Microsoft today announced perhaps one of the biggest moves, that gaming industry has seen for some time. The redmond tech giant today announced, that it will be acquiring gaming giant Activision Blizzard, in an all-cash deal worth a staggering $68.7Bn, which would include the latter’s own cash reserves as well. While Microsoft steps into gaming big time, for Activision, this is a decent escape route if so to say, from its recent controversial times.
Activision Blizzard has faced much criticism over sexual harassment claims in recent times. It delayed launching the much-anticipated sequels to its Diablo and Overwatch games in November. It also saw a steep fall in its shares as it gave a sales forecast for Q4 2021 that fell short of Wall Street’s expectations.
Now, the same company will be acquired by Microsoft for $68.7 billion in an all-cash deal, inclusive of the company’s net cash. Activision Blizzard is the name behind not only Overwatch and Diablo but also Call of Duty, Candy Crush, and others (including Spider-Man games and World of Warcraft).
“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,” said Satya Nadella, chairman and CEO, Microsoft.
According to Microsoft, the acquisition will accelerate the growth in its gaming business across mobile, PC, console, and cloud and provide building blocks for the metaverse, which is a big deal nowadays (even though it has not been built yet). It will also enable Microsoft to offer as many Activision Blizzard games as they can within Xbox Game Pass and PC Game Pass. This includes both new titles and games from Activision Blizzard’s incredible catalog (which will help expand Microsoft’s offerings for Xbox).
The Xbox Game Pass currently has over 25 million subscribers. The company has been focussing on the cloud gaming segment in recent times (the recent swell in the gaming industry has undoubtedly been a factor behind this). Mobile gaming make up nearly 95% of gamers across the world.
Activision’s games boast nearly 400 million monthly active users in 190 countries, and with Activision and Microsoft working together, the Games Pass is set to be one of the most compelling and diverse lineups of gaming content in the industry. Microsoft had earlier in 2020 acquired Bethesda (which gave us “The Elder Scrolls V: Skyrim”) for $7.5 billion.
It is expected that the deal, where Microsoft pays $95 a share in cash for each share of Activision Blizzard, to close in the fiscal year 2023. Once the deal is sealed, Microsoft will become the third-largest gaming company in the world in terms of revenue (better watch out, Tencent and Sony!).
Until then, Activision Blizzard and Microsoft Gaming will continue to operate independently, and Bobby Kotick will continue to serve as CEO of Activision Blizzard for now. After that, the Activision Blizzard business will report directly to Phil Spencer, CEO, Microsoft Gaming.