According to Activision founder Bobby Kotick, Berkshire Hathaway’s Charlie Munger was at one point in time interested in buying Nintendo, or at least interested in exploring the idea of buying Nintendo.
Kotick said on the Grit podcast that Munger was not a fan of video games, but saw an opportunity to potentially make a bid for Nintendo. Munger is said to have floated the idea of spending some of Berkshire’s immense holdings on making moves in the video game space. One of Munger’s ideas, apparently, was to buy Nintendo.
“He goes, ‘You know, I was looking at a couple other companies in your sector. I think if we bought yours, we should buy that company Nintendo, too,'” Kotick recalled. “He said, ‘Have you guys looked at it? I was like, ‘Yeah.’ It was trading [at the time] at like 13 billion, with 7 billion in cash. He goes, ‘You know, I don’t think anything is gonna go really bad before I’m dead, and then if it goes bad after I’m dead, they’ll just chalk it up to the folly of an 82-year-old, so you don’t have to be so concerned about disappointing me.”
This came about at a time when the French conglomerate Vivendi was forced to sell its stake in Activision, and Berkshire Hathaway was in the mix to buy it. That didn’t happen, though, as Activision ultimately bought itself back from Vivendi.
During one of his weekly Friday lunches with Munger, Kotick asked for advice on how to structure a buyback from Vivendi. It was at this time that Munger reportedly said he wanted to fund the buyback. When he got up to go to the bathroom, Activision’s Brian Kelly said to Kotick that if Munger–an adept investor–wanted to buy the stake, then he and Kotick should want that as well. And that’s eventually what happened.
“He didn’t like the business [of video games],” Kotick said of Munger. “He thought it was a step removed from gambling. He’s like, ‘You know, you’re preying off people’s addictions.’ And I was like, ‘I’m not. I’m actually giving them joy and fun, and if you ever tried a video game, you’d see that.’ He always had this… little bit of an aversion.”
Of course, Berkshire did not buy Nintendo. As for Munger, he passed away in 2023 at the age of 99. Berkshire Hathaway currently has more than $325 billion in cash and could theoretically try to buy pretty much any company on the open market, but it has not signaled any intent to buy a video game company.
Microsoft also tried to buy Nintendo
More than 20 years ago, Microsoft tried to buy Nintendo. Then-CEO Steve Ballmer sent staff to Japan to broach the idea, and the team apparently got laughed out of the room.
Berkshire did make a very big investment in the video game space in 2022, when it bought almost 15 million shares of Activision Blizzard just before Microsoft announced its intention to buy the company. Berkshire paid an average of about $66.50 per share, and that price surged tremendously after Microsoft announced its plans to buy Activision Blizzard. The deal was ultimately approved at $95 per share, so Berkshire no doubt made a very big profit on the investment.
Game Pass issues
Also in the interview, Kotick discussed Microsoft’s blockbuster $75.4 billion buyout of Activision Blizzard, saying he and Microsoft CEO Satya Nadella “got the deal done in three days.” Of course, it took more than a year for regulatory approval, but the framework was apparently decided in just 72 hours. The only disagreement Kotick and Nadella had around the deal focused on Microsoft’s vision for Game Pass.
Kotick mentioned how World of Warcraft has been successful with its $15/month subscription cost, and that’s just for one game. “Why would I put that into a Game Pass?” Kotick said. “I said to these guys, ‘Why trade our flexible business models where you can do what’s actually in the best interest of the customer.’ I didn’t believe in that. But the beauty if you’re Microsoft… you can take that bet.”
Kotick is not the only higher-up who has questioned the economic realities of Game Pass, as companies like Devolver Digital have spoken critically of the service since day one. Take-Two’s Strauss Zelnick has also discussed why launching new games in Game Pass makes no sense for the company. There are examples, too, of Game Pass actually helping to drive game sales outside the subscription, and Doom creator John Romero just recently said Game Pass doesn’t hurt companies.
Microsoft itself previously acknowledged that Game Pass can, in some cases, cannibalize game sales–but not in every case.