In a move that will rock the gaming world to its foundation, Microsoft has announced it is buying up Activision Blizzard, the game publisher behind hugely popular titles like Call of Duty, World of Warcraft, and Diablo. The deal is valued at $68.7 billion.
Microsoft is no stranger to making billion-dollar acquisitions. The company swallowed up LinkedIn for $26 billion in 2016. However, the Redmond giant has broken its record by paying far more for Activision Blizzard.
The last big gaming acquisition was Bethesda for $7.5 billion last year. However, the acquisition of Activision Blizzard is its biggest play in the gaming industry yet, and it will instantly become the third largest gaming company behind Tencent and arch-rival Sony.
If this deal goes through, Microsoft will end up being the publisher of popular games Overwatch and Candy Crush, apart from the ones already mentioned above. Microsoft has a definite vision for these titles, as explained by Microsoft Gaming CEO Phil Spencer. “Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog.”
Microsoft’s Xbox Games Pass service has been growing by leaps and bounds as the company has maintained a spree of buying up game studios and adding them to the service. Users pay a monthly fee for unfettered access to Microsoft titles. Its purchase of Bethesda last year brought the number of titles to 23, boosting the appeal of the service.
The deal is expected to be concluded by 2023, leaving about 18 months to tie up all loose ends. The sale will surely attract attention from regulators that would need to be convinced the purchase would not harm the gaming industry. Things could get complicated as Activision Blizzard is active in multiple markets.
Commenting on the deal, Microsoft CEO Satya Nadella said, “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.”
This purchase is coming at a time the game studio is facing an internal crisis with calls for the CEO to be replaced. It is facing a lawsuit from the California Department of Fair Employment and Housing (DFEH) for fostering a culture of “constant sexual harassment.”
Activision Blizzard’s employees have made multiple public accusations of sexual misconduct, forcing the company to reach an $18 million settlement.
In addition, about 40 employees have turned in their resignation letters in the last six months.
While Microsoft will inherit the mess, it is not clear how it plans to handle it. The embattled CEO, Bobby Kotick, will remain CEO at least until the deal is closed. However, once Activision Blizzard becomes a part of Microsoft, it will fall under the jurisdiction of Spencer, meaning Kotick’s position may not be necessary.
“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players,” says Spencer. “We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”
Microsoft is not the only company making big money acquisitions in the gaming industry. Take-Two, the NBA 2K and Grand Theft Auto maker splashed $13 billion on Zynga, known for the popular Farmville game. EA also bought Glu Mobile and Playdemic. Even Activision Blizzard itself acquired Candy Crush maker King for nearly $6 billion to strengthen its mobile game offerings.