Tag Archives: Marketing strategy

Game Companies are a Hot Acquisition Target

Are you ready for the metaverse? It might not be quite a reality yet, but it has certainly caught the attention of technology companies that are positioning themselves for growth in the industry. While the metaverse might be difficult to define, there is no doubt that technology companies view video games as an important strategy for growth and customer acquisition for the metaverse.

So far this year three companies have been on a buying binge:

  • Microsoft will pay $69 billion for Activision Blizzard.
  • Sony will buy Bungie for $3.6 billion.
  • Take Two Interactive is paying $11 billion for Zynga.

Whew – that’s a lot of activity and investment at more than $84 billion!

Activision makes some of the most popular game titles such as Candy Crush and Call of Duty. However, Activision has been accused by employees of discrimination and sexual harassment, making the purchase by Microsoft rife with potential employee issues.

Microsoft was also the previous owner of Bungie, buying the company in 2000 for $20 million for the top multiplayer shooter games – Destiny and Halo. In 2007, Bungie split from Microsoft and became a privately-held company. Bungie’s most popular game currently is Destiny 2 (which is available on multiple platforms including Xbox and Playstation.

All of these acquisitions are predicated on the assumption that people will be spending more time in the digital metaverse, including augmented and virtual reality.

We have already seen an increase in gaming during the pandemic as people look for new entertainment options. According to MarketWatch, video games are a bigger industry than movies and sports combined. According to IDC Group, global video game revenue was roughly $180 billion in 2020, with mobile platforms showing the most growth.

What will you do in the metaverse?

Group Activities and Discussion Questions:

  1. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification.
  2. Which strategy are Microsoft and Sony using?
  3. Discuss with class: Why did Microsoft and Sony buy game makers?
  4. Show websites: Activision: https://www.activision.com/
  5. Bungie: https://www.bungie.net/
  6. Zynga: https://www.zynga.com/
  7. Check out Nielsen’s list of top video games: https://www.nielsen.com/us/en/top-ten/
  8. What are the risks and rewards that will be faced by the acquiring companies?
  9. Which competitors will be most pressed by these acquisitions? Why?

Source: Tilley, A., Lombardo, C., Gring, K. (January 18, 2022). Microsoft to buy Activision Blizzard, Wall Street Journal; Metz, C. (January 31, 2022). Sony to buy game maker Bungie in $.6 billion deal, New York Times; other news sources.

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Chocolate and Pretzels Make a Perfect Match for Hershey

It’s always snack time around our work place. And of course the best snack flavor profile favors chocolate and salt! Sweet and savory. All of which makes Hershey’s acquisition of snack companies Dot’s Pretzels and Pretzels, Inc. a great match. The two deals will amount to roughly $1.2 billion for the chocolate company and expand its product portfolio farther into the snack area.

North Dakota-based Dot’s Pretzels is a key prize for Hershey as Dot’s accounted for about 55% of the pretzel category growth last year. The snack category overall has done well under the pandemic as people everywhere reach for comfort foods and treats. And it’s easy to grab snacks when studying or working from home!

Pretzels aren’t the only product that Hershey is buying. In 2018 it bought SkinnyPop popcorn maker Amplify Snack Brands for $1.6 billion. Hershey also has entered into the nutrition bar category, diversifying from chocolate as consumers buy healthier snacks.  Hershey has also acquired Krave jerky and expanded Reese’s pretzel-nut-chocolate snacks. Other new treats from the company include:

  • KIT KAT Thins
  • Reese’s Snack Cakes for a mid-morning snack
  • Organic Hershey’s Bars
  • Organic Reese’s Peanut Butter Cups
  • Zero sugar chocolates

Shoppers seek more options than ever before. Hershey’s stated goal: Become a snacking behemoth. That’s a tall order when competing with companies the size of Nestle, PepsiCo, Mondelez, and Kraft.

Care for a snack?

Group Activities and Discussion Questions:

  1. NOTE: If available near you, buy a couple of bags of Dot’s Pretzels and bring them to class (along with Hershey bars). It’s always a nice idea to feed students.
  2. Discuss the four primary marketing strategies: market penetration, market development, product development, and diversification. When is each used?
  3. Which strategy is Hershey’s using with Dot’s Pretzels? Why is it in acquisition mode?
  4. Show the list of brands Hershey owns: https://www.hersheyland.com/brands
  5. Show Dot’s website: https://dotspretzels.com/
  6. Next, discuss setting SMART objectives (specific, measurable, achievable, realistic, and time-bound) for marketing strategies.
  7. Divide students into teams. Have each team develop five SMART objectives for the new acquisition’s products.

Source: Hershey to buy two pretzel makers for $1.2 billion, Reuters News Service; Newman, J. (Nov 10, 2021), Hershey plans to spend $1.2 billion in deals for pretzel producers, Wall Street Journal.

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Rebranding Facebook into Meta

Ask any marketer and they will tell you that rebranding a company is tough – and expensive. Once a company’s brand is firmly established, it has a value that carries to the company and all its products/services. Consider that a brand is the position a company holds in the consumer’s mind. State a brand name such as Nike, Tesla, or Google, and a specific image will quickly come to mind.

Let’s try it. “Facebook.” What thoughts and images did you immediately recall?

Now let’s try another name – “Meta.” Any thoughts?

Meta is the new company name for the formerly-known Facebook company. Why the shift? After all, Facebook is already one of the most well-known and valuable brands in the world.

To explain the change, Facebook/Meta CEO Mark Zuckerberg stated it this way: “We are a company that builds technology to connect…. But over time, I hope we are seen as a metaverse company.” The new name is designed to help the company (and its audience) transition from being seen primarily as a social media company into something much broader and more ambitious, encompassing the “metaverse.”

What is the metaverse? The term originated in science fiction from writer Neal Stephenson. It refers to a virtual space where people can do virtually everything from playing games, meeting with friends, attending concerts, and of course buying many different kinds of digital (and physical) goods and services. (Think “Ready Player One” or “Snow Crash.”)

In the past 15 years, Facebook has bought a whopping 78 companies in many areas of technology. The most well-known and valuable acquisitions are Instagram (acquired for $1 billion in 2012), WhatsApp ($19 billion in 2014), and Oculus VR ($2 billion in 2014). These acquisitions have helped the company expand using social media and advanced technology – most geared towards young users. They also set the stage for developing new services into gaming and the metaverse interactions.

Facebook has also been under intense pressure this fall after stories emerged about its calculated social media strategies and toxic handling of Instagram for teenage girls. Other issues that Facebook faces includes antitrust regulations and privacy concerns in the U.S. and Europe.

What does the future metaverse hold for us?

Group Activities and Discussion Questions:

  1. Discuss the importance and value of a strong brand.
  2. Poll students: Should Facebook rebrand? What does ‘metaverse’ mean to them?
  3. Show Meta website: https://about.facebook.com/meta/
  4. Ask students to define “metaverse.” What is its appeal to consumers?
  5. View a video from WSJ: https://on.wsj.com/3mnxucW
  6. Additional videos are available on Meta’s YouTube channel: https://www.youtube.com/channel/UC04FyDIvYXNecpbG8gyOw4A
  7. Discuss other corporate rebranding efforts such as Google’s rebrand to Alphabet.
  8. When does rebranding make sense for corporations? When should it be avoided?

Source: Forbes; New York Time; The Verge; Wall Street Journal; other news sources

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