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We're getting like professional actors on here. I know. The human torch was denied a bank loan. Welcome back to episode 40 of Acquired, the podcast about technology acquisitions and IPOs. I'm Ben Gilbert. I'm David Rosenpill. And we are your hosts. Today we are covering the 2008 merger of Activision and Vivendi Games, the parent company of Blizzard Entertainment. We've got a pretty wild episode because these companies have had a crazy history that's got a lot of ins, a lot of outs, a lot of what have used and it's really been kind of a winding path. There's a lot of confusing names. So we will try and demystify the winding river that is Blizzard Activision. Yeah, I mean, you'd think that if you look at this merger happened between these two huge game companies, Blizzard and Activision and probably Blizzard was like another public company like Activision had a normal path there. You'd think maybe IPO at some point. Nope. Turns out that they have been subsequently owned by the publishers of the math blaster software. Remember that Ben? Oh, back in the day. The holding company that owned Ramada and days in hotels in the US and then the one of the French national water companies created by Napoleon III during the second empire in France. We'll get into it on the show, but we will. We will. We will. Indeed. Our presenting sponsor for this episode is not a sponsor, but another podcast that we love and want to recommend called the founders podcast. We have seen dozens of tweets that say something like my favorite podcast is acquired and founders. So we knew there's a natural fit. We know the host of founders. Well, David Senra. Hi, David. Hey, Ben. Hey, David. Thank you for joining us. Thank you for having me. I like how they group us together and then they say it's like the best curriculum for founders and executives. It really is. We use your show for research a lot. I listened to your episode of the story of Achaomarita before we did our Sony episodes and it's this incredible primer. You know, he's actually a good example of why people listen to founders and to acquired because all of history's greatest entrepreneurs and investors, they had deep historical knowledge about the work that came before them. So like the founder of Sony, who did he influence? Steve Jobs talked about him over and over again if you do the research to him. But I think this is one of the reasons why people love both of our shows and there's such good compliments is on acquired. We focus on company histories. You tell the histories of the individual people. You're the people version of acquired and where the company version of founders. Listeners, the other fun thing to note is David will hit a topic from a bunch of different angles. So I just listened to an episode on Edwin Land from a biography that David did. David, it was the third, fourth time you've done Polaroid. I've read five biographies of Edwin Land and I think I've made eight episodes of them because in my opinion, the greatest entrepreneur to ever do it, my favorite entrepreneur personally is Steve Jobs. And if you go back and listen to like a 20 year old Steve Jobs, he's talking about Edwin Land's my hero. So the reason I did that is because I want to find out like I have my heroes who were their heroes. And the beauty of this is the people may die, but the ideas never do. And so Edwin Land had passed away way before the apex of Apple, but Steve was still able to use those ideas. And now he's gone and we can use those ideas. And so I think what acquired is doing what the founder trying to do as well is find the best ideas in history and push them down to generations. Make sure they're not lost history. I love that. Well, listeners, go check out the founders podcast after this episode. You can search for it in any podcast player. Lots of companies that David covers that we have yet to dive into here on acquired. So for more indulgence on companies and founders, go check it out. All right, David, you're ready to dive in? Let's do it as always. So we're going to tell the history of Blizzard, the Blizzard entertainment side of Activision Blizzard. Because we think there's kind of more interesting stuff both from tech themes going on in that regard and the story as I alluded to earlier is just crazy. Yet another example of you can't make this stuff up. So Blizzard was started initially as a company called Silicon and Synapse by three college friends from UCLA right after they graduated in 1991. And they had all studied computer science together. Alan Adam, Frank Pierce and Mike Mourheim. And they love video games and they wanted to get into the scene and they decided, kind of, hey, rather than working for someone else, this industry is young, like let's start a company. And so they did. And they started out at first not actually making their own games because they graduated from college. They didn't really know what they were doing. They started porting other people's games from platform to platform. So like one of the big titles that they ported was Battle Chess. I kind of vaguely remember this. And they ported that version onto the Commodore 64 and that both let them make some money as a baby startup, but also got them experience with game development and they got kind of access to these code bases of what games look like. So they did that for a little while and then in 1992, the next year, they sort of got some confidence in themselves and said, okay, it's time to make our own games. And so they did the, I believe the first title they released was Rock and Roll Racing for the Super Nintendo. It came out in 1992, followed quickly by the lost Vikings. And I remember these titles and this is where Blizzard sort of really starts to develop its personality in these guys. Like they are quirky dudes. And Rock and Roll Racing, I believe was the first video game, at least the first console game to feature like actual music, like licensed music in the game. And it was a racing game and it had cars with like, you know, lasers on them and rocket boosters and kind of like fun stuff. And then lost Vikings. I think I believe the plot of this was that three Vikings like from, you know, Ancient North mythology get kidnapped by like an alien space pirate and they have to escape. And both of them are incredibly successful. And they win a bunch of awards and really establish this tiny little game studio down in Southern California as a premier game developer in the early 90s. Yeah, you know, early innings of computer gaming sort of after the original console wars, but you know, long, long way before the, the esports crazy MMORPG world we live in today. Yeah, a shadow of what would be to come. But this is where gaming was at in the early 90s. And you know, Super Nintendo, that was the big, big platform. Another thing happens in 1992 though that ends up having a big impact on the future Blizzard. And that is that another game developer called Westwood Studios releases a title for the PC called Dune 2, which is based on Frank Herbert's classic sci-fi novels, The Dune series, which are awesome. By the way, and Dune 2 the game, I don't think becomes super, super popular, but it's the first real time strategy game first kind of top down perspective, you know, resource management strategy game that comes out. And it's actually the predecessor Westwood, the studio that developed it, they would go on to develop the Command and Conquer franchise, which I totally remember playing to is sort of a, you know, more modern military themes sort of, you know, competitor to what Blizzard would ultimately develop, which is Warcraft and Starcraft. Yeah, and for listeners, we should demystify some of the acronyms. And a real time strategy game is commonly known in the gaming industry as RTSs. And the phrase that I mentioned earlier, these MMO RPGs are born out of RPGs, which are role playing games, and the MMO is massive multiplayer online. Yep. So we will get to the MMO in a second. But so that was 1992, Dune 2 comes out, and the Blizzard guys, they're fans of it, and they start playing it and say, hey, you know, we should, we like this, we've got some ideas we can do, an RTS real time strategy game of our own. But before that comes out, now it ended up being Warcraft, the first Warcraft, they, in 1994, go through a couple of things. Well, first they changed the name, not to Blizzard, but to Chaos Studios, which is what they want to be known as. But then it turns out that there's already another company that has another software developer that has Chaos Studios. So they have to change again, and they settle on Reluctantly Blizzard. And they had actually changed, did that second name change after they got acquired. So the first time that they get acquired is by a company called Davidson and Associates, acquires them for $10 million, which is huge for them. And these kids are, at this point, three years, I think, out of college. David, it really feels like you never want to be acquired by an ant associates. Yeah, seriously. Well, so they get acquired for $10 million, and just a little, you know, future preview, Activision Blizzard, of which, you know, they're in the title, you know, more than half the company's revenues, trades at a $44 billion market cap today. But these guys, Davidson and Associates, they are the publishers of the math blaster educational software. Oh, nice. Which I totally remember playing on my really early PC in my room, growing up in elementary school, and my parents bought for me. I was like, oh, it's educational. That must be okay for kids. But this was mid-90s. The internet, sort of, bubble was just starting, the internet and the tech bubble was just starting to form. And this was, but the start of a whole chain of crazy, totally nuts, 90s stock deals that end up happening, which we'll get into in a minute that resulted in the crazy ownership that we talked about earlier. But before that, later in 1994, Warcraft comes out. And this is the first huge, huge hit that Blizzard has on their hands. Unfortunately, they kind of sold the company at the wrong time because they sold it before it comes out. But Warcraft was really the first game that popularized this real-time strategy genre among PC gamers. It becomes a huge hit. You can complain against the computer on your own, which lots of people did. But it also had multiplayer over LAN. So if you had LAN parties and you could local area network, it is sort of like pre-cursor to the local networking, not on the internet, you could play against other people who brought their own computers over. But you could also sort of through some third party software hack to, and I remember doing this with the original Xbox too, you could hack the multiplayer so that you could play online against other people who weren't physically there with you. Oh, is that, but before the Xbox Live style thing. Yeah, so this is before the... You could trick into thinking the LAN was a LAN. Yeah, somebody out there on the LAN over the internet. You could trick the console or the PC in this case or Warcraft into thinking that they were there on your local area network. So hacky. But these were the links people were willing to go to to play games against one another. Back in the day, this is before Xbox Live, before BattleNet that Blizzard would ultimately release. These are desktop computers, right? It's not like... I thought it was cumbersome enough bringing a little TV and Xbox. I think it was... It wasn't the 360 yet. Playing Halo 2 and having a play. It was cumbersome enough to bring the console, but like a whole freaking tower. And people back in the day, I remember even in college people doing this, which the internet was definitely around by then. So I don't understand why people did. But, you know, lugging their like desktops from one another's rooms altogether into a common room to wire them up on. I guess maybe to have lower latency. Totally, it's happens. But yeah, Warcraft was one of the first games to really popularize this happening. So that's a big success. And then Davidson, the parent company, says, you know, okay, great. I'm going to give you a bunch more resources. They work on the sequel, Warcraft 2. And that comes out in 1995, late 1995. And that becomes even a bigger hit. And this is the first time that it starts to like really strive the mainstream into getting into PC games. And I remember buying this, you know, like either CompUSA or Best Buy back in the day. Because as we talked about on the SoundJM episode, you used to have to buy software in a store in a box. And games were no exception. You used to have to actually pay for games like to buy them rather than get Nickel and Dymedal on the way later. Yeah. I don't know what was better. So we'll get into this in a little bit with Blizzard's kind of come full circle now with Overwatch. But Warcraft 2, Tides of Darkness, comes out. And that includes sort of more robust multiplayer. You still have to use a third party tool to connect with people over WAN over the internet instead of on a local area network. But the tools are more robust and they can actually do matchmaking so you can play against people you don't know, but who also want to play. But the bigger thing that Warcraft 2 comes with for the first time is a map editor. So now all these, you know, many millions of fans of Warcraft, some portion of them that like it so much, they can design their own maps for the game, their own levels and then release them on the internet for other people to play. And we'll see in a little bit this comes back and actually spawns a whole new industry. But this is a major, major animation. You're talking about with the Warcraft 3 mods? Yeah, and talking about foreshadowing Warcraft 3 mods. And that comes a little later. But Warcraft 2 is the first game that isn't just, there's sort of three aspects to it. There's like the solo single player campaign you can play against the computer, you can play against your friends over a local area network or online. But also if you want to go even deeper into it, you can actually get in and start mucking around with the game itself and the maps and making your own versions of it and then releasing them. And that spawns a whole big community of modding as it comes to be called. So later in the year, back to the corporate drama. In 1996, Davidson, the owner of Blizzard at this point, gets acquired by this early internet conglomerate that acquired a whole bunch of companies called CUC International. And they buy Davidson and Sierra Online, which was another video game publisher for about $1.5 billion, all in inflated internet company stock. So a huge portion of that, obviously, there are lots of assets within these conglomerates. But Blizzard Entertainment is one of the crown jewels of Davidson at this point. And so we'll see, there's yet more drama to come. But Blizzard, they're still hard at work. They kind of are cranking through this despite the ownership changes. In 1996, they actually contract for the first time with a third party studio up in Northern California called Condor Games. And they contract them to make a game that they end up calling Diablo. And Diablo, even before it comes out, the Blizzard guys love this game so much that they go to Davidson and CUC now and they ask for resources and they just acquire Condor outright and say, this needs to be part of Blizzard. This is going to be one of our core franchises. And so later in 1997, Diablo comes out and just like Warcraft kind of took the real-time strategy genre and popularized it for millions and millions of gamers. Diablo does that for the, you know, quote unquote, dungeon crawler genre. So this is sort of like the action RPG or role-playing game. And this has always been like a cornerstone of gamer and nerd culture at Minera Remember Playing, the Japanese RPGs like Final Fantasy and stuff on Nintendo and Super Nintendo growing up. So David, does that come out of like the physical RPG culture like Dungeons and Dragons? Yeah, very much. I see. Yeah, that makes sense. Very much. And this is like, you know, I'd say Diablo is the first or one of the first, you know, sort of, this has always been like I said, a cornerstone of nerd and gamer culture, but to make it just like an insanely addictive experience. And one of the key innovations to Diablo is it's kind of infinite. Like most RPGs before that, you'd play them, you'd get to the end, you'd beat the boss, you'd save the world, and then the game's over. But with Diablo, it had this like insanely addictive leveling up system and not just leveling system, but equipment system. So as you were playing through the game, you'd find swords and armor and stuff, and there were all these levels of equipment. And it kind of became like a treasure hunt. And so even after you'd beaten the game and you could play online with other people too, you could then acquire and find more and better equipment. And then you could trade it with people online. So this whole sort of economy started to emerge on the internet around Diablo. Yeah. And for listeners, it's kind of crazy thinking that before that games were completely finite. Like we now know about world of warcraft and these games that you can sort of play indefinitely and have not only a sort of infinite feeling experience for you, but also an infinite feeling experience for everyone else. And you can work collaboratively on, you know, teaming up to accomplish goals and just and exist until the end. And this is, you know, just as sort of unintentionally warcraft popularized this idea of like playing against your friends and even people you don't know on the internet. Diablo is one of the first games that popularizes. Like I said, this economy, it's, you know, you want to play with and you can battle other people on the internet. But the bigger thing becomes this sort of trading of items and kind of taking a lot of sort of real world dynamics and they're just starting to get recreated in a game online. Yeah. Pretty cool. So on the technical side, Blizzard had obviously been observing all that had been going on with warcraft and they built their own and all the third party tools that were enabling people to play against one another online. They build their own service called battle.net, which is still a huge part of Blizzard today, all their games run on it. That is the like Xbox live version. It's their way of owning and controlling how people play online against one another. And it also becomes a pretty huge revenue generator for them. First, as they sell advertising on the service for other games, for their own games, for other publishers games. But then they also start to monetize it later with world warcraft, which we'll get into. Monatize it directly in a minute. Yeah. This really foreshadowed, you know, what every sort of game publisher who, or at least a lot of the large game publishers would go on to do and become a cornerstone of their business model. Like Valve does this with steam and steam is this incredible distribution channel where they basically can take a cut of every game that gets pumped out and control distribution because, you know, everyone already has steam installed and that's where they go to browse games and that screen real estate is incredibly valuable. Battle. That's the same way. Xbox live really controlling the entire all the API surface underneath all the games for, you know, a lot of the player management and matchmaking and all that. They like paving the way for these other companies that would come later for what their product and business model. Yep. And so then, so that was 1997 and then 1998 things start to really snowball here, both on momentum for Blizzard and their games and all these innovations that they're driving. And on the internet tech bubble era here. So first thing that happens at the very end of 97, CUC, the new parent company, merges with another holding company called HFS. And so CUC, which was the current parent company, merges with another holding company, internet holding company called HFS. And this is the company that owned the Ramada and Howard Johnson and Dazin and all these like random hotel assets. The company gets renamed sentent and let's put a pin in that for a sec. We're going to come right back to it. Really after that, Blizzard releases their next big title, which is Starcraft. And Starcraft just takes everything that we talked about with Warcraft and the success they'd had there and Diablo and starting to grow the whole gamer genre and bring more people into it. And Starcraft just like blows past all of that and takes this right into the mainstream. Starcraft becomes the biggest selling game of 1998 anywhere on any platform, console, PC, what have you, sells one and a half million copies right out of the gate. It's basically Warcraft. It's a real time strategy game like we talked about, but it's evolved. So the graphics are better. They have a sort of isometric view, which is sort of like a quasi 3D. It's kind of a three quarters view down under the battlefield instead of just a straight top down. They have three character races classes you can play as. So it's really balanced and it's super, super deep. And so this comes out and people love it so much and it's all around the world and actually randomly in South Korea over its lifetime, it sells one million copies in South Korea. There are only like 50 million people that live in South Korea. So. And this is crazy important. Like this is the beginning of what we really see today in the East-Broad world. Like you have nearly a third of the people who are watching East-Broad in South Korea. It is the world epicenter for this. The South Korean government has rules and regulations around these live tournaments. I mean, it's a part of the public fiber of the country. Yeah. I'm sorry. Of the country. And this is what we're getting to. This is the birth of, which is now being ironically sort of re-exported back to the US and the rest of the world with what's happening in East-Broad. But this is the moment that's the birth of East-Broad. And it becomes so popular in this relatively tiny country of South Korea that like television channels get devoted to showing Starcraft tournaments. People start like quitting their jobs and playing Starcraft professionally. There are all these, what otherwise would be called internet cafes that pop up all around the country that are called PC bangs. And they're just dedicated to their rows and rows of computers. And you go there and you log in and you play Starcraft. And I've been to South Korea. And so it's a really cool place. And our listeners that have been as well will be well familiar with this. And it's just one of the most surreal things you can imagine. And I went in 2013. So what's that? Like 15 years after it came out and it's still just as popular. Crazy. Totally crazy. So that happens. Blizzard is now enormous. And at the same time, I mentioned that the parent company had just been rolled into this third holding company, Sendin. It turns out that they were cooking the books and they're accounting. They're a public company and total N-RON style. They are basically the N-RON of the tech sector. And the company totally implodes. There was falsifying revenue and earnings and just making up all sorts of stuff. And as a result of that, they end up divesting all their assets and they sell all of their games division to a French publishing company called Abbas. And then Abbas turns around. This is still 1998 and gets acquired by another French conglomerate called the Vendee, which started in 1853 as the company General Dezot, the national general company of water by Imperial decree of Napoleon III. And it was like controlled all of the water utilities in most of France. God, it is great, David, that you just spent all that time in the industry. It's far from really doing this for our money. I'm not sure. And here, this is an unbelievable company history of conglomerate to conglomerate, handing it off, rolling it into the industry, spinning it out as a tone. And to really put the cake topper on it, I didn't even realize this when I was doing the research because it seemed so out of left field. But the next thing that Vendee did when after they bought Havas was actually buy Seagrams, the Seagrams. Like the Jin, you know, Seagrams. Like the beverage itself. It's all owned universal studios. That's the best back then. Amazing. And I mean, this, you know, is super personal throwback for me doing this and really fun because I, it was a few years later, but it was right before the Activision and Blizzard merger happened right out of college. My first job was doing media investment banking on Wall Street. And like, this is what everybody, like all these bankers were running around, like, you know, covering and going and talking to, you know, Vendee, this French conglomerate, which owned universal studios, which made movies obviously and Blizzard, which was huge. And like, you know, trying to, you know, advise on these deals that were all happening. And, you know, obviously ended up happening with the Activision, but so funny. Yeah. Yeah. It's funny. When I was reading through this, like listeners, we were deciding whether or not we were going to sort of like do this part of the show where we talk about they bought this and then they bought that and then they bought that because it's almost like that part of the, like, for anybody who's read, like the old testament, you skip over the parts that are like that. So and so, be got so and so, be got so and so and so and so and so and so. And you're like, yeah, yeah, yeah, yeah. But you know, it's important to understand sort of the foundation of like they'd been incredibly, like the narrative to take away here is that incredibly Blizzard as a group of people creating these games stayed brilliantly creative and innovative and were able to spot what that next big thing was and either go after it themselves or sort of buy it. And not even so much in the distribution side, but as the developer studio over and over and over again through all this, you know, corporate turnover. It's pretty incredible. And really a testament to both the creativity and just the pure sort of IP and franchise value of these franchises, you know, work craft, starcraft, Diablo and then later Heartstone and Overwatch that Blizzard has created. But also exactly what you were saying, like these guys are really not just best at spotting waves that are coming, you know, in terms of tech waves relevant to the gaming world. But like they're actually generating way. It's like executing on it. Yeah, yeah, yeah. Absolutely. And it's worth at this point mentioning to listeners, Dave and I were talking about this before the show that the way the games world work is very similar to the way that the movie world works. And I think it sort of borrowed the same playbook when people realized how many analogues there were as the industry was growing up. But there are really publishers who are responsible for marketing, distribution in the old days physically printing the discs and capitalizing projects and then there's developers who are kind of the studios that actually often initially have the creative insight themselves build the games and like the movie industry. Sometimes these are smashed together in one where you have somebody doing their own kind of creative work and development and distribution and sometimes they're sort of separate. And the way you can think of Blizzard is a lot of their genius really is in all of the games that they are able to develop in house themselves and they do or historically did some of their own distribution and the way that we haven't really talked about it yet. But you can think of Activision is primarily as sort of that distributor, publisher and capital source to fund these games. Yep. So we'll kind of accelerate here getting to the merger with Activision. But along the way, a couple of big things happened for Blizzard. First, Warcraft 3 comes out in 2002 and this is when I alluded to earlier sort of the map editors that came with Warcraft 2 allowing gamers to make their own versions of the game. It was the version, the campaign editor that came with Warcraft 3 was even more robust and you could do, you could really have sort of full control over the experience and it shipped just right with the game. Anybody could do this. And so people started making even more mods. It got really robust community for Warcraft 3 and this one guy. Yeah, David, I'm going to stop you real quick and say, one night propose, what if I were to build like a Warcraft 3 mod that like you can have a base sort of the lower left-hand corner and I'll make a base for me in the top right-hand corner and rather than, you know, the traditional map that we're going to play on. Yeah, like why don't, why don't, no, no, how about we just play sort of like a capture of the flag style thing where we just try and go after and blow up each other's face. Oh man, that'd be super cool. And like, you know, because Ben, you have, you know, the campaign editor that's just bundled in with Warcraft 3, you can just do that. Isn't that really cool? Yeah. I could invite other people and sort of get them to play it with me and kind of give it my own name and brand and all that. Yeah, and maybe you could call it defense of the ancients and then maybe it would get really popular and people would call it just Dota. It's acronym DOTA. And then maybe it would just like transform the whole industry. And David, it kind of feels like you blizzard, feels like you should have maybe maintained a little bit more control over that. Well, it does feel that way. So, well, they really mean it when they're giving everybody control. And so, you know, everything we just described, of course, did happen. And in 2003, a member of the mod community named Eel, I mean, be pronouncing that wrong, EUL, he creates a mod, a map that he calls defense of the ancients. And it is the multiplayer online battle arena, genre, which is now, if not the biggest, one of the biggest portions of the whole gaming industry. I mean, this is the roots of League of Legends of Dota 2, of Heroes of the Storm, which Blizzard does itself. And it all just starts in the mod community. Yep. It is over 50% between League of Legends and Dota 2. And for listeners out there, if you've heard people throw around these games, but you're not a gamer yourself, if you ever want to Google a screenshot of League of Legends and a screenshot of Dota 2 and look at it, you're going to be like, your mind's going to be blown by that these are number one separate games. Number two, made by two completely different companies. Like you look at these and you feel like they're indistinguishable. And then obviously you play them and you start to understand the differences. But it is just mind blowing to me that the format was so popular and yet the way that it all played out, it didn't consolidate on one side of the game. Number three, your mind will be blown by Blizzard has no involvement with either League of Legends or Dota 2. They really mean it. Is the IP that these people created and neither of them are the actual IP of defense of the ancients, the first initial mod? There's a long and very fascinating history that you can look at some really great red at threads for about this. But the short story of what sort of happened here is Dota got really popular. It was a Warcraft 3 mod. It was Blizzard's IP. People wanted to build a second Dota and started to build what became Dota 2. Actually, I'm not sure if I'm getting my timeline right, but somewhere along the lines there are some people spun out and decided that they wanted to start creating their own Dota like game that didn't have a lot of what they believed to be the flaws of Dota. So they started creating League of Legends and then ended up founding the company Riot. Well, we'll come back to all of that in a little bit. But super interesting. This is all starting in 2003 and Blizzard is completely not focused on it. They're focused on what comes out in 2004, which is World of Warcraft, which is just another and again, it's kind of mind blowing like so many huge waves in the gaming industry all come out of Blizzard. World of Warcraft there had been MMO's quote-unquote massively multiplayer online RPGs, MMO RPGs, before World of Warcraft. But this becomes just an enormous phenomenon and it comes out in 2004 and grows over time to over 12 million monthly subscribers that are playing World of Warcraft. And so to play, it also revolutionizes the business model of the game industry. It's actually a subscription fee to play this game online. You pay between $12 to $15 a month. So at its peak, when it had over 12 million subscribers, Blizzard was making over $1 billion years a year, every year recurring just from this game. And the company basically goes on to full on just all World of Warcraft support mode. They don't release any other games until 2010. They're just running this one game. Yeah, I mean, it's the best business model innovation to happen in games since games. And they largely headed all to themselves. I mean, this was a time when yes, they had the business model innovation, but you want to talk about value creation, value capture. They were capturing all of it. Yep. And while they were working hard on both supporting the servers to keep this game going and releasing new content that they were making at Blizzard for the game, it really was a community. The reason people played and the reason they kept coming back year after year after year wasn't the content that Blizzard was putting out. It was the other people in the game and this community. And so really was brilliant that all this money they were making, of course, they were investing to keep the game running essentially. But the content and the experiences were coming from other people who were playing the game well, totally wild. So this is all the backdrop to the merger that happens gets announced in December 2007, which is that Favendi, the parent company, the French conglomerate, the water company announced. I still can't get over this. Of course. The water company. The French water company no less. No offense to France, of course. I love France. But they announced that they are doing a deal with Activision, which is a large publicly traded video game publisher, that they are going to contribute, merge their games division of which the vast majority is Blizzard into Activision, value it at $8.1 billion. And then the total new combined company will be valued at $18.9 billion. So assigning a close to $11 billion value to Activision, which is a 30%, 31% premium to where they have been trading. And that combined, Favendi is also going to invest close to $2 billion in cash into the combined company. And then also, fund a share offer. There's just so much corporate transaction history around this company. It's mind numbing even to myself to say it. The net result of which is that Favendi is going to own 63% of this combined company. And the other 37% is going to trade in the public markets. This makes the structure more complicated, not simpler. It's worth pausing from it. So listeners, we've covered a ton about Blizzard. We're not going to do the history in facts of Activision, but it's worth addressing real quick. Who are these Activision guys? And why are they worth approximately $11 billion? Activision is a long time video game publisher, Conglomerate, they own some studios. The guitar hero games, they publish those, all those cheap pieces of plastic you bought in the mid 2000s. Yeah, called duty crash bandicoot. Yeah, called duty crash bandicoot. And the cute skylanders, which, you know, your kids probably play with now, Tony Hawk, all this stuff. And Activision's run by a guy named Bobby Koteck, who's been, I believe he actually bought the company himself in the super early days of the gaming industry in the 80s or 90s. And he's been CEO forever and is just a total. He's one of the more. He's one of the more. Yep, exactly. And he's known to be, you know, passionate, ruthless, true capitalist. Someone that a lot of these articles described him as the guy that gamers loved to be. Yep, he is a capitalist amongst the idealists of the video game industry. And in fact, Activision, they're really, they're quite old for this industry. They're founded in 1979. They're the first video game publisher. And they're the first people to publish games for video game platforms that are not the platform themselves. So, you know, Nintendo obviously made Mario and Super Mario. The Activision, you can think of as sort of the first third party game developer to ever exist. Yeah, someone's business model. Sorry, third party game. Yeah, publisher. And it's worth noting that all those franchises that we left listed off earlier have not won, but each one with a variety of development studios that Activision worked with to create those games and create all the sequels for these games. Yep. So, all right. Let's bring this on home. I'm exhausted already. Perfect. So when the merger happens, Blizzard is projecting in 2007, $1.1 billion of revenue, $520 million of operating profit. They have about 10 million subscribers and more work craft at that point. This then, bunch of stuff happens. They release Starcraft 2, they release Diablo 3, they release Hearthstone, which is basically a video game online version of Magic the Gathering, which I probably lost a year in my life being addicted to and have been went through rehab and I'm out of it now. No, David, no, it's not. It's completely different. Why would you say such a thing? That's not true. Yeah, right. Everybody respects IP and the video game world or not. Right. Right. Well, it's an interesting point. I'll take a look at Tech Themes later, but listen, Hearthstone is basically using a lot of the very same game mechanics from Magic the Gathering, but doing what Blizzard does best in every Disney-like way with their IP and that's let people play a new game with the existing world of warcraft characters that they know and love. When you think about the incredible complexity in building a game like World of Warcraft, and I think it's only like a 15 or 20 person or initially was like a 15 or 20 person development team that just built Hearthstone in Unity, like they have incredibly high margins on the what are effectively the diminimous costs of creating a game like Hearthstone. The Disney parallels are apt here. We'll come back to that in a minute. So 2013 Activision Blizzard ends up buying back most of the stake, the 63% stake that Vivendi owned in it. They raised external capital, including from Tencent, which owns Riot Games, which makes League of Legends now interesting. So wait, Tencent wholly owns Riot Games and- I believe they own the majority of Riot Games at this point, not 100%. But then also have a minority share here in Blizzard Actors. Yes they do. Net result of a few of those buybacks is Vivendi now owns just under 6%, and 94% of Activision Blizzard is a publicly traded company. So no investment advice on the show, but if you want to invest in a publicly traded gaming company, there are basically two. There's electronic arts, there's Activision Blizzard. They are the main pureplay gaming companies out there. Yeah, and this is pretty interesting to make a point on. So I don't want to take us too far forward, but as a quick flash forward, eSports is enormous today. There's over 300 million people a year that can watch other people play video games competitively. Players are often trying to figure out how to make bets in this space, and EA is not a major player in eSports. Riot Games is privately held, mostly by Tencent. Valve is privately held, incredibly tight-lipped, and sort of their own very special company. And so really the only way that public company investors can really- Get exposure to this. Bet on this wave is through Blizzard Activision. And I think it's all because of Blizzard being part of the company. Like Activision itself would never, I think, have innovated on this level of stuff. But so Blizzard finally gets in the act on MOBA's itself, the League of Legends style, Dota style games. They release Heroes of the Storm in 2015, which gets some market share, but is still less than Dota, Dota 2, and League of Legends. But in January, two things happened in 2016. First Activision Blizzard acquires major league gaming, which Ben probably knows more about than me, but is sort of a play at another level into eSports at the actual kind of league and- Right. It's basically making the bet that competitive video gaming is going to start to look more and more like real sports, and starting to kind of vertically integrate there, and not just owning the IP of the game itself, but start to own some of the kind of league structure and broadcast of the games as well. And the second thing that they do in 2016 is they release a totally new franchise called Overwatch. And Overwatch is also- Yeah, David, have you played Overwatch? I'm scared. This stuff is like, we should put a warning label on this episode. Like, this stuff is like- I will you dictate. OPM, like it is, OPM, it is like, if you start playing this stuff, you will get addicted. It is designed to addict you, and you will spiral into a vortex, so like, you know, use with caution. And more and more so now, unlike the old days where they were wholly optimized for the playing experience, these games are starting to be optimized for the viewing experience as well. So games that are starting to come out now are, you know, not only fun to play, but are optimized for, you know, basically the top of the funnel, like how can we get people to enjoy watching this as a competitive sport so that they'll eventually- On Twitch and YouTube and elsewhere, yep. Exactly. And so Overwatch for our listeners out there is very intentionally designed to be like a love child of a MOBA, but from a first-person shooter perspective. Yep. So Halo meets League of Legends. Exactly. So you're on that very same arena style battlefield that has a very capture the flag mechanic to it, but you- the camera is mounted as a sort of first-person shooter, and you are on the ground, and it has the best of both games. So it is a very intentional attempt to capitalize on everything that's going on in the East Ports world today. And not just an attempt, like a success. Like it comes out in May of last year of 2016, get 7 million players in the first week, 25 million players by the end of 2016, and now it's over 30 million players, and already over a billion in revenue. And what's super interesting about that is Blizzard made- I would love to- I wish I knew more about the industry and the history of how this decision got made. They sort of go with a hybrid business model for Overwatch. So League of Legends and Dota 2 and the other MOBAs are completely free to play. You can log on, you can play them. You can compete at a level playing field with everyone else without paying a dime. But if you want to get special, you know, sort of aesthetic items for your character, or special characters or whatnot, you have to pay money to get those sort of add-ons. They don't really affect your skill at the game, but they look cool. And that's been a hugely successful business model. I mean, again, billions of dollars of money made from these things just from sort of, you know, aesthetic add-ons, but Overwatch Blizzard decides to actually go back to their roots and charge money for the game. So if you want to play Overwatch, you got to pay either $40 or $60 depending on the version you want to buy the game. But then they also have sort of Diablo inspired. They have loot boxes that you can buy that contain items that you can essentially sort of also magic the gathering as sort of like, you know, booster packs you can buy for your characters. And so they make money on that too. And yeah, totally. It's incredible to watch everybody sort of steal from each other's mechanics here and what's old is new again and people sort of reinventing that over and over again. And David, as you were saying, that Overwatch has been phenomenally successful. I pulled up some stats that are worth mentioning and there's a couple observations out of them. The first one is that there's incredible staying power in what people care about. So in the very same way that Baseball is the American pastime and even though attention is waning on it a little bit, it's not that bad. It's still like a huge fiber of what people grew up with. You have this in esports as well. And so even though Overwatch has sold quite well, they're really only 1.9% of the monthly esports hours viewed on Twitch, which incredibly is exactly the same percentage as Starcraft 2. Like that is an old old game that is still highly revered in seven years old at this point. Yeah, everywhere, but still a lot in South Korea. And if you look at the two biggest games, we were mentioning these mobile style games, seven year old League of Legends still commands 23.3% of viewing hours. And Dota 2 has 32.2%. And it's like these newer games that are coming out that are really tuned to take advantage of this wave. But what it still has the majority of the attention share and it's unclear if this will wane in the future or not is these games that people have sort of been playing for a while. Yeah, well, I think this is, we'll get into this more in tech themes. But starting really with the modding community for Warcraft 2 and Starcraft 3 and then especially with World of Warcraft, Blizzard really brought this new approach to the video game market where it's not about just publishing a piece of software, people buying it, and then that being the end, it's that these games grow and get bigger and more in depth and make more money over time. And really brought very sort of start up company like business models to the games base. Yep. And it actually to make another parallel to the movie industry, these games when they come out are making as much money as movies are when they come out, but they have an incredible tale of the ability to continue making money. So like a Star Wars comes out and it'll be, I forget if that was like a billion dollars or two billion dollars or something huge. And then it's only in theaters for so long. For example, like 2013, Blizzard Activision released Call of Duty Ghosts and on the first day sold a billion dollars into retail. Like that's insane. It's for a video game and then they continue to make money on it for quite a bit of time after that. Yeah. So, you know, to wrap it up in a year and 2016 at the end of last year, Blizzard just Blizzard, within Activision Blizzard, did 2.4 billion dollars in revenue, which by the way was up from 1.6 in 2015. So the growth is insane. The growth on that huge number is insane. Yep. Did over a billion dollars in operating income. And this just blew my mind. So in combined between Activision properties like Call of Duty and the like and Blizzard, you know, also Skylanders within Activision, in 2016, consumers spent approximately, this is a quote from their earnings release, 43 billion hours playing and watching Activision Blizzard content, which is on par with Netflix. And over 1.5 times, the amount of time that people spent in Snapchat. So like acquired listeners, if you think that, you know, this episode is like, man, this is a lot of crazy games company stuff. Like this is small fry. Why is acquired covering this? Like, nope. This company has had 1.5 times the total attention of Snapchat last year. And it's distributed in such a different way. Like when you think about Snapchat, writing about, what was it, 20 to 25 minutes a day in Snapchat, it's these short little bursts. Like when you talk to people that they really like to play these games, a lot of the time you'll ask someone if they're a big, like a big League of Legends player. And so we'll say no, I only play like two or three hours a night. And then you talk to the people that are like, yeah, I'm really into it. Like I play probably six, eight hours a day. Yeah. Well, then you have professionals that, you know, literally it's their job. Yep. Yep. It's, it is crazy. It makes Facebook look like, you know, some app that you, you know, open like, you know, once a month. Yeah. It's true. All right. Should we move on to category? Yeah. So I'd like to do category a little bit different today. I'd like to do a little bit of discussion beforehand beforehand of sort of like, you know, why did this merger happen? Like what did they see in each other? And, you know, why did Activision sort of make this play to make it happen? Because, you know, Vivendi Games, which Blizzard probably wanted Activision's kind of marketing distribution. And then, when Activision obviously, you know, looked over and Blizzard had hit after hit after hit of online games, games that really were, you know, they were not these sort of console games that you'd play through once and be done. I mean, it was, and when I say online games, I mean, World of Warcraft at that time, where it's just an incredible behemoth that kept going, kept generating revenue at an incredible scale. You know, so it's really trading sort of marketing and distribution in exchange for the ability to do these MMRP jobs. Well, and I think not just World of Warcraft, even though that was very much the focus of Blizzard, like, maybe this is retrospective history, but I think with all the Blizzard properties, you could see the potential for, because it was already happening in the modern community with Dota, you could see the potential for all of them to be what they've become, which is, you know, monetized over time and things that grow and don't, you know, fade, which, you know, in the knock on the video game industry has always been, ah, it's a hit-striven business. It's like Hollywood, right? And like, to a certain extent, it still is in that before a game comes out, you don't really know how well that game is going to do. But with what has happened in this innovation in the industry, once it has an audience and is working, it doesn't fade, it grows, you know, like, and that's, I think, what Activision saw, I have to imagine what Activision saw in Blizzard. Yeah, and for Blizzard, it's kind of a hedge, right? It's the ability that, you know, number one, they don't have to pay like a separate entity anymore to actually publish and release their games. They can sort of do all of that as one entity. But the other thing is that when there's a drought between titles, like if their next title didn't really hit, they have this, you know, well-funded sort of, you know, cushy way to smooth out the hit-striven business. Yeah. Well, and also, you know, like we said earlier in the show, I think it's a huge testament to the creative energies at Blizzard that through all this not-so-90s-era ownership changes and ups and downs, they kept making great, they stayed focused on what they did and made great products. But I kind of imagine for them too, they're like, they must have been thrilled to get out from, you know, the former French national water company and be part of Just a Games Company. Yep. Yep, yep. All right, so I'll take a stab at acquisition category and call this a business line. This is one that, you know, Activision was kind of in the business of doing their own game development with some studios in-in-house, but none nearly as successful as the scale of Blizzard. And really, yeah, there's some synergies in combining and we can get to that later, but I really think that the big thing they saw here is holy crap. This is a revenue-to-generating business line and the secret sauce within Blizzard allows it to happen over now. Well, and I think the proof's in the putting in that if you look at the reporting segments of Activision Blizzard as a public company and their financial results, they report Blizzard as a, you know, business line as a separate segment. Right. I think there is also an element, though, of I forget what we category we assigned to all of our Disney series of acquisitions, but there's definitely a Disney element here too. Yeah. It feels like Disney buying picks things. Exactly. It's like these are franchises that there is value both to the core games themselves, but now they're doing movies around these and, you know, merch and other, you know, just like the Disney Flywheel got created around Disney IP, you know, being Mickey and others over time and all the movies, you know, a similar thing is starting to happen around these franchises at Activision Blizzard. Yeah. Absolutely. Alright, what would have happened otherwise? I feel like we talked about that, you know, sort of a little bit just now, and I can't imagine that Blizzard was super happy, you know, being part of Vivendi and- Right. Right. And yeah, they would have continued, you know, creating and doing their thing, but seeing all of the, you know, it almost feels like the fruits of the labor that resulted from all of the game and product driven innovations throughout the 90s and kind of 2000s are really being harvested now by Activision Blizzard in terms of businesses that they're building on top of them. And that probably would have been hard within Vivendi. Yeah, and here's the question. I was coming at it from both sides. One, on the Blizzard side, you know, would they have produced something like Overwatch without Bobby Cotec? Like, would we see, you know, these very aggressive, you know, business first games rather than sort of like creative people- Yeah. And I mean, make a mistake. It is aggressive. Like, they are monetizing both ways, you know, you pay for it up front and you have micro transactions over time. Yep. And they're aggressive about building the ecosystem around it. I mean, the buy-in to have an Overwatch team and the Overwatch League, the rumors are that it's like a $20 million buy-in per team. Wow. So, holding up this game and the ability to buy a franchise in, you know, in the competitive world of esports as being like the next big thing and you'd be a fool to miss out and it's extremely expensive because of that. And I think that, you know, this is of what would have happened otherwise. I don't think we would see Overwatch and I don't think we would see a lot of the character of Blizzard Activision as it is today without that Activision component. Yep. It might be interesting. And again, I don't think I know enough about the industry to really speculate here, but, you know, Valve and Riot, Valve obviously, you know, does many things within gaming as we've talked about in episodes past, but with Dota 2 that they control and then Riot with League of Legends, they've become huge companies and so powerful, but had Blizzard not been, you know, kind of put into its own sort of independent gaming-focused company with Activision, maybe Valve and Riot would be even more powerful, you know, and Blizzard wouldn't be even part of the picture. Yeah. That's interesting. I think Activision would have done if they didn't buy, or merge with Blizzard because they really missed MOBAs. I mean, they missed this enormous wave. It's almost like Microsoft missing MOBA. Yeah. Really they did. I mean, and it's not to say that I think this is also a dynamic that happens with these waves that I think is super interesting is that the old paradigm of video games didn't go away either. And Activision's great at that, like Call of Duty, you know, like you're saying, makes billions of dollars. But it just makes it in a way that is an inferior business model because it's like you invest hundreds of millions of dollars in creating the content, just like movies. And then you release it and then you monetize it for, you know, a window and then it fades. So like they still would have done fine, right? But all the growth and the innovation and the better business model that Blizzard has, they would have missed out on. Yep. And then two other things that I want to point out that I think are questions that I don't have answers for and listeners, if you know about the video games industry, join us at acquired.fm in the Slack. We would love to hear your answers to these. But Blizzard Activision, you know, had a, as we, as we put it at Pioneer Square Labs, when we work on something for a long time and don't create a company out of it, a very expensive kill called Titan, where they worked on this game for a long time and it was supposed to be the next big thing and, you know, it was, it was killed. And the question is, in my mind, if it were just Blizzard, like, would they have believed in it and persevered through it and shipped it anyway? Or, you know, would the expensive project have just, would they have continued to pour money on to it and would have seen the light of day? I don't know. But I speculate that that has more to do with Activision than Blizzard. And then the other thing I want to point out is the next big thing was also supposed to be Diablo 3 and that was a total flop. And I'd also have to be able to... Well, I don't know if there was a flop. I mean, it was, I think it was successful, but just not to the degree of these other franchises. Yeah. And I mean, the stakes are so high now that if you're not like one of these other franchises, you just don't matter. Yep. Right. Like, in these businesses that have incredibly high capital requirements and then incredibly high revenues after that. Yep. I mean, no doubt it's... Well, I think it's less well adapted to the, you know, esports and viewing model that these other franchises, you know, have been so successful with. So it's just, it just has less potential. But, you know, I think Blizzard views Diablo as a core franchise and, you know, it'll be super interesting to see what directions they take it in. You know, I see huge potential like the original Diablo, you know, sort of created this idea of an economy around items and like people love, you know, trading stuff online. So I see huge potential for that going forward. Yep. Great point. Tech themes. Tech themes, oh man. Per usual, I think we've covered a lot of them. Yeah. You know, I think for me, there's... We've talked about a lot on this show already. But one that I think is super powerful is just this idea of creating, enabling, building and then creating, enabling a platform for users of all types of it to then be creative themselves. And if you can execute that well in whatever domain and essentially create a marketplace around what you're doing, but a marketplace where you're enabling new types of creativity and really entrepreneurialism, that's how you can grow just an individual. An enormous ecosystem in any type of business. And so specifically, I'm talking about the modding engine and the campaign and maps editors that Blizzard released. I mean, it literally created this industry that is tens of billions of dollars now in combined in esports and mobas. And I think about in other, you know, I think Apple was like this in a way, like, you know, the industry that was created around software, you know, was really Apple enabling and then next, you know, and object oriented programming, enabling people to, you know, build things and release it on the platform or iOS or, you know, even sort of like square in a way, enabling people to go into business and be merchants or strived. Yep. I think so. Another big one that we keep touching on is really is concept of sort of the IP flywheel that Blizzard released the Warcraft movie recently. And it'll be interesting to see, you know, how well they're able to parlay the IP from these games into, you know, physical locations into cinema and to TV shows and to toys. You know, it's nowhere near the level that Disney is now, but it's an open question to me if the sort of storyline and character development and affinity for these characters that Blizzard Activision and that Riot and, you know, these games are doing for the, you know, the heroes and characters and champions in these games. If they'll be able to really parlay that the same way that Disney has with, you know, the characters in their universe. Yeah. Well, and you can start to see the pieces falling into place with, you know, the majorly gaming acquisition and the analogies to Disney and all of the assets Disney owns that are part of its flywheel, you know, and I'm thinking in particular of ESPN, you know, the challenge, I think, for Blizzard is an Activision Blizzard is, is, you know, they don't own Twitch, right? You know, Amazon owns Twitch and is Twitch the ESPN here. You know, and I think that obviously the dynamics will be slightly different as it's a different world, but, you know, the, as we've pointed out throughout the show with as they sort of relate to the game with MOBAs, you know, sort of lead the groundwork for the MOBA genre to emerge, but then didn't participate it until too late. There's several elements of the flywheel that are kind of missing that are holds in the chain for, for Blizzard right now. So it'll be interesting to see like, do they continue trying to build them, you know, in-house? Do they buy things? I wouldn't be surprised at all to see, you know, more acquisitions coming down the pipeline for Blizzard. Yeah, it's worth noting listeners, they also bought King. Yeah, right, of course. And they make a candy crush for what? That's like five point nine billion dollars. And so their, their divisions now the way they're internally structured are Activision, Blizzard, Activision Blizzard Studios, which is the moviemaking arm, media networks, and then King Digital is its own independent subsidiary inside. And so, yeah, to your point, David, I'll be curious to see how those divisions really start sharing more IP around inside of them. And yeah, it is mind blowing to me that they are not really participating in the world of mobile digital. Yeah, yeah. Yeah, the king one is curious, well, we'll have to do another episode on it at some point. On king, yeah. Yeah, yeah. The quick take again, not being an expert on the space and not having done the research is it doesn't feel as lasting or transformative or sort of future wave looking as Blizzard, you know, but anyway, another topic for another day. Yep. And I got one more and I'm going to get over here. Where it hits to have been business that acquired. Yes. I'm going to amend what I actually that's not true. It is not true. And the reason it's not true is really awesome. The nature of podcasting is that when people subscribe, they're sort of pushed an episode and they have an opportunity to decide if they want to listen or not, but unlike a movie where their relationship with their customer sort of ends by going to the theater and then that person leaving the theater, it's not like Disney has my email address because I went and saw a movie at regal cinemas that was created by them. But, you know, listeners have acquired know that a new episode comes into your podcast feed every time. You don't have to get reacquired as a customer and it really helps keep longevity around. So cool thing about podcasting is an ecosystem. And I think David, we're probably due to do a podcasting ecosystem part two here at some point soon. Yeah, we should do a follow up. We should. All right, so the one more that I'm going to amend, I wrote in my notes, the decreasing power of distributors in the internet era, but it's really the changing nature of distribution in the internet era because I think that if you look at the power that Activision had historically, and then you look at the power that Blizzard has had more recently, the nature of these studios is that they can kind of do their own distribution once they get scale. Like once they establish a customer relationship once and they have a battle net, they have a steam. Like they don't need to incur a new cost every time of going and printing a bunch of CDs and then putting them in boxes and then putting them on shelves and getting people to go to the stores. Like they actually you acquire a customer once and you can retain them for a long time. It really inspires more of an ecosystem view of your customer where you can sort of keep sending new titles to them and figuring out what they would like for really their entire lifetime. And so I look at this like Activision sort of had to make a play into the content world because you know, if they were not that they were dumb pipes like a Verizon or something, like the way a lot of people think of Verizon. But not that they were just, you know, dummy distribution, but the importance of what they did changed and they sort of had to adapt their business model and do something different because the almost gets into aggregation theory here where, you know, all of video games are not aggregated into a single place the way that all of, you know, information and advertising is starting to get aggregated into Facebook. It's still kind of fractured among multiple game publishers, but you really do see this incredible concentration of power because distribution is done differently now and it becomes winner take most aggregation theory hard at work. All right, should we grade it? Let's do it. All right. So listeners, the way that you know, David and I were have never really done a merger before in this way, really a merger of pseudo equals. And so we were talking before the show about the way that we feel we should evaluate this. And I think the framework that we're going to use is the combined enterprise value like far down the road. So let's say the 2017 combined enterprise value more than the combined enterprise value, I'm sorry, the separated enterprise value. So put a different way if they had stayed separate and executed and, you know, both grew in value versus if they had combined and achieved their I say synergies and and were compared against what their actual combined value is today. You know, was it a good idea for them to combine or was it value destructive? And you know, David, we were sort of talking it's tough to know like it's tough to really identify, you know, they're at $44.9 billion market cap today. They're a they were a $19 billion company upon combining the two companies. You know, they grew over 2x and the question is from 2008 until today over a 10 year time horizon, would they have 2xed on their own? And David, what do you think? Yeah, I don't know. This is a tough one like, you know, going through the episode and thinking, you know, I think we've been very lawtatory of blizzard certainly and the merger and we've talked about how, you know, sort of in our expert opinion, it would have been hard for a lot of this innovation and value capture really of that innovation that they realized to happen separately for both companies. On the other hand, though, you know, I mean, this merger happened in 2008, so almost 10 years ago. And that they've only grown kind of 2x since then. I mean, yeah. 2x on a huge base like adding, you know, $20 plus billion of market cap, like that's not easy to do for sure. What if I would, I mean, this, the years are a little loaded, but you know, what if in 2008 I had put $19 billion into an index fund? Yeah, right. Or, you know, $19 billion into Apple or Facebook, you know, well, you couldn't have done Facebook then. You know, it's a, I'm actually a little surprised that the growth hasn't been larger. I mean, think about like we talked about, this is, you know, one and a half time Snapchat in terms of engagement and Snapchat itself is, you know, 20 billion-ish market cap company. So I don't know. For me, without knowing enough about the ins and outs to understand why that's the case from a valuation perspective, you know, I think just purely from the perspective we usually take here at acquired, which is a more operational and product focused one, you know, I think I give it a, a minus I'm going to go with just because I do think it would have been really hard to do this value capture in some of the business model and pricing decisions that they've done, you know, around the product innovations separately. But I'm, but I'm, it's, it's a, you know, a minus question mark from me, given that I'm just a little puzzled on the finances. Yeah, I've been a little, a little bit stumped too because I think on an absolute basis, it's been fine. Like the growth has been what you would hope for out of a 10 year investment. I think that when, so on an absolute basis, it's not like they did anything revolutionary. But then let's compare it on a relative basis to where they potentially could have ended up otherwise and then how other competitors were performing. So it is probably worth noting that they, they're really the biggest sort of gaming company. They became the behemoth in the space. There were competitors that rose up incredibly fast in that time period. I mean, Riot Games sold to 10 cent for a huge amount of money. I mean, estimates were that, yeah, but we've sold way too early though for not that much money relative to what we're talking about and relative to how big they are. True. Exactly. But I'm like thinking from a growth perspective, I mean, they were started seven years ago. Like they were started after this transaction. And I feel like Blizzard Activision or Blizzard let a huge amount of value creation go elsewhere. Like I think that sure there was a lot of goodness created by combining these companies. But I can't believe that they actually, it actually has not been, you know, anywhere near a flawless execution. No, no. And I don't know, you know, I'd be more of a bowl on, let's say they didn't combine. I would be much more likely to invest in Blizzard than Activision on their own. I mean, I think that the way that the future is going, like you look at where the value creation is, it is very much a smiling curve argument. It's the last place to touch consumers or the originator of the content or the IP or the components and very little in the middle. And as a primarily capital and distribution. Twitch or Riot, you know? Yep. Yep. And so, you know, I'll go with the B-minus. Like I think they did great, but like our bar on the show is not, you know, two point whatever X-ing in ten years. Yep. Great point. Great. And I'm going to take it down to a B plus, partially for the arguments you just made. But also, I do think I'm coming in higher than you because, as I thought about it more, like they have, it's only two X in ten years, right? But two X-ing on $20 billion is really hard. I mean, you're talking $20 billion of value creation. Yeah. And it sounds trivial when you say two X, you know, over 10 years and for us in startups and venture lands, like, you know, but two X-ing, you know, on that is really really hard. So, but at the same time, I completely agree with what you said, which is they have kind of fumbled the ball here in that they could be another two X or three X bigger than that. And what we're not considering today is how well positioned they are. So, you know, let's say that their bets are right and that Overwatch is the franchise of the future, that becomes the competitive sport that everyone's watching. Teams are paying $20 million for these spots, and that all goes fantastically well. But the flywheel continues, that BlizzCon gets more popular, that the Warcraft movie does phenomenally well, that they're able to create even another franchise. I mean, there's all these things where you could argue they're one of the best, if not the best, set up for the future. So, I guess, stay tuned for another episode in three to five years. But yeah, I think we've set our pieces. All right. Whew. That was a, that was super, both super fun and exhausting. It's fun in the research, you know, I was doing for this and watching a bunch of videos and reading articles and like all of these pieces are like, well, here's the corporate history, you know, go, if you want to take a nap, like read through all this and like, man, I get it now, I mean, just done it. Even for, by acquired standards, like, this stuff is crazy. Yep. Totally agree. All right. What's your carve out? Carvouts. All right. So, my carve out is Dick Costello appearing on a podcast on a, an, an, an, an, an, an, vanity fair called Inside the Hive and its Twitter's former CEO talks about Trump's midnight tweets and I loved it, Costello. Like listening to that guy talk about leadership and management and storytelling and comedy is just so good. And there, there's a lot of very interesting insights to be gained there about the process of taking your company public, which I'm sure are, you guys would love listening to. But there's just so much great stuff in there about Dick's experience being in the writer's room for Silicon Valley and his time at Second City doing improv in Chicago and, you know, that guy, he's just learned so many great lessons along the years and you get to pick up a lot of really great sort of leadership insights. So, highly recommend listening to that podcast. That's awesome. Uh, mine, uh, mine is out of left field today. Uh, I have been super busy lately working on a bunch of new stuff, uh, which is exciting more to, more to come later on that. But, um, but, uh, so I haven't had much time for, you know, media consumption or anything, but, uh, haven't had much time for anything. But, um, Jenny and I had our annual summer bash, you know, backyard party last weekend and the cocktail that we served, uh, because we always have a cocktail at our parties, uh, was mint margaritas and, and the problem with margaritas for the summer, you know, is they're great, but you need a bunch of lime juice and that's like really exhausting if you're making, you know, cocktails for 50 or 60 people, uh, and putting it in a cooler. So thanks to the internet and to Amazon found Nelly and Joe's 100% natural key lime juice. This stuff is amazing. It is literally lime juice from like 100% natural organic limes in a bottle that you can use in margaritas and it is perfect. So for your summer cocktails, wow, key pro tip. Yeah, I think we found our next, uh, next spot. Yeah. Should reach out after we said we said one, three. We'll give you an audience, uh, audience overlap there. Tart. That's right. That's right. Thank you so much. And we hope you have a great day. I'll see you soon.