The year 2022 has begun with the big news of the tech giant Microsoft acquiring the gaming giant Activision Blizzard in an all-cash transaction valued at $68.7 billion for $95 per share.
In an official tweet Activision Blizzard revealed
We are joining the @Xbox family.
Learn what this means for our iconic games and player communities: https://t.co/abPxlb37kA pic.twitter.com/Z8sVgsjScz
— Activision Blizzard (@ATVI_AB) January 18, 2022
The information on the deal is one of the iconic deals to start the new year. The business deal will benefit not just the two companies to grow bigger but the industry as well. As the gaming industry today is counted as one of the most profitable businesses in the world, therefore, the paradigm shift for Activision Blizzard to join the tech giant will truly help the company to flourish.
Here is how we think Microsoft will be benefited together:
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Akshat Rathee
With the giant acquisition for Activision Blizzard, Microsoft will become one of the top names in the gaming industry. Microsoft becomes the third largest global gaming company after Sony and Tencent as per revenue leaving behind Nintendo. This business deal happened two years after buying ZeniMax Media. This also indicates that the bigger business acquisitions have also become trendy lately. As NODWIN Gaming co-founder and MD Akshat Rathee shared, “We are seeing a massive consolidation activity in the industry. Take Two buying Zynga for $12.7 billion, Embracer becoming the largest European gaming group with THQ/ Koch Media/ Gearbox/ Dark Horse Comics and the recently announced Asmodee Group investment for $3 billion and Sony’s investments into Epic and Evo.”
- Microsoft chairman and CEO Satya Nadella shared during the official announcement that gaming will play a key role in the development of metaverse platforms. The acquisition will bolster Microsoft’s metaverse vision and compete with Meta, formerly Facebook. Since gaming is now a real and tangible business, this move by Microsoft is quite commendable. “With the race to the “metaverse” heating up across the largest corporations in the world, I see a lot more M&A from the likes of Amazon, Netflix, Meta, Disney and google. Everyone has run multiple experiments in the space with New World/ Stadia/ Netflix Games/ Facebook Gaming and more. Exciting times ahead!” Rathee added.
- Right after the announcement Microsoft Xbox rival Japanese technology giant Sony’s shares have slumped in Tokyo trade. The deal would be a major step for Microsoft’s Xbox gaming brand in its battle against Sony’s PlayStation. It also comes a year after Microsoft bought another influential gaming company, Bethesda for $7.5 billion. Not just that, Activision’s library of games may help Microsoft’s Xbox to find an edge over PlayStation games.
- Mobile is the fastest growing segment and Microsoft realised it right. Apart from project Xcloud, Microsoft has almost no presence in the mobile gaming segment at all. With the acquisition Microsoft will get hold of the popular mobile gaming titles like Candy Crush, Call of Duty Mobile and so on.
Long-time industry analyst and SuperGaming communications manager Rishi Alwani said, “This gives Microsoft tremendous inroads to mobile gaming audiences while consolidating their position on PC and console with Game Pass as well as access to globally popular IP like World of Warcraft and Call of Duty. At the same time, it results in consolidation of the games business, which could result in less visibility for indies and newer studios to break through the clutter. It’ll be interesting to see how and if Microsoft can utilise Activision’s IP and prowess to go beyond their usual markets and truly expand the base of people playing games across the world.”
- With the acquisition, Microsoft will get hold of Activision Blizzard’s popular esports title Call of Duty League, and Overwatch League. Both the titles have witnessed rough years thanks to COVID-19, however, the acquisition will transform the esports scene. Further, Microsoft will be able to promote its holding like Xbox, gamepass and so on independently with the league advertisements.
Esports Federation of India director, Asian Esports Federation (AESF) vice president Lokesh Suji shared, “This colossal $68.7 billion acquisition will make Microsoft the largest video gaming company in the world; and will further the conviction of the market in Video Games. It seems that only a company like Microsoft could achieve this feat, they are a futuristic company and are pre-empting smartly the way the video games/esports industry will evolve with metaverse, NFTs etc. Activision has some of the best esports video game titles e.g. Call of Duty, Overwatch; it’s coming out clearly that Microsoft wants to dominate the Global Video Game Industry and will do whatever it needs to do to do so. The conviction of the Indian VC / Market will develop and/or increase due to this acquisition as India is the fastest-growing market when it comes to video games/esports.”
With the acquisition, Activision Blizzard will also be hugely benefited, especially the deal will bolster the purification of its past controversies. Activision has been involved in multiple notable controversies, including allegations of infringed patents and unpaid royalties. In late July 2021, it was sued by the California Department of Fair Employment and Housing on allegations of sexual harassment and employee discrimination. The suit triggered an investigation by the U.S. Securities and Exchange Commission which led to multiple workplace walkouts, resignation or dismissal of several employees, loss of multiple company event sponsors, and hundreds of workplace harassment allegations. Post the acquisition Microsoft will be supervising the culture of Activision Blizzard during the transition, hopefully sponsors may return to the leagues and expand under Microsoft’s domain.
The date of acquisition is set to finalise for July 2023, however the gaming industry expects nothing but greatness through this acquisition. The industry expects more and more investment in the game development as well as bringing newer game titles for esports as well as better esports roadmaps in regions. World Esports Cup director Vishwalok Nath shared, “We hope that once the deal is through, Microsoft can focus on Call of Duty and Call of Duty Mobile esports tournaments in India. Obviously, we can also wish for Halo to enter the esports segment in the country. Overall, we are optimistic about the impact and the potential of this acquisition and hope for encouraging announcements from Microsoft in the future.”
Concrete roadmap and details on the acquisition are yet to be published by the company, however, the industry experts believe that it will be a positive turn. Trinity Gaming co-founder and CEO Abhishek Aggarwal shared, “Games being published by Activision Blizzard will be more accessible to the ecosystem and the community. Being the maker of Xbox, the games published by Activision Blizzard will now be accessible to the Xbox users. There will be more positive impact on the content industry and the mobile ecosystem will be able to see some support from Xbox and cloud gaming. It will be too early to talk about something really concrete. We are just waiting for key details to be released on their roadmap and further developments, however, everything seems positive.”