Warner Bros. ($TWX) — also known as WarnerMedia a subdivision of AT&T ($T), not to be confused with Time Warner Cable Inc. ($TWC) — is a complicated company.
Primarily, it's known as a movie studio that owns/licenses lots of intellectual property (Lord of the Rings, Harry Potter, DC Comics, Looney Tunes, etc.). Warner Bros. has been around for a long time, releasing films and TV shows. It has the famous water tower and lot, and it still does a ton of production, albeit at a slowing pace due to COVID-19. HBO Max was the company's latest attempt to capitalize on that renowned IP, and is clearly the focus for the long term. But is that a detriment to the other part of the company, Warner Bros. Interactive Entertainment, which utilizes its IP by making rad video games? Apparently so, since there are rumors they might sell.
If you ask us, we don't buy into those rumors. It doesn't make sense to get rid of some of the biggest names in gaming, which uses Warner Bros. properties and licenses, for just $4 billion. Rocksteady has been making successful, highly acclaimed Batman games for more than a decade. Netherrealm has made Mortal Kombat more popular now than in the early '90s. There are quite a few high profile Lord of the Rings, DC, and Harry Potter games in development, and it just wouldn't make sense to let the entire gaming division go since they only make things out of Warner's catalog.
Warner Bros. isn't at a loss for fans, but if the company stops iterating on its franchises, it could lose the interest of loyalists. Giving up on their profitable games division seems like a surefire way to cut off your nose to spite your face. The WB Games Facebook page has 569,000+ likes and followers. WB games are almost always Game of the Year contenders, and selling studios would create the need to license out your IP to new publishers that might create lesser quality games.
So who is potentially buying, if those reports are to be believed? As it turns out, the three largest game publishers in the world are looking to beef up their libraries. Take-Two Interactive ($TTWO), Activision Blizzard ($ATVI), and EA ($EA) are giants in the industry, and if they smelled blood in the water, they would absolutely pounce on the opportunity to take in world-class teams and whatever projects they have under development.
Take-Two is best known for owning 2K and Borderlands (which is soon to be adapted into a movie) and creating Grand Theft Auto, Rockstar Games. It's big enough to absorb the 10 main studios (which also include Avalanche, Monolith, and a host of others worldwide) and take the small financial hit for potentially massive gains.
The other good fit could be Electronic Arts, which is very familiar with licensed games. The company handles Star Wars games for Disney as of now, and have both the FIFA and NFL licenses to make exclusive games (you've probably heard of Madden. That's EA). EA relies heavily on multiplayer games at the moment, which make their money through more nefarious business models. Warner Bros. games are single-player only, and could be a nice complement to the current slate.
Activision Blizzard doesn't usually rely on licensed games, which makes it the hardest fit, but the company has enough money to throw at Warner Bros. and has a need to fill its portfolio. After letting go/closing studios and laying off employees for the last few years, Activision could definitely use some more games that differ from its standard annual Call of Duty release.
Anything could happen, but we don't see a deal being done any time soon. WB Games is already planning on showing their new line-up this summer, and this could all be a giant thought exercise for nothing.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.