Meta hasn't been in China since Facebook was blocked way back in 2009, but that may be about to change. The company is reportedly planning to release an all-new, lower-priced version of its virtual reality headset in the nation via an exclusive deal with video game giant Tencent, The Wall Street Journal has reported. Sales are tentatively set to begin in late 2024, but some details must still be finalized. 

The new headset would be more powerful than the Quest 2, but use lower-quality optics than the Quest 3, according to the report. The more budget-oriented headset may also be sold in other regions. Meta would reportedly take a larger share of headset sales, while Tencent pull in more of the content and service revenue, "like software subscriptions and game sales."

The deal would open up a huge market for Meta's VR division, which has been hemorrhaging money and could certainly use the boost. However, it's not clear whether Tencent would require government approval to sell the devices. Gaming is a popular VR activity, but China's strict rules have already had a significant impact on Tencent, the world's largest video game company. 

China may not be a panacea for Meta's weak VR division, either. TikTok owner ByteDance is China's virtual reality leader with its Pico headset, but is struggling with sales in China just as Meta is elsewhere. And Tencent itself was reportedly on the brink of disbanding its own VR division, but supposedly built it back up once the Meta deal seemed inevitable. Headset sales across the globe fell nearly 45 percent this quarter compared to the same period last year. 

If the deal goes through, Meta would regain a foothold in China after 14 years with no direct presence there. The company has a 50 percent worldwide share of the VR market, with Sony's PlayStation VR2 and Pico's VR headset in second and third place. Apple is about to enter the market with its $3,500 Vision Pro headset, but isn't likely to have a serious presence until it releases a cheaper version down the road. 

Sony has had a blockbuster quarter when it comes to PlayStation 5 sales. The company has sold 4.9 million PS5 units in its second financial quarter ending on September 30, bringing the total number of consoles sold to 46.6 million. It didn't quite reach last year's holiday figures, but it still moved 1.6 million units more than the same period in 2022. To note, Sony couldn't keep up with the demand for the console for quite some time due to the supply chain issues that plagued the tech industry, but it was finally able to ramp up production last year after the shortages had eased up. By July 2023, it announced that it had already sold more than 40 million PS5 consoles since the model came out in November 2020. 

To be able to reach its sales target of shipping 25 million PS5 units for this financial year, however, Sony will have to sell 16.8 million more units. That's a massive figure, considering it only sold 19.1 million PS5 consoles for the whole financial year of 2022. But according to Reuters, Sony President Hiroki Totoki is confident that the goal is something the company "can attain very easily." The company is likely expecting a boost in sales when its smaller PS5 models come out this month, just in time for people's holiday shopping sprees. 

In addition to its hardware sales, Sony has also reported that it sold 67.6 million games in the second quarter, though only 4.7 million are first-party titles. It will most likely post much higher first-party sales in the next quarter, though, seeing as Marvel’s Spider-Man 2 sold 5 million units within its first 11 days, eclipsing the performance of its prequel that sold 9 million copies in 80 days. 

There has been another twist in the WeWork saga as the office space rental company has filed for bankruptcy protection. Following reports last week that the company was expected to file for Chapter 11 protection, WeWork's shares were halted on the New York Stock Exchange (NYSE) on Monday. According to The New York Times, it described its bankruptcy filing as a "comprehensive reorganization" of its business. 

A number of factors played into WeWork's fall, including trying to grow too fast in its early days. The company has attempted to cut costs in recent years (including by closing several co-working spaces in the wake of COVID-19 lockdowns) while its revenue has grown. 

However, WeWork has been toiling in a real estate market that has felt the pinch of inflation and the rising costs of borrowing money. It has also been contending with another pandemic-accelerated change as millions more people are opting to work remotely instead of going to their company's offices. In its most recent earnings report in August, WeWork said it had "substantial doubt" about its ability to remain operational.

WeWork first attempted to go public in 2019, though it withdrew plans for an initial public offering after investors expressed concerns over profitability and corporate governance. Its S-1 filing showed losses of over $900 million for the first half of 2019 and indicated that WeWork was on the hook for over $47 billion worth of lease payments — WeWork takes out long-term leases on office space and rents it to workers and companies on a short-term basis.

That fiasco led to Softbank, which at one point led an investment round into WeWork when it had a valuation of $47 billion, taking control of the company. Softbank pushed out co-founder and CEO Adam Neumann with an exit package that was said to be worth $445 million.

The business eventually went public in 2021 after it merged with a special-purpose acquisition company. WeWork shares cost more than $400 two years ago, but by Monday the price had dropped to under $1.

WeWork has made more attempts to steady the ship. In September, the company completed a reverse stock split. It said this was conducted to help it continue to comply with the $1 minimum share closing price required to stay listed on the NYSE.

Later that month, WeWork said it would try to renegotiate the vast majority of its leases. At the time, CEO David Tolley pointed out that the company's lease liabilities amounted to over two-thirds of its operating income in the second quarter of this year.

On October 31, WeWork said it would withhold some interest payments — even though it had the cash to make them — in an attempt to improve its balance sheet. The company then entered a 30-day grace period before an event of default.

Meanwhile, Neumann has a new real estate venture, this time focused on residential rentals. It emerged last year that he had bought more than 3,000 apartments in Miami, Fort Lauderdale, Atlanta and Nashville. Flow, the company that will manage those properties, has reportedly received an investment of $350 million from venture capital firm Andreessen Horowitz.

Apple's latest earnings report paints a picture of software wins amid a hardware slump. In a statement announcing the financial results for its fiscal fourth quarter, the company called out a new all-time high for revenue from its Services products. It also highlighted iPhone revenue as having set a September quarter record. However, this marks the fourth consecutive quarter of overall revenue decline, with its earnings of $89.5 billion representing a 1 percent drop year over year. This also means the record-breaking performances of the iPhone and Services divisions did little to offset weakness elsewhere. 

The lackluster performance is somewhat understandable, though. The company just had a launch event for its new M3 chips, MacBooks and an iMac this week, none of which can be bought yet. And though the new iPhone 15 lineup and Apple Watches were introduced in September, sales of those devices likely did not account for much of this fiscal quarter’s results. We're also anticipating a November release for new iPads this year, which could further fuel hardware revenue. 

Correspondingly, the Mac, iPad and wearables divisions were down this quarter, with the first two taking noticeable hits. Though Apple drummed up significant interest with the Vision Pro headset earlier this year, that device is far from ready to be sold to the public and is unlikely to hit the market until 2024 at the earliest. With holiday shopping about to ramp up, as well as more product releases on the horizon, it’s much more likely that the company’s hardware products will have a greater impact on its bottom line next quarter.

Samsung has been reporting steep profit declines and record-breaking losses over the past quarters, and while it has yet to go back to its previous numbers, it sounds optimistic for the future in its latest earnings report. The company credited the strong sales of its mobile flagship devices and its premium displays for doing better the past three months than the previous quarters. Samsung also said that its Device Solutions (DS) division, which includes its memory and foundry businesses, has narrowed its losses. It even expects demand for memory chips to recover gradually with the rise in popularity of artificial intelligence. 

The company has posted a consolidated revenue of KRW 67.40 trillion ($49.9 billion) for the third quarter of 2023, which shows a respectable 12 percent increase from the previous quarter's. It reported KRW 2.43 trillion ($1.80 billion) in profit, as well, and while that's a third of what it earned in the same period of 2022 — KRW 10.85 trillion or $7.6 billion — that figure still much better than the $527 million profit it reported for the second quarter. 

For its mobile and network business, in particular, it reported KRW 30 trillion ($22.17 billion) in consolidated revenue, as well as KRW 3.30 trillion ($2.44 billion) in operating profit. There was a higher demand in the third quarter compared to the second, Samsung said, thanks to the global smartphone market showing signs of recovery. If you'll recall, the company mostly blamed its drop in revenue for the second quarter to a decline in smartphone shipments. For this period, it says the Galaxy S23 series has maintained "solid sales momentum," while its foldables, tablets and wearables recorded strong sales. It expects smartphones sales to grow next quarter due to the holiday season and for the market to bounce back next year "as consumer sentiment stabilizes in anticipation of a global economic recovery."

Another segment that did well in the third quarter is Samsung's mobile panel business, which "reported a significant increase in earnings on the back of new flagship model releases by major customers." As Bloomberg notes, those new flagship model releases could include Apple's iPhone 15. Samsung intends to continue focusing on OLED panels for its mobile display business and plans to establish a supply chain catering to the augmented and virtual reality market. 

Finally, the company's semiconductor division posted KRW 3.75 trillion ($2.77 billion) in operating losses for the quarter, which is slightly better than its KRW 4.36 trillion ($3.23 billion) losses in the previous one. Samsung expects the demand for PCs and mobile devices to improve next period, and it's anticipating strong server demand from cloud service providers thanks to generative AI applications. 

Meta’s increasingly aggressive push to promote Threads seems to be paying off. Mark Zuckerberg said the app currently has “just under” 100 million monthly active users, and that he thinks there’s a “good chance” the app could reach 1 billion users in the next couple of years.

“I thought for a long time, there should be a billion-person public conversations app that is a bit more positive and I think that if we keep at this for a few more years, then I think we have a good chance of achieving our vision there,” Zuckerberg said during the company’s third-quarter earnings call.

Threads’ growth has been closely watched since its July launch. The app saw 100 million sign-ups in its first week, but quickly saw engagement drop off amid complaints about limited functionality and feeds flooded with posts from brands. But Meta has steadily added new features, and engagement seems to have rebounded in recent weeks as Elon Musk makes unpopular changes to X, like stripping headlines from links. The Wall Street Journal reported this week that Threads has recently succeeded in attracting former “power users” from X.

Threads’ growth wasn’t the only bright spot for Meta, which reported just over $34 billion in revenue for the quarter, a 23 percent increase from last year. There are no 3.9 billion people who use one of the company’s each month, a new high for the social media company. During a call with analysts, Zuckerberg said that Meta’s recent focus on “efficiency,” which resulted in the company shedding more than 20,000 jobs over the last year, has been an effective strategy that will continue as the company faces “a very volatile world.”

Zuckerberg also shared that Meta would be increasingly focused on generative AI going forward. “We're going to continue deprioritizing a number of non-AI projects across the company to shift people towards working on AI instead,” Zuckerberg said.

Those AI investments, however, won’t come at the expense of new spending on the metaverse. Reality Labs, Meta’s division overseeing its AR and VR spending, continued its multibillion-dollar losing streak. Revenue from Reality Labs sank to just $210 million, with losses climbing to $3.7 billion for the quarter and more than $11 billion since the start of 2023. Meta CFO Susan Li said the losses were expected to accelerate further in the coming year due to “ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem.”

Zuckerberg, who has recently attempted to highlight AI advancements within AR and VR, said that the technology has the potential to reshape all of the company’s services. “Generative AI is going to transform meaningfully how people use each of the different apps that we build,” he said.

Snapchat grew to more than 400 million users, Snap announced in its third-quarter earnings report. The app added nine million new users in the last quarter, bringing its total daily active users (DAUs) to 406 million, an increase of 12 percent from last year, the company said.

The milestone comes a little more than a year after Snap laid off about 20 percent of its workforce in an effort to cut costs as advertising revenue slowed. Those cuts, along with new product features, are apparently starting to pay off.

The company reported $1.19 billion in revenue for the quarter, an increase of 5 percent from last year and better than Wall Street analysts expected, according to CNBC. In a statement, Snap pointed to its subscription service, Snapchat+, as a key part of its strategy to grow its non-advertising sources of revenue. Snap announced last month that Snapchat+, which offers users exclusive and experimental features for $4 a month, had reached five million subscribers.

Generative AI has also been a bright spot for the company. The company’s MyAI chatbot, which rolled out to all Snapchat users in April, has reached more than 200 million people who have collectively exchanged more than 20 billion messages with the OpenAI-powered chatbot. Snap said it believes the assistant is one of the “most used AI chatbots available today.”

Developing...

GM announced on Tuesday that it’s delaying production of the Equinox EV, Silverado EV and GMC Sierra EV. Electrek reported on the comments from the automaker’s earnings call, citing a desire to “protect” GM’s pricing while adjusting to shifting EV demand. The company didn’t commit to a specific timeline to resume production, only saying the delay would last “a few months.”

“We are also moderating the acceleration of EV production in North America to protect our pricing, adjust to slower near-term growth in demand, and implement engineering efficiency and other improvements that will make our vehicles less expensive to produce, and more profitable,” GM CEO Mary Barra said in the company’s Q3 earnings call Tuesday.

Barra said the changes “will make our vehicles less expensive to produce, and more profitable” in the long run. She warned that the EV delays would affect Ultium-based models, including the Equinox EV, Silverado EV RST and GMC Sierra EV.

The move comes a week after GM announced it would delay EV truck production (Silverado EV and GMC Sierra EV) at its Orion assembly plant in Michigan until late 2025. GM spokesperson Kevin Kelley said the move was designed to “better manage capital investment while aligning with evolving EV demand.”

The United Auto Workers strike began in September and is the elephant in the room amid GM’s production shakeup. Citing uncertain labor costs related to the strike, the automaker also withdrew its full-year financial guidance. It expects to provide more clarity for investors once new union contracts are signed. “Accepting unsustainably high [labor] costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do,” Barra said.

The biggest acquisition in gaming history and one of the largest in the tech industry is in the books. Twenty months after the deal was announced, Microsoft has bought Activision Blizzard for $68.7 billion, the largest acquisition in the company's history. CEO of Microsoft Gaming Phil Spencer has asked Activision CEO Bobby Kotick to stay on until the end of 2023, at which point he'll be leaving the company. It's been a long road filled with plenty of twists and turns to get to this point.

The UK's Competition and Markets Authority (CMA) initially blocked the deal in April, though it and the companies agreed to pause Microsoft's appeal to try and resolve the regulator's reservations over the merger's impact on the cloud gaming industry. An appeal tribunal approved a request to delay the proceedings. 

In an attempt to win over the UK regulator, Microsoft agreed to sell the cloud gaming rights for Activision Blizzard titles to Ubisoft. That means that not only should Activision Blizzard's games be on Xbox Game Pass, but they'll land on Ubisoft+ and any other game-streaming service Ubisoft decides to work with. Concerns about competition in the cloud gaming market was the CMA's reasoning for initially blocking Microsoft's takeover of Activision, but the watchdog said in September that the Ubisoft concession "opens the door to the deal being cleared." A few weeks later, the CMA has rubberstamped the merger.

Microsoft also signed 10-year agreements with Nintendo and several cloud-gaming companies to offer its titles on their platforms. Those moves led to the European Union giving the merger the green light. The bloc's competition officials reportedly didn't see anything in the amended merger agreement (with the Ubisoft plan factored in) that would prompt a fresh antitrust investigation. 

The Federal Trade Commission's attempts to stop the deal over competition concerns haven't panned out. The agency sued to block it in December and an evidentiary hearing in that case was slated to take place on August 2nd. The FTC tried to temporarily block the merger with a preliminary injunction ahead of its administrative trial, but a judge denied that effort. 

The FTC still plans to challenge the merger. If that effort is successful, Microsoft could be forced to divest some or all of Activision Blizzard.

But for now, the deal is done. It means, among other things, that Activision Blizzard titles will be available on cloud gaming platforms for the first time since the publisher pulled its titles from GeForce Now in early 2020. Its games will surely join Game Pass in the very near future, including on Xbox Cloud Gaming, and they'll pop up on Ubisoft+ and other platforms Ubisoft works with.

Those waiting for Activision Blizzard's two biggest games of 2023 to hit Game Pass will certainly need to remain patient, though. The publisher has said Call of Duty: Modern Warfare III and Diablo IV won't hit the service until next year.

Meanwhile, Blizzard games are already coming to Steam rather than being siloed on the Battle.net launcher. We'll probably see them appearing on Xbox's PC app too. For what it's worth, in court filings, Microsoft called Activision's strategy of releasing PC versions of Call of Duty titles exclusively on Battle.net in a bid to grow the platform a "resounding failure."

ASSOCIATED PRESS

One of the key reasons Microsoft gave for pursuing the deal was to accelerate its aim of becoming a major player in the mobile gaming market. With Activision Blizzard pulling in $1.9 billion in mobile revenue in the first six months of 2023 alone, it will achieve that goal practically overnight. 

King, which is behind the hugely successful Candy Crush franchise, generated more revenue ($1.49 billion) than Activision ($1.15 billion) in the first half of this year. Thanks largely to the massive success of Diablo IV, Blizzard brought in the most of the three units during that period with a hair over $1.5 billion. Still, King had 238 million monthly active users as of June 30th, just over twice as many as Activision and Blizzard combined. It recently emerged that Candy Crush Saga has generated over $20 billion in lifetime revenue.

Blizzard has also been making a push into mobile gaming with the likes of Diablo Immortal. Activision, meanwhile, has Call of Duty Mobile in its portfolio and Call of Duty: Warzone Mobile is on the way. The company said in its most recent earnings report Call of Duty has around 90 million monthly players, "with over half of all engagement on the mobile platform."

As for exclusivity of future projects, Microsoft Gaming CEO Phil Spencer has promised to "do whatever it takes" to keep shipping Call of Duty games on PlayStation. After months of refusing to do so, Sony eventually signed a 10-year pact just before the initial merger deadline of July 18th to keep that particular franchise on PlayStation, conceding defeat in its efforts to halt the acquisition. However, Microsoft will likely opt to keep other Activision Blizzard games off of PlayStation platforms, as it has done with ZeniMax/Bethesda titles Redfall and Starfield, as well as MachineGames' upcoming Indiana Jones project.

Meanwhile, many observers hope that Microsoft will help stamp out the alleged toxic workplace culture at Activision Blizzard. Earlier this year, Activision Blizzard paid $35 million to settle SEC charges related to how it handled employees' workplace misconduct complaints.

In 2021, the California Civil Rights Department (formerly the Department of Fair Employment and Housing) sued the company and accused it of fostering a "frat boy" culture in which female employees were harassed and discriminated against. Activision Blizzard countersued the CRD in December. The case hasn't been resolved. In fact, the CRD's lawsuit (which, along with other events, sent Activision's stock tumbling) set the ball rolling on Microsoft's acquisition of the company in the first place.

UK's antitrust regulator has given Microsoft the green light to buy Activision Blizzard for $68.7 billion following a protracted back and forth. The regulator called Microsoft's concession to sell cloud gaming rights to Ubisoft a "gamechanger that will promote competition."

With the last major obstacle out of the way, the Competitions and Markets Authority (CMA) has now largely cleared the path for the companies to close the biggest merger in gaming history. That move was widely expected after the watchdog said in September that the company's revised merger agreement "substantially addresses previous concerns and opens the door to the deal being cleared."

In April, the CMA blocked the deal on the grounds of a belief that it would make Microsoft too dominant of a player in the cloud gaming space. However, as other dominoes that were preventing the deal from happening fell, the CMA gave Microsoft a second chance to resolve its concerns. The companies extended their merger agreement by three months to give them time to smooth things out with the CMA.

Microsoft later submitted a modified deal to the watchdog that will see it sell Activision Blizzard game streaming rights to Ubisoft if the merger goes through. Ubisoft would then handle cloud streaming rights in perpetuity for current titles and any others that Activision Blizzard releases over the following 15 years. Given that the CMA's misgivings over the original deal, Microsoft evidently hoped that the concession would be significant enough to resolve the regulator's concerns. Evidently, that's exactly what happened.

The CMA said last month that it had "residual concerns" about enforcement of Microsoft's revised proposal. However, it noted that "Microsoft gave undertakings that will ensure that the terms of the sale of Activision's rights to Ubisoft are enforceable by the CMA."

The regulator touted its role in forcing Microsoft to make concessions. "With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market," CMA chief executive Sarah Cardell said in a statement. "As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice. We are the only competition agency globally to have delivered this outcome."

There were suggestions that European Union antitrust regulators might review the amended deal. EU officials approved the acquisition in May after Microsoft made some cloud gaming concessions. According to Bloomberg, the bloc's competition regulators didn't see cause for concern with the amended deal that would prompt another investigation.

After a US court rejected the Federal Trade Commission's attempt to temporarily block the deal pending an administrative trial, the CMA and both companies in question asked a tribunal to delay Microsoft's appeal against the UK regulator's initial decision. The tribunal agreed and, after reviewing the updated proposal from Microsoft, the CMA has rubberstamped the merger. It now seems like just a matter of time until this is a done deal and one of the biggest tech mergers in memory is in the books.

There is one significant potential hurdle remaining, however. The FTC is moving forward with its attempt to challenge the deal. That effort won't stop Microsoft from closing the acquisition, but there's a chance that the FTC could force the company to divest some or all of Activision Blizzard.