Daily Brief: Microsoft Has Seen The Future, And The Future Is Gaming

Daily Brief: Microsoft Has Seen The Future, And The Future Is Gaming

almost 3 years ago3 mins

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Microsoft is reportedly in talks to buy video game chat platform Discord, presumably once they’ve finished trash-talking each other’s basements.

What does this mean?

And to think your parents thought video games weren’t a productive use of time: Discord has been the go-to for gamers everywhere during the pandemic, and it now has 140 million users to its name – twice as many as in 2019. That’s caught the eye of Microsoft, which reckons Discord would make a good fit for its gaming segment. Such a good fit, in fact, that it’s reportedly willing to pay more than $10 billion for the company – a nice bump from the $7 billion it was worth in December. Of course, whether Discord feels the same way remains to be seen: the platform might end up opting for another buyer, if not going it alone via an initial public offering.

Time Spent on Social Networks
Source: The Wall Street Journal

Why should I care?

For markets: Video games aren’t playing around any more.

Microsoft’s move is even more evidence that it’s looking to expand its games business, after having made its biggest gaming acquisition ever in the form of ZeniMax Media – owner of video game publisher Bethesda – for $7.5 billion. And it’s not hard to see why the tech giant’s suddenly so keen: video games are expected to have made more money last year than the global movie and North American sports industries combined.

Covid fuels global surge in video game revenue

The bigger picture: Mobile games are the future.

The gaming boom isn’t lost on China’s ByteDance either: the TikTok-owner just agreed to buy Chinese games studio Moonton – famous among younger and more in-touch people for its Mobile Legends game – for $4 billion. That move will help ByteDance diversify its income streams beyond advertising, as well as secure a slice of the mobile gaming market – the biggest and, according to investment manager VanEck, fastest-growing category in the games industry.

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Video-Streaming Platform Bilibili Sold Shares In Hong Kong

Bilibili image

Animation-focused streaming platform Bilibili sold shares in Hong Kong on Tuesday, as more Chinese companies opt to bring their stocks closer to home.

What does this mean?

The appetite among investors for fast-growing tech firms just won’t quit, and it’s no different in Asia: the region’s technology, media, and telecoms firms have sold over $20 billion worth of shares so far this year. Bilibili already has a listing in the US, but just like tech giants JD.com and NetEase before it, the company opted to sell its newest shares – 25 million of them, to be precise – in Hong Kong. And sure, it was competing against a much bigger company for investors’ attention, with Chinese search giant Baidu selling its own shares in Hong Kong just last week. But Bilibili’s well-known early backers Tencent, Alibaba, and Sony might’ve helped make sure investors showed up for its sale just fine.

Bilibili average monthly users

Why should I care?

The bigger picture: China and America are still worlds apart.

It’s not hard to see why Chinese companies are returning home to raise money, given all the US’s blacklistings, forced sales, and threats of cutting their shares from the country’s stock market altogether. And while some investors might’ve been hoping a change in US leadership would thaw the US and China’s relationship, the first meeting between the administrations last week showed no signs of that happening.

Chinese funds find alternative places to invest

Zooming out: Tech stock market listings keep on coming.

Denmark-based Trustpilot just became the first European company to list its shares on the UK stock market this year, and its stock rose 16% following its debut early on Tuesday. That might buoy Deliveroo, which is set to be valued at $12 billion – or six times this year’s estimated sales – at its own stock market listing in early April. That’s half the multiple of the US’s DoorDash, but some investors argue that it should be higher – especially since Deliveroo counts tech behemoth Amazon among its early investors.

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