Biggest acquisitions of 2014: Fighting for Users

2014 was probably the biggest year of the century (so far) for big acquisitions in the IT-industry. There was a number of huge billion dollar deals among the biggest companies in the gaming industry. 80.lv recollects the craziest acquisitions of 2014 and tries to figure out what will come out of these deals in the future.

Virtual Social Reality

Facebook was the biggest and the most audacious spender in 2014. The social network managed to grab two valuable pieces of the technological market last year. The heaviest product in Facebook’s shopping cart was Oculus VR – a powerful company behind the new virtual reality system Oculus Rift.

Oculus VR was financed over Kickstarter. In June 2012 developers asked for $250 and by the end of the campaign gathered over $2.4 million. Later the crowdfunding continued. Community and investors managed to gather over $91 million. This proved enough to lure some of the industry’s greatest talents, including John Carmak from id Software and Michael Abrash.

It cams as a shock, when Facebook announced its plans to acquire Oculus VR for $2.4 billion. Some developers were openly against the deal. The creator of Minecraft Markus Persson (Notch) criticized the sale and said that he will cancel the development of Minecraft for Oculus Rift. Members of the community, who supported the project a couple of years ago, felt betrayed.

The reasons for Oculus VR acquisition till this day are unknown. Facebook CEO Mark Zuckerberg reportedly stated that “Strategically we want to start building the next major computing platform that will come after mobile”. Zuckerberg thinks that this acquisition will be a long-term bet on the future of computing.

Our mission is to make the world more open and connected. For the past few years, this has mostly meant building mobile apps that help you share with the people you care about. We have a lot more to do on mobile, but at this point we feel we’re in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences.

This is where Oculus comes in. They build virtual reality technology, like the Oculus Rift headset. When you put it on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you’re actually present in another place with other people. People who try it say it’s different from anything they’ve ever experienced in their lives.

Facebook is one of the most powerful companies in the Internet, so it doesn’t have to stop on virtual reality. The social powerhouse bought WhatsApp for $19 billion. This is a much more lucrative deal (if you ever consider thinking in terms of billions of dollars), but it’s much clearer. While Oculus technologies seem a more long-term investment, WhatsApp brought Facebook something it needs most – users.

WhatsApp has over 600 million users worldwide, 833 thousand active users per day and the service adds 25 million users daily. The statistics definitely changed for the better over the course of the year. After Facebook acquisition a lot of users decided to abandon WattsApp. However the service also got a lot of users thanks to the media attention.

Combining WhatsApp user base and technologies of Oculus VR Facebook could potentially become one of the biggest companies in the world. We’re not talking about Google-size juggernaut. We’re talking about a whole new level of companies that can become a new instrument for controlling population globally. As it finally appeared Oculus was less about games and more about manipulation the virtual world on a whole new level.

Billion dollar stream

Twitch became the second biggest newsmaker of 2014 in financial press. With Amazon buying this streaming service for $970 million well-respected journalists had to quickly learn everything there is about “letsplayers”, “streaming” and League of Legends.

What will actually happen with Twitch is not clear right now. Twitch CEO Emmett Shear commented on the acquisition.

We chose Amazon because they believe in our community, they share our values and long-term vision, and they want to help us get there faster. We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon’s support we’ll have the resources to bring you an even better Twitch.

We can recollect at least a couple of cases when Amazon actually ruined pretty promising startups (Goodreads.com), but Twitch is different. With millions of users and incredibly big amounts of data Amazon seems like a perfect partner for Twitch. By heavily investing in the infrastructure the new owner could help Twitch to become huge in the whole world.

Amazon could use its influence and infrastructure to turn Twitch into the biggest game-related media resource. It would provide various advantages to letsplayers, who feel themselves restricted on Youtube. However there could be drawbacks as well. Amazon is a big corporation and it can clutter Twitch with unnecessary bureaucratic procedures or corporate problems. Both Amazon and Twitch say that this will never happen. I guess we’ll just have to wait and see.

Mining Gamers

Microsoft probably surprised us the most this year. The creators of Windows and Xbox bought one of the most successful indie-developers in the world – Mojang.

Mojang is a small company founded by Markus Persson. His bestselling game is called Minecraft. You might have heard of it. Basically Microsoft bought Minecraft. Buying Mojang was just a legal way to get the rights for one of the best sandboxes on the market.

Minecraft is no longer a game. Some people consider it to be more of lifestyle thing. Children play Minecraft more often than they play LEGO. In fact the purchase of Minecraft by Microsoft is very similar to Facebook buying WatsApp. The company is buying new users. It is a long term gamble. Microsoft doesn’t want to make Minecraft 2, or to turn the game into an all time exclusive for its platforms. Instead it will use Minecraft to improve its image, make its game products more relatable and well-spread among younger audience that adores Minecraft and its various versions.

Minecraft for Xbox One

Minecraft also gives Microsoft an opportunity to organize its own event – a worthy opponent to battle Blizzcon and Quakecon. This game has millions of fans and the user base is very active. People would eagerly come to various conferences, shows and expos. Microsoft might also try to expand the influence of this franchise outside videogames to movies or television.

It’s difficult to evaluate the adequacy of this 2-billion acquisition. Minecraft earned about 300 million last year and it’s difficult to make predictions about the growth of the game’s revenues. Microsoft will have to monetize the game much more aggressively to get its investments back. But this will not happen probably. Minecraft is more of an image purchase a way to stimulate the indie market and to make better connection with the fans.

Big acquisitions of 2014 were not about the money, technologies or games. They were about users. Biggest companies of the digital age eagerly investing billions in products that will shape the future of the Internet and the future of the world. Something big is coming. We can feel it.