Xbox to acquire Activision Blizzard in historic $70 Billion industry consolidation
Photo: Corbis via Getty Images
Microsoft has just announced their intent to acquire Activision Blizzard - the publisher behind blockbuster gaming franchises like Call of Duty, World of Warcraft, and CandyCrush - in a landmark acquisition that will undoubtedly send ripples across the gaming world. Totaling nearly $70 billion, the all-cash deal is the largest of its kind in the history of the industry - eclipsing the recently announced TakeTwo-Zynga acquisition, and Microsoft’s previous purchases of Zenimax aswell as Minecraft maker, Mojang.
Microsoft CEO Satya Nadella addressed the acquisition via the Microsoft News post, outlining how the addition of gaming giant Activision Blizzard will propel Microsoft to being a key developer for metaverse platforms. He stressed, however, that Microsoft intends to retain what makes these newly added studios great by keeping “players and creators first” in the development process. Phil Spencer, CEO of Microsoft Gaming, adds that Xbox will “offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass”, ranging from new releases to classics from Activision Blizzard’s treasured catalogue - and that the acquisition will also “accelerate” Xbox’s plans in cloud game streaming. At this time, it is unclear whether traditionally cross platform experiences, such as Call of Duty and Overwatch, will remain available to players on other consoles like Sony’s Playstation 5.
The news this morning breaks amidst Activision Blizzard’s ongoing controversy regarding allegations of sexual misconduct, employee retaliation, and other disgusting behavior that was reportedly widespread across the publisher. The California Department of Fair Employment and Housing, as well as the Equal Employment Opportunity Commission, have each filed lawsuits targeting Activision Blizzard for their insufficient management of the aforementioned issues with the former still ongoing. Chief Executive of Activision Blizzard, Bobby Kotick, is not unfamiliar with the spotlight himself either. Beyond allegedly knowing about the sexual assaults for years and taking insufficient action in that time, he has reportedly threatened to kill his assistant and regularly earns enormous compensation for his role while cutting jobs across the company. According to Microsoft PR, he will remain CEO of Activision Blizzard until at least the acquisition is completed next year.
Pardon the editorializing: Bobby Kotick has demonstrated that he deserves no further role in this industry, and Microsoft should remove him of his role effective immediately upon the completion of the acquisition. This is but one step of righting the wrongs that have transpired over the decades at the company, and Microsoft should seek to prioritize that as they absorb the various studios and game developers from the publisher.
Photo: Xbox Wire, 2022
There is a fundamental question that remains in the wake of this mega deal:
What about industry consolidation?
Should we be concerned that two of the largest technology and entertainment corporations in the world have pooled together their competitive and financial power? It is quite reasonable to fear that this cannot be as wholly positive as these two industry titans would have us believe. Previous mega-mergers in technology and entertainment have brought layoffs due to duplicative team responsibilities, vast sums of money flowing into the pockets of millionaire and billionaire executives, and consolidation of industries into fewer and fewer competing players. The latter could result in higher costs for consumers, without tangible benefits in exchange for the terms of the market. On the other hand, the combined revenues of Microsoft and Activision Blizzard would comprise the 3rd largest company in gaming by revenue - still trailing behind the likes of Sony. And there remain hundreds and thousands of game developers across the world - Microsoft Gaming would not in a traditional sense competitively appear as a monopoly.
More details on this purchase remain outstanding. In spite of assurances from Microsoft and Activision Blizzard, the industry appears to be responding quite cautiously to the news this morning. The prospects of a bolstered Game Pass and Xbox first party portfolio are exciting for many gamers, but the long term ramifications of this deal are yet to be made clear. But we woke up to a very different industry this morning - and it will never be the same from this day forward.
Keep following Solve for Xbox for more news and commentary on all things Xbox, Game Pass, and now I guess Activision Blizzard? Very odd stuff indeed!
