According to Bobby Kotick, founder of Activision, Berkshire Hathaway’s Charlie Munger once expressed interest in potentially acquiring Nintendo. During a recent discussion, Kotick revealed that Munger, despite not being an avid gamer, saw a strategic opportunity to enter the gaming market by acquiring Nintendo.
Kotick recounted Munger’s remarks, highlighting that the investor considered Nintendo as a viable target, given its valuation of approximately $13 billion at the time, alongside $7 billion in cash reserves. Munger noted that he was unconcerned about any potential setbacks during his lifetime, suggesting that any failure after his passing would simply be attributed to the missteps of an elderly investor.
This interest in Nintendo emerged during a period when Vivendi, a French conglomerate, was compelled to divest its stake in Activision, with Berkshire Hathaway being considered for the acquisition. Ultimately, Activision opted to repurchase its shares from Vivendi.
In a conversation with Munger over a weekly lunch, Kotick sought guidance on structuring the buyback. It was during this meeting that Munger hinted at wanting to finance the process. Following Munger’s brief departure for the restroom, Activision executive Brian Kelly advised Kotick that if Munger was interested, they should also consider that angle, leading to further discussions.
Kotick also noted Munger’s skepticism towards the gaming industry, associating it with gambling and addiction. Despite the difference in perspective, Kotick defended the value of gaming as a source of joy and entertainment for players.
Berkshire Hathaway did not pursue the acquisition of Nintendo. Munger sadly passed away in 2023 at the age of 99. Currently, Berkshire holds over $325 billion in cash, presenting considerable potential for future acquisitions, although no intentions have been announced regarding the purchase of a gaming company.
In related news, Microsoft attempted to acquire Nintendo over two decades ago, but the proposal was met with rejection. More recently, Berkshire made significant investments in the gaming sector, buying nearly 15 million shares of Activision Blizzard prior to Microsoft’s bid for the company. This investment paid off handsomely when the acquisition was approved, significantly increasing the share value.
Additionally, Kotick discussed Microsoft’s substantial $75.4 billion acquisition of Activision Blizzard, noting that he and Microsoft CEO Satya Nadella finalized the framework of the agreement in just three days. However, discussions around Microsoft’s Game Pass service revealed differing perspectives regarding its impact on business models in the industry.
Kotick expressed concerns about integrating successful games like World of Warcraft into Game Pass, questioning the rationale behind trading flexible pricing strategies for a subscription model. This sentiment resonates with several industry leaders who have raised doubts about the economic implications of Game Pass, while others have pointed out that the service can occasionally bolster, rather than hinder, game sales.
In conclusion, the landscape of gaming acquisitions remains dynamic, with potential for significant market shifts as major players like Berkshire Hathaway and Microsoft navigate their strategies in an industry ripe with opportunity.
