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Tuesday, Jul 5, 2022

Microsoft to Buy Activision Blizzard for $70 Billion

Technology giant Microsoft Corp. is set to acquire Santa Monica-based video game publisher Activision Blizzard Inc. in a deal worth $68.7 billion, the two companies announced January 18th.

Microsoft said the acquisition will be the largest in its history and will make the Xbox manufacturer one of the top three gaming companies in the world by revenue, just behind Tencent Holdings and PlayStation maker Sony Group Corp.


Under the terms of the all-cash sale, which is expected to go through in fiscal year 2023, Redmond, Wa.-based Microsoft will pay $95 per share to acquire Activision Blizzard, which is already the seventh-largest game publisher by revenue, according to industry analyst Newzoo.


Activision Blizzard Chief Executive Robert Kotick said the acquisition would help to propel the company forward as the technological and analytical demands of the gaming industry continue to advance.
“Microsoft has all the important technologies we need to deliver the next generation of games,” said Kotick on a call with investors. “Microsoft’s culture of inspiring people through caring and empathy is a powerful motivator, and one we embrace as we renew our resolve in the work we’re now doing to set a new standard for a welcoming and inclusive workplace culture.”


The sale announcement comes just six months after the state of California’s Department of Fair Employment and Housing filed a lawsuit against Activision Blizzard, alleging that the company had created a culture of sexual harassment and gender-based discrimination.


The allegations rocked the gaming industry and led many company employees to call for Kotick’s resignation. Microsoft said the CEO would remain with the company at least until the deal closes, at which point Activision Blizzard employees will begin reporting to Microsoft Gaming Chief Executive Phil Spencer.


“We’re looking forward to working with the thousands of talented Activision Blizzard employees with the same approach of proactive inclusion and partnership that we extend to every member of the Microsoft family,” Spencer said on the investor call.

Activision Blizzard formed out of the 2008 merger of Activision and Vivendi Games and is among the most valuable companies in Los Angeles by market capitalization. Owner of popular franchises like “Call of Duty” and mobile game “Candy Crush,” the company is also a leader in the emerging esports industry, with professional leagues supporting titles like “Call of Duty” and the strategic shooter game “Overwatch.”

Microsoft Chief Executive Satya Nadella said the acquisition will bolster Microsoft’s cloud gaming services and Game Pass subscription platform, as well as supplying the company with content ready for the “metaverse.”


One of the most talked-about subjects in tech over the last year, the metaverse is a theoretical network of virtual environments facilitated by new technologies like augmented reality. Nadella suggested Activision Blizzard’s vast library of intellectual property would fit in well with such a concept.


“In gaming we see the metaverse as a collection of communities and individual identities anchored in strong content franchises accessible on every device,” Nadella told investors. “Bringing fantastic entertainment together with new technologies, communities and business models is exactly what this transaction is about.”

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