Microsoft snaps up Activision Blizzard for US$68.7bn, forms metaverse foundation

Microsoft is acquiring video game company Activision Blizzard for US$68.7 billion to accelerate its gaming business across mobile, PC, console, and cloud. The acquisition will also provide building blocks for the metaverse, Microsoft said. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony, the company said in a press statement. The transaction is US$95.00 per share and the all-cash transaction includes Activision Blizzard's net cash. 

The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios such as Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush, in addition to global esports activities through Major League Gaming. Activision Blizzard has studios worldwide with nearly 10,000 employees. 

With games such as Candy Crush, Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment. The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which now has more than 25 million subscribers.

With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and US$3 billion franchises, Microsoft said 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. 

Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. The deal is expected to close in fiscal year 2023 and once this happens, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.

Satya Nadella, Microsoft's chairman and CEO, said gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. "We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all," Nadella added.

Kotick added that the combination of Activision Blizzard’s talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure the company's continued success in an increasingly competitive industry.

The acquisition comes shortly after Activision Blizzard reportedly "fired or pushed out" more than 36 employees and disciplined approximately 40 others since July. According to The Wall Street Journal, this was part of its plans to handle sexual harassment allegations and other misconduct at the company. Citing its sources, WSJ said the individuals were expected to be terminated before the winter holidays but Kotick "held it back". He had reportedly revealed to some individuals that the job cuts could make Activision Blizzard's workplace problems "bigger than is already known". 

Also, the video game company had reportedly collected about 700 reports of employee concern regarding misconduct and other issues since July, WSJ said. According to WSJ, Activision Blizzard's spokesperson confirmed that 37 individuals have "exited" and 44 "have been disciplined" as part of its investigation. 

When it came to the 700 reports, however, the spokesperson said employee comments comprised social media statements. The issues covered reportedly ranged from "benign workplace concerns" to "a small number" of potentially serious assertions, all of which the company has investigated, WSJ said. The spokesperson also stressed that the statement regarding Kotick "is untrue" and its focus is ensuring it has "accurate data and analysis to share". 

Activision Blizzard has been under the spotlight since last November following a WSJ investigative article that reported that Kotick, who has been CEO for more than 30 years, did not alert the board of sexual misconduct allegations against managers that he was aware of, including rape. Last November, Kotick also said he will consider leaving the company if he is unable to fix the company's culture problems quickly. 

At the same time, the video gaming company is under regulatory probes from the Securities and Exchange Commission and the California Department of Fair Employment and Housing into its culture and the management of harassment allegations, WSJ said. MARKETING-INTERACTIVE has reached out to Activision Blizzard for comment.

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