Last week was a big event in the video game industry. In a deal that dwarfed everyone else before it (in the gaming business, anyway), Microsoft surprised the world by announcing it would buy Activision Blizzard for a whopping $68.7 billion. The news comes two months after Microsoft Gaming CEO Phil Spencer described Activision Blizzard’s sexual harassment and discrimination scandal as “horrific” and said Microsoft was “evaluating every aspect of its relationship with the company.” of.
The scale of the acquisition is staggering: When complete, Microsoft will control some of the biggest franchises in the world, including Call of Duty, Warcraft, and Overwatch, as well as a massive backlog of older games. Combine that with Microsoft’s acquisition of Bethesda Softworks more than a year ago — a blockbuster deal in itself, albeit at a fraction of Activision Blizzard’s price — and it would make Microsoft the third-largest gaming company in the world. world income.
It’s not a done deal, and Activision Blizzard comes with a lot of baggage that could complicate the regulatory approval process. But if it does pass — and the general consensus is that it will — then it could shake up the video game industry in ways we’ve never seen before.
With a flood of news coverage in just a few days, here’s what we know so far about the deal, its impact, and the industry’s reaction:
- How much did Microsoft spend? $68.7 billion
- When will the transaction be completed? Possibly sometime between July 2022 and July 2023
- Are Activision Blizzard games coming to Game Pass now? Yes, it’s part of Microsoft’s plan
- Will Activision Blizzard games now be exclusive to Xbox and PC? Microsoft says it will honor its existing Sony contract and won’t make Call of Duty exclusives right away, but it’s likely that some of Activision Blizzard’s future games won’t come to PlayStation. There’s precedent: After Microsoft acquired Bethesda, we learned that Starfield and The Elder Scrolls 6 would be Xbox and PC exclusives.
- Is Bobby Kotick still CEO of Activision Blizzard? Yes, for now, but he may leave after the deal.
- How many PC game developers does Microsoft have now? a lot of. Here is a list.
- Is this a good thing or a bad thing? Can’t say! But we’ve already thought about it.
‘business as usual’ when the deal closes
One Filing with the SEC Answers some basic questions about the impact of the acquisition: Until the deal closes, both companies operate independently, “business as usual” and no immediate layoffs are expected. As for Kotick’s identity, however, it only said it would remain CEO after the matter: “Once the transaction is complete, the Activision Blizzard business will report to Microsoft Gaming CEO Phil Spencer.”
The industry responded quickly and intensely.Microsoft execs are naturally optimistic – Xbox GM Aaron Greenberg He said he was “proud of the team we have at Xbox/Microsoft – and the ABK Workers Union is more cautious:
We remain committed to improving workplace and employee rights, regardless of who controls the company financially. (2/6)January 18, 2022
Game Development Consultant Rami Ismail said the deal cemented the already hugely popular Game Pass as “the best deal in consumer gaming,” while industry analysist Daniel Ahmed Take note of Microsoft’s broader gaming strategy. Bloomberg’s Jon Erlichman did some comparative work to give the size of acquisitions:
Microsoft’s biggest acquisitions: Activision Blizzard: $68.7 billion Linkedin: $26.2 billion Nuance: $19.7 billion Skype: $8.5 billion ZeniMax: $7.5 billion GitHub: $7.5 billion Nokia Phone: $7.2 billion aQuantive: $6.3 billion Mojang ( Minecraft): $2.5 billionJanuary 18, 2022
Bobby Kotick is reportedly leaving Activision Blizzard
While Kotick’s post-acquisition status remains unconfirmed, sources told The Wall Street Journal and Bloomberg that he is expected to step down once the deal closes. Kotick expressed interest in staying on in some capacity, telling VentureBeat that it would be “an easy task” to have Phil Spencer as the new boss, but he was pressured by his long history at the top of Activision Blizzard, during which time he was Conducted workplace abuses have been ignored. Employees, investors and even a group of political activists have called for his removal.
Will the acquisition receive regulatory approval?it looks like this
The scope of the deal means it will be scrutinized by regulators and approval is not a done deal. That said, the general feeling is that it will get the green light.
“Antitrust issues typically arise in horizontal mergers, where companies acquire competitors because those mergers limit competition in that particular market. For example, Microsoft’s acquisition of Sony,” Voyer Law founder and attorney Kellen Voyer told PC Gamer. “Vertical mergers, where a company acquires a downstream company that provides a different function, such as one of its suppliers, may also give rise to antitrust scrutiny, but the anti-competitive nature of the transaction is not clear and the chances of passing the scrutiny are greater.”
Loup founder Gene Munster predicted a similar scenario on CNBC’s Squawk Box, saying there could be “some drama,” but in the end, the deal will be done.
Microsoft doesn’t want Call of Duty exclusive — at least not right away
A big concern for the PlayStation team is that the deal could make the Call of Duty franchise a console-exclusive, especially since it has already done so with StarCraft and The Elder Scrolls 6. However, a few days after the deal was announced, Spencer reassured me that Microsoft had no immediate plans to remove Call of Duty from the PlayStation, which made me a little nervous.
“Great call with Sony leaders this week,” he tweeted. “I confirmed our desire to abide by all existing agreements following the acquisition of Activision Blizzard, as well as our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry and we value our relationship.”
Had a great call with Sony’s leaders this week. I confirmed our intent to abide by all existing agreements following the acquisition of Activision Blizzard, as well as our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry and we value our relationships.January 20, 2022
The carefully worded statement is far from a rock-solid commitment, especially with no mention of other big Activision Blizzard franchises.
Phil Spencer wants to bring back the game he loved as a kid
For some gaming veterans, a more pressing question than Microsoft’s plans for Activision Blizzard’s biggest games is what it thinks about classic games. In that regard, the news could be better. “We hope we can [Activision Blizzard studios] When the deal is done, to make sure we have the resources to develop the franchise that I loved growing up and that the team really wanted to get,” Spencer told Reuters Washington post.
So, Tim Schafer is rebooting space exploration? It’s unlikely, but possible, and it’s a tantalizing prospect.
Raven QA workers form first union at a major North American game studio
Last week, the high-profile Raven Software QA workers voted to create a landmark union, backed by the ABK Workers Union and the Communications Workers of America. The union, known as the Gaming Workers Union, demanded immediate and voluntary recognition from Activision Blizzard, although it also noted that even without management approval, it could be formalized through the National Labor Relations Board.
We are proud to join CWA! https://t.co/ZoJH2qBHNq pic.twitter.com/hKGFhyhLusJanuary 21, 2022
The creation of the union isn’t directly related to the acquisition, but it does introduce a variable that didn’t exist when Microsoft made the acquisition decision, and Microsoft will have to work with it after the deal closes. On the bright side, Raven QA workers ended their strike today in good faith.
World Bank does not approve
The World Bank, an international financial organization that provides loans and grants to poor countries, was not involved in the regulatory process, but even then World Bank President David Malpass disapproved of the deal.
“I was shocked by Microsoft’s $75 billion investment this morning [actually $68.7 billion], at a video game company, the entire IDA20 commitment that we were just able to deliver in December was $24 billion over three years in the long run,” Malpass said in a statement. Peterson Institute for International Economics Virtual Event [via Reuters]”That’s $8 billion a year for the 75 poorest countries. $8 billion versus a one-time investment of $75 billion in a gaming company. You have to wonder — wait, it’s the best Capital allocation?”
Once the deal is done, big things can happen
We can’t really comment on this deal from a global financial standpoint, but we did pull together 28 exciting, interesting possibilities that could emerge from Microsoft’s acquisition of Activision Blizzard after the deal closes . Clips in Overwatch? Hey, you never know.