Warner Bros. Discovery is reportedly looking to avoid a major company breakup following years of financial strife, with a view to sell off its smaller assets, such as a stake in its video games business.
WBD stock has fallen significantly since 2022, likely as a result of economic difficulties, compounding by poor management choices, and the failure of many high-profile projects. Per The Financial Times, WBD management has allegedly evaluated “all options” to reverse the company’s fortunes, but it wants to avoid significant structural change.
It’s believed that a WBD split would be far too complex, as it would have “significant operational challenges,” with sports rights and television deals contributing to legal complications. That’s not to mention potential issues with investors and partners. Rather than pursuing this “nuclear option” it’s alleged WBD is considering smaller sales, ie. for its video games business, to streamline its operations.
This topic was actually first raised several years ago, with WB (prior to its merger with Discovery) previously considering the sale of its games business to Microsoft or Take-Two, for a reported value of up to USD $4 billion. Given recent events, it may be that discussions are back on the table.
Read: Suicide Squad: Kill the Justice League labelled ‘disappointing’ by WBD
While WBD had a smash hit with Hogwarts Legacy in 2023, and it seemed to remain enthusiastic about live service games as of March 2024, Suicide Squad: Kill the Justice League was notably “disappointing” and lost the company USD $200 million. It may be this hit which has inspired reported talks about selling off WBD’s video games business.
Who could buy WBD’s video games business?
Should this plan eventuate, there’s plenty of questions to ask, including what WBD’s video games business is worth, and who exactly would have capacity to purchase it. Both formerly interested parties – Microsoft and Take-Two – have recently made their own significant purchases of game studios, and have been in cost-cutting mode lately.
Microsoft purchased Activision Blizzard in 2022, for a total of USD $68.7 billion. This process was dogged by legal complications, as global courts questioned potential monopoly powers in the market – and it’s likely a move to purchase WBD’s business would raise further scrutiny.
Take-Two purchased Gearbox from Embracer Group in 2024, for the price of US $460 million. While any WBD acquisition would likely face lesser scrutiny in the court of law, Take-Two has only recently wound down a cost-cutting program which saw studios shut down, and hundreds laid off.
As it stands, plenty of video game companies are experiencing financial hardship as the economy takes a nosedive. While WBD is reportedly considering selling off its video game business, the timing and circumstances will likely make this process difficult. For now, WBD has not announced anything official, but we are likely to hear more from the company in the coming months.
