Video game

Microsoft buys gaming giant Activision for $68.7 billion

Erik Gruenwedel

On January 18, Microsoft announced plans to acquire Activision Blizzard, a leader in video game development and interactive entertainment content publishing, for nearly $69 billion in cash.

Activision properties include “Call of Duty”, “Candy Crush”, “Diablo”, “StarCraft”, “Warcraft” and “Overwatch” franchises. The acquisition aims to accelerate the growth of Microsoft’s Xbox gaming business across mobile, PC, console and cloud and will provide building blocks for the Metaverse – described as a virtual reality space in which users can interact with a computer-generated environment and other users. .

With 3 billion people actively playing video games, including 200 million Americans, and powered by a new generation of interactive features, gaming is now the largest and fastest growing form of home entertainment. fast.

Microsoft will acquire Activision Blizzard for $95 per share, including Activision Blizzard’s net cash. When the deal closes, Microsoft will become the world’s third-largest games company by revenue, behind Tencent and Sony. The planned acquisition also includes Activision’s global esports business through Major League Gaming. The company has studios around the world with nearly 10,000 employees.

Subscribe HERE FOR FREE Media Play News Daily newsletter!

Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will continue to focus on efforts to further strengthen company culture and accelerate company growth. Once the deal is complete, the Activision Blizzard business will report to Phil Spencer, CEO of Microsoft Gaming.

“Gaming is the fastest growing and most exciting entertainment category on any platform today and will play a key role in the development of metaverse platforms,” ​​said Satya Nadella, president and CEO of Microsoft, in a statement. . “We are investing deeply in world-class content, community and cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to everyone.”

Inclusiveness and diversity remain a hot topic at Activision, which reportedly saw thousands of employees sign an online petition last summer demanding improvements to a corporate culture that had bordered on operating like a brotherhood. . Activision has denied the allegations.

Mobile is the largest gaming segment, with nearly 95% of all gamers worldwide enjoying mobile games. Activision Blizzard’s mobile business represents a significant presence and opportunity for Microsoft in this growing segment.

“Gamers everywhere love Activision Blizzard games, and we believe the creative teams have their best work ahead of them,” Spencer said. “Together, we will build a future where people can play the games they want, virtually anywhere they want.”

The acquisition also strengthens Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games in Game Pass, which has reached another milestone of over 25 million subscribers. With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lines of gaming content in the industry. industry. At closing, Microsoft will have 30 in-house game development studios, along with additional esports publishing and production capabilities.

“Combining Activision Blizzard’s extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an industry of increasingly competitive,” said Bobby Kotick, CEO of Activision Blizzard.

The transaction is subject to customary closing conditions and the completion of regulatory review and Activision Blizzard shareholder approval. The deal is expected to close in fiscal 2023 and will be accretive to closing non-GAAP earnings per share. The transaction has been approved by the boards of Microsoft and Activision Blizzard.

Government approval could be a tricky issue, says Michael Pachter, media analyst at Wedbush Securities in Los Angeles.

‘[The deal] has great potential to harm PlayStation, and that will likely be the sticking point with regulators,” Pachter said in an email.

Specifically, the analyst argues that consumers might be wary of buying a PS5 if they are unsure that future Activision games will be available on the platform.

“It’s an issue, and I expect regulators to raise it,” Pachter said. “The ultimate solution is probably to issue a decree of consent [merger allowed] this forces Microsoft to continue offering Activision games on PS5 for several years, but until regulators review this, we won’t know for sure.