Microsoft announced the purchase of Activision Blizzard for nearly $70 billion. Journalists are already comparing the deal to an earthquake and are trying to find out what will happen when (and if) the agreement between the companies is approved by the US Antitrust Service. Everything we know about the biggest game industry event in history.
On January 18, Microsoft announced the purchase of Activison Blizzard. The deal amounted to 68.7 billion dollars. An agreement has been signed between the companies, which will have to come into force no later than March 2023, if the US Antimonopoly Service does not intervene in the matter. She may decide that in this way Microsoft significantly strengthens its position in the gaming market and interferes with healthy competition. Experts note that there are chances for the deal to be canceled by the antimonopoly service, but they are small. As Phil Spencer himself says in his message to Xbox employees, even after the completion of the deal, Microsoft will remain on the third line in the list of the most profitable gaming companies in the world, behind Sony and Tencent. The media note that the antimonopoly service cannot prevent a deal that will only allow it to enter the top three, and not take a leading position around the world.
Why the deal became possible
The reason probably lies in the troubled year for Activision Blizzard. In 2021, the company first postponed two of its major releases without even announcing a rough release date. We are talking about Overwatch 2 and Diablo 4. Against this background, investors became worried, and stocks began to fall in price. And then the company was hit by a major scandal involving sexual harassment, humiliation based on gender and race, and other types of harassment. An investigation by journalists showed that the management of Activision Blizzard not only knew about what was happening, but also deliberately turned a blind eye, sometimes shielding the leaders.
The scandal led some workers to go on strike and demand that Bobby Kotick, Activision’s longtime chief executive since 1991, resign from the board of directors and step down from his post. The media reported that investors were supporting Kotick, which led to even more unrest among studio employees. The final point, after which investors could force Bobby Kotik to sell the company, was the failure of Call of Duty: Vanguard. It is already known that it sells 34% worse than the previous part and is the most unsuccessful Call of Duty in the last 14 years. This does not prevent her from being in the top three most popular PlayStation games, but the profit from the game is noticeably less. After the deal was announced, information appeared that Bobby Kotick opposed the deal and even tried to find other buyers, but there were none.
Why is it Microsoft?
The $68.7 billion purchase of Activision Blizzard will open up several new markets for the company at once.
- Satya Nadella, CEO of Microsoft, has already said that the deal will create a metaverse that will be the best in the world.
- Microsoft will have several well-known gaming franchises at its disposal, including one of the most profitable – Call of Duty. Every year the game brings Activision Blizzard billions of dollars.
- Xbox and Microsoft will be able to enter mobile markets. Among the many divisions that will come under the wing of Microsoft will be King, one of the leading developers and publishers of mobile games. She owns projects of the Saga series of the genre “three in a row”: Candy Crush Saga, Farm Heroes Saga and others. They also bring in a lot of income.
- Through the purchase of new studios, Microsoft will be able to create a gaming community that will include 3 billion gamers.
- The company may significantly increase the Game Pass subscription service base (for Xbox and PC). Phil Spencer has already stated in a message to gamers that as many games as possible will be added to the catalog once the deal is closed. This means that such projects as Call of Duty, World of Warcraft, Diablo 2: Ressurrected, Crash Bandicoot remasters and many others can become available by subscription. It is known that already now the number of Game Pass subscribers is 25 million people.
What studios will Microsoft get
Upon completion of the deal, Microsoft will own 30 game studios that will create games for it: 343 Industries (Halo), World’s Edge, (Age of Empires), The Coalition (Gears of War), Compulsion Games (We Happy Few), Double Fine Productions (Psychonauts 2), The Initiative (working on a Perfect Dark reboot), InXile (Wasteland franchise), Mojang Studios (Minecraft), Ninja Theory (Hellblade series, Bleeding Edge), Obsidian (Avowed, Grounded, The Outer Worlds), Playground Games (Forza Horizon and Fable restart), Rare (Sea of Thieves), Turn 10 (Forza Motorsport), Undead Labs (State of Decay), Bethesda (The Elder Scrolls, Fallout, Starfield), Alpha Dog Games (mobile game developer) ), ZeniMax Online (The Elder Scrolls Online), Tango Gameworks (The Evil Within, GhostWire: Tokyo), id Software (Doom, Quake), Arkane Studios (Dishonored, Prey and Deathloop), MachineGames (Wolfenstein announced Indiana Jones game ”), Roundhouse Studios, Treyarch (Call of Duty: Black Op s), Toys For Bob (Skylanders and Crash Bandicoot), Infinity Ward (Call of Duty: Modern Warfare), Raven Software (Call of Duty, Singularity), Sledgehammer Games (Call of Duty: Vanguard, Call of Duty: WWII), Radical Entertainment (Prototype), Blizzard Entertainment (World of Warcraft, Diablo, Overwatch), Beenox, Digital Legends, High Moon Studios (Deadpool, Transformers), King (Candy Crush Saga).
What game franchises will Microsoft get
- Call of Duty Main Titles & Warzone
- Call of Duty Mobile
- Candy Crush & Other Titles
- Crash Bandicoot
- guitar hero
- Geometry Wars
- Heroes of the Storm
- Sekiro: Shadows Die Twice
- Tony Hawk’s Pro Skater
- World of Warcraft
It is known that the transaction will be closed until March 2023. Until the deal is approved by the Antimonopoly Service, Microsoft has no right to interfere with the work of Activision Blizzard. Bobby Kotick will lead the firm during the transition period. Sources of The Wall Street Journal learned that after the official confirmation of the deal, Kotick will leave his post. It is assumed that he will receive almost $ 300 million in his hands.
It also became known that Phil Spencer, the former head of Xbox Game Studios, received a promotion and became the head of a new department – Microsoft Gaming. All studios obey him. After the completion of the transaction, he will also be responsible for the studios that are part of Activision Blizzard.
Will Call of Duty be an Xbox and PC exclusive?
Not yet known. Experts suggest that this is a very risky move for Microsoft. The game brings in billions of dollars, and according to statistics, it sells best on the PlayStation. Bloomberg notes that Microsoft plans to make many Activision Blizzard franchises exclusive, but it will keep some of them for the PlayStation. Perhaps Call of Duty is one of them.
What will happen to Sony?
Probably, the company will continue to position itself as a gaming platform with exclusive projects of the highest class. Experts point out that the company does not have such financial resources to compete with Microsoft’s purchases of other studios. On January 19, trading on the stock exchange opened with a fall in the value of Sony shares by 10% or more. So investors have expressed concern that Sony may lose the battle of console generations.