Tuesday, May 24, 2022

Microsoft Seeks To Acquire Activision Blizzard In Transaction That Would Set Gaming Records

In recent years, Microsoft has been on a games buying spree to give its Xbox and Game Pass platforms an edge over Sony’s PlayStation, which continues to dominate with exclusive titles. ZeniMax (aka Bethesda), Minecraft creator Mojang, Id, Obsidian, Ninja Theory, Rare, Double Fine, and 343 Industries were among the major firms previously bought by the company. But the computer giant’s next acquisition is so significant that it could rock the gaming industry’s foundations: Activision Blizzard.

The reveal comes as part of an official Microsoft release that features some of the company’s most popular gaming franchises, including World of Warcraft, Call of Duty, and Candy Crush. The deal is valued at $68.7 billion, with Microsoft paying $95 per share for shares in Activision Blizzard. A promotional website, press release, blog posts, open letters to employees, and even a map of the proposed management team will all be used to promote the merger.

If approved, the roughly $70 billion deal would be the largest in gaming history, with Zynga’s take-purchase two earlier this year coming in second at “just” $12.7 billion. For reference only, Nintendo’s current market cap is approximately $55 billion.

One of the oldest game publishers in the industry, Activision was founded in 1979 with titles such as Pitfall, Little Computer People, MechWarrior and Tony Hawk’s Pro Skater. The publisher has endured multiple crashes and booms to become one of the world’s leading software publishers. In 2008, it merged with Vivendi to form Activision Blizzard, which grew in power through its relationship with the highly respected creator of Warcraft, Starcraft, and Diablo. Activision Blizzard now manufactures and services some of the most well-known products in the industry, including Call of Duty, World of Warcraft, Crash Bandicoot and Overwatch.

Microsoft

In recent years, the unified Activision Blizzard has struggled, and has been gripped by widespread backlash against major publishers who prioritize profit over quality and abuse their employees. Abuse of employees and “crunch” culture, sexual abuse of female employees (including a highly public investigation by the state of California), lack of accountability from executives, and embarrassing episodes such as an apparent surrender to the Chinese government when a player showed a pro- Taiwan news in the stream were all targeted by AB.

The company’s troubles appear to be embodied in multibillion CEO Bobby Kotick, who has been at the helm for nearly 30 years. According to a Wall Street Journal investigation, Kotick was aware of workplace harassment but did little about it, protecting abusive executives and even threatening to murder an employee. Despite calls from across the industry for his resignation, including rare reprimands from partners like Microsoft, Sony and even LEGO, Kotick continues to lead the company. According to a Microsoft press release, Kotick will remain in his job for the time being, reporting to Phil Spencer, Microsoft’s gaming CEO.

Microsoft’s desire for one of the world’s leading publishers is clear. It seeks to build a streaming gaming platform that can be accessed anywhere on any device, in addition to expanding a growing library of exclusive Xbox and Windows game assets. The all-you-can-eat nature of Xbox Game Pass, analogous to Netflix, is shaking up the industry in ways that are still unclear – other companies like Amazon and Google have invested in game streaming, and Sony appears to be working on a similar program . Sony’s position at the forefront of console gaming, while dominating the PS4 era with exclusive games, seems increasingly uncertain as Microsoft continues to improve its first-party library.

Various regulators, including the US Federal Trade Commission (maybe even the Department of Justice) and the European Union Commission, have yet to approve the deal. The landmark acquisition of Microsoft is far from a done deal as both the US and EU governments are far less receptive to mega-mergers than they have been in the past.

Michael is a former graphic designer who has spent more time designing and customizing desktop PCs than he cares to admit. In no particular order, he likes folk music, soccer, sci-fi, and salsa verde.

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