Microsoft is set to acquire Activision Blizzard for $95 billion ($US68 billion) in what is set to be the tech giant’s largest ever purchase.
The deal was announced early on Wednesday morning and will see Microsoft gain some of gaming’s largest franchises including Call of Duty, World of Warcraft, and Candy Crush.
“Our vision is for a river of entertainment where the content and commerce flow freely, driving a renaissance across the entire industry to make games more inclusive and accessible to all,” Microsoft CEO Satya Nadella said during a conference call about the acquisition.
“And together with Activision Blizzard, that’s what we will be able to deliver. Removing these barriers will only become more important as the digital and physical worlds come together and the metaverse platform develops.”
Yes, Microsoft is framing its $95 billion purchase as a metaverse play, indicating the trend of tech companies referring to ‘the metaverse’ is already continuing in 2022.
According to Nadella, Microsoft’s vision for ‘the metaverse’ is “a collection of communities” which are “anchored in strong content franchises” and can be “accessible on every device”.
In other words, the company wants to be the gatekeeper for blockbuster games through its console and cloud gaming platforms, likely with a touch of augmented and virtual reality.
Microsoft’s adoption of the subscription-based Xbox Game Pass has helped see a turn away from the online store model that was long dominated by Valve’s Steam marketplace.
For $11 a month, users can download and install any game on the catalogue. Microsoft is also beta testing its cloud gaming service that, for an extra $5 a month, gives users instant access to that catalogue of games.
Should the Activision Blizzard deal come to fruition, which the parties expect to happen by June 2023, it will see Microsoft’s gaming catalogue greatly expand and allow the company to increase its share of the valuable gaming market.
The acquisition will still have to pass regulatory muster and will no doubt be heavily scrutinised, given the interest from US lawmakers and the Federal Trade Commission (FTC) in big tech antitrust cases.
This has included a complaint that Facebook ought to divest itself of WhatsApp and Instagram which it bought to gain the lion’s share of the social media space, along with suits against Google for dominating search.
According to sources who spoke with Reuters, Microsoft is putting up a US$3 billion 'break-fee' clause in case the deal goes sour, suggesting the tech giant is confident it can win over the FTC.
Activision Blizzard is the product of a 2008 merger between the two video game studios.
CEO Bobby Kotick framed the deal with Microsoft as being a way to get more access to the tech giant’s infrastructure for future projects.
“Competition for diverse talent and the creative and technical capabilities desire to meet the expectations of our players has never been greater,” he said during Wednesday’s conference call.
“As investments in cloud computing, AI and machine learning, more sophisticated data analytics, user interface and user experience capabilities become more competitive and more necessary for the exciting gaming future that lies ahead, we will benefit tremendously from having a partner like Microsoft to better enable our ambitions.”
Activision Blizzard boasts having 10,000 staff around the world and was once a well-respected developer of franchises like Starcraft, Warcraft, and Diablo.
But it has spent the last 12 months dealing with an unfolding scandal in which women alleged that sexual harrassment and misconduct was rife within the company.
In California, where Blizzard is headquartered, the local Department of Fair Employment and Housing launched legal action against the game studio saying it fostered a culture in which “women were subjected to numerous sexual comments and advances, groping and unwanted physical touching, and other forms of harassment”.
At the same time, Activision Blizzard’s flagship title World of Warcraft was seeing a mass exodus of players who migrated to a similar MMO, Final Fantasy, 14 after years of growing disappointment with the way Blizzard Activision had treated its fans.