer would be a life-changing amount for him.

Some people like owning a business for the sake of owning it. Not everyone is a Silicon Valley vampire in sheep's clothing.

I think he's just trying to save up enough to buy steam.com one day.

Microsoft, there's your way in!

Top_Shelf wrote:

Some people like owning a business for the sake of owning it. Not everyone is a Silicon Valley vampire in sheep's clothing.

The 30% cut would say differently.

Call of Duty: Black Ops 6 to go straight to Game Pass.

This will be a hugely interesting experiment. Presumably, Microsoft are counting on securing sufficient additional subscriptions to (in the longer-term) offset the revenues forgone from unit sales.

So - again, presumably - Microsoft have persuasive data about the number of CoD players on XBox who don't already subscribe to Game Pass(?)

EDIT: I guess this makes sense. Subscriptions can be pretty stick things. I've been a subscriber to Playstation Plus/PSN (in its various incarnations) since I bought a PS3 in 2007. I buy a game from the PS Store, maybe, once every few years. And I haven't played multiplayer since 2019. But I'm still giving them £80 a year or something.

Not a surprise...

The big questions are:

will there be a new price tier for gamepass... Lot of rumours pointing to yes
will the gamepass versions have xplay out of the box

detroit20 wrote:

EDIT: I guess this makes sense. Subscriptions can be pretty stick things. I've been a subscriber to Playstation Plus/PSN (in its various incarnations) since I bought a PS3 in 2007. I buy a game from the PS Store, maybe, once every few years. And I haven't played multiplayer since 2019. But I'm still giving them £80 a year or something.

Yeah, it'll be just like when the pivot to streaming happened and Hollywood did not regret undermining their existing model in favour of pursuing low interest rate fueled tech-bro disruption at all.

I'm probably misreading your post, but I always thought that 'Hollywood', they didn't really have much of a choice. Their product was already being extensively distributed on the internet without their involvement anyway.

There's a good interview with Ted Sarandos of Netflix - on 'The Interview' podcast - where he talks about the pivot to streaming, and importance of abandoning or adapting old business models when it becomes clear that they cannot survive intact. Netflix's treatment of its DVD-by-mail department is... eye-opening.

Unfortunately that interview is behind a paywall, and I'm not giving the New York times my money, or letting it monetize my existence.

My POV on the pivot to streaming is that it has by and large been a disaster. It's destroyed the traditional multi-tiered revenue models for a flat subscription fee that can't scale. You had hit show? You can charge the f*ck out of anyone that wants to advertise during its broadcast. You have a hit movie? You had your ticket sales, your physical media release, your broadcast rights.

A streamer? There's a reason the Netflix model by and large only produces two seasons of television. Because there's no more money, no *growth* in servicing and maintaining an existing audience. Only in finding stuff that could bring in new people.

And this is part of the reason of why most things they make have the cultural footprint of a wet fart, and so many people watch their back library of 90:s sitcoms instead. (The other reason is the binge model.)

Streaming is unsustainable, especially now that interest rates are higher and servicing debt is a pressing thing again. This is why ads are coming back and streamers are reinventing cable.

Yeah, there needed to be change to account for the internet, but they didn't have to f*ck up *that* bad. It's basically textbook rot economy/ensh*ttification.

So I'm not a fan of the model being brought to games, even if it initially might have some transient benefits for me as a consumer.

Guugh. Just heard about this during lunch because an old VFS classmate of mine posted on FB about this studio being completely shut down.

Sumo Group, Company Behind Still Wakes the Deep and More, Laying Off 15 Percent of Its Workers

Solium Infernum dev shutting down-ish

https://www.gamedeveloper.com/produc...

Search function doesn't work so couldn't add this to the game's thread

Why are publishers acting like private equity lately?

Maybe it’s time for a new forum topic “Capitalism was a Bad Idea”

I think I'm done with Paradox.

Wasn’t Paradox Tectonic in the Bay Area? That’s an expensive place to be running a dev team that doesn’t have a very clear path to launch soon with interest rates not functionally at zero.

They missed two Early Access release dates so I am not sure I believe a front line dev who in the trenches actually has the big picture that the game was meeting all expectations. The management mismatch could be happening between the Cali management who thought things are fine and the Swedish management who didn’t.

Like there is plenty of clearly predatory behaviour in capitalism but I don’t actually see any evidence here that paradox have screwed over these developers.

Every employee knows explicitly that if the project doesn’t work, the jobs aren’t safe. This isn’t a case of paradox executives creaming in the profits from a successful project while screwing the people who did the actual work.

DoveBrown wrote:

Wasn’t Paradox Tectonic in the Bay Area? That’s an expensive place to be running a dev team that doesn’t have a very clear path to launch soon with interest rates not functionally at zero...

Your full response was really thought-provoking, DoveBrown, but this sentence stood out for me as it chimed with other things that I've been reading and thinking about.

As games continue become more expensive to make, the traditional industry model of development studios with large permanent staffs is looking less and less sustainable. This is something that GwJers have talked around on this thread recently. But it's clear that the industry is also having these conversations. Edge magazine - which I think is doing some great reporting on these matters - quotes Noirin Carmody, a co-founder of Revolution Software (makers of the Broken Sword games):

"Many people in companies were increasing their numbers because the investment would climb... But they soon discovered that, once a game ships, you don't need those numbers because you go back to basics and you start creating again. You don't need large teams when you're creating the initial [concept]. so they have to shed these people because they can't afford to pay them until they need them."

When the discussion moves to former US Playstation head, Shawn Laden's suggestion of moving to the movie-style system, where crews are hired on short-term contracts to work on specific contracts, Charles Cecil (also of Revolution Software) noted, "Which is what we've been doing right from the start."

DoveBrown wrote:

Like there is plenty of clearly predatory behaviour in capitalism but I don’t actually see any evidence here that paradox have screwed over these developers.

I agree. And more broadly, it's not as if any other economic systems have delivered video game industries of their own in the last 50 years!

The reason that works with the movie industry I think is SAG-AFTRA. So there’d need to be some kind of equivalent. I’m sure that wouldn’t get any kind of resistance from video game companies. /s