Microsoft bids $68.7 billion to buy Activision Blizzard

Activison Blizzard Microsoft deal

Microsoft wants to acquire mega games publisher Activision Blizzard, which would represent the biggest purchase in the history of gaming.

The acquisition will cover huge gaming franchises from the Activision, Blizzard and King studios including Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush. The purchase is for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. It’s being widely reported as the largest deal of its kind in the gaming sector.

Upon completion Activision Blizzard CEO Bobby Kotick will stay on, reporting to CEO of Microsoft Gaming Phil Spencer.

Aside from the potential paradigm smashing implications of one console owner buying up one of the biggest publishers in the games business, perhaps the most obvious thing that could be affected by this deal is the Games Pass – a service owned by Microsoft which is basically Netflix for gaming, in that users pay a monthly subscription to play any games on the service.

One criticism you could make of the move is that the list of games isn’t exactly exhaustive, but then you could probably have said something similar about Netflix in its early streaming days. Microsoft wasn’t shy about revealing that pumping Games Pass up with the new influx of Activision Blizzard titles is exactly what it has in mind.

“The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers,” explained the press release. “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 lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.”

The deal also brings a lot of mobile gaming heft into Microsoft’s camp as well, most obviously with the inclusion of King. What exactly the firm plans to do about that isn’t clear from the below vague statement, but clearly it has a mind to do something cross-platformy with the assets.

“Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile,” said the announcement. “Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like Halo and Warcraft, virtually anywhere they want. And with games like Candy Crush, Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment.”

There’s also been a lot of speculation that the deal is fuelled by Microsoft’s ambitions in the metaverse. While it’s mentioned briefly in the release, there’s nothing much to go on with regards to exactly how the purchase will enable said metaverse plans. While Microsoft clearly wants in on that area as well, it’s also possible this particular deal is mainly a straight up play for a larger slice of the gaming sector rather than a lateral move to help it fight Facebook and Amazon in the tech sector, but it’s certainly being touted by many commentators as just that:

Of course the metaverse hasn’t exactly been defined yet, and simulated interaction in virtual spaces is already part of the gaming industry, with VR headset gaming very much here if not exactly mainstream. So the lines between whatever the metaverse turns out to be and what the gaming sector evolves into may be blurred to say the least.

The console platforms – Microsoft’s Xbox, Sony’s Playstation and Nintendo – have bought up labels and developers before of course, but Activision Blizzard – an entity itself already a conglomerate of the two titular companies and King, the mobile gaming giant behind Candy Crush – represents a huge amount of IP, development and publishing firepower now under Microsoft’s already massive umbrella.

Are there any competition law complications around this? It seems an obvious question since it would presumably be possible to make the entire portfolio of games Xbox or PC exclusive at some point. While the deal has been approved by the boards of Microsoft and Activision Blizzard, questions like this will presumably be chewed on in the regulatory review which will take place before the deal closes.

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