Details of The Deal
It has been announced today that Microsoft will acquire Activision Blizzard in a huge 68.7 billion dollar deal. If all goes well and the deal doesn’t fall through, this purchase will go down as Microsoft’s biggest-ever acquisition and will also mark the biggest deal ever to be struck in the video game industry.
The significant lineup of Activision Blizzard titles includes; Call of Duty, Candy Crush, Warcraft, Diablo, Overwatch and Hearthstone. A press release has been put out by Microsoft to explain some of the reasoning and details being the monumental deal:
“This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse,” the statement divulged. “When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony.”
“The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s shareholder approval. The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard.”
The news of this industry-shaking deal comes hot on the heels of a significant scandal within Activision Blizzard. The company was recently accused of permeating a “pervasive frat boy workplace culture” withing their studio’s walls. They allegedly allowed this vastly inappropriate conduct to thrive, to the point where female company employees were being constantly subjected to daily sexual harassment by fellow male employees.
Since that scandal last July, Activision Blizzard have fired more than three dozen of the employees accused of misconduct, as reported by the Wall Street Journal. Microsoft chairman and CEO Satya Nadella put out a statement recently with regards to the company letting those accused of harassment go.
“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. 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 statement was obviously only put out as an attempt at damage control, in order to allay the ferociousness of the backlash. Could this move be a further attempt to try and make gamers forget about the horrific details of the scandal and continue buying huge AAA sequels to established franchises?
This scenario is actually somewhat similar to when Microsoft acquired Bethesda back in early 2021. At that time, Bethesda Softworks were still somewhat recovering to the absolute mess that was Fallout 76. That grotesque atrocity of a game, along with disappointments such as; Prey, Elder Scrolls Online and Wolfenstein; Youngblood meant that Bethesda were on the back foot and looking for a hand up.
Whilst a few critical and financial disappointments is by no means the same thing as sexual misconduct in the workplace, the point is that Microsoft’s method for acquiring other publishing houses seems to be targeting companies that are on the down-swing. Thus, I feel that the recent scandal and subsequent justifiable boycotting arranged through social media has had a significant effect on the timing of this deal.
Long Term Effects
Microsoft have already made it clear that Bobby Kotick will remain CEO of Activision Blizzard, once Microsoft acquire Activision Blizzard. From now on, Kotick will report directly to Phil Spencer, who is the CEO of Microsoft’s gaming division. Phil Spencer also commented on the deal between his company and Activision Blizzard saying:
“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them. Together we will build a future where people can play the games they want, virtually anywhere they want.”
In terms of lower level employees, nothing has been confirmed at the time of writing regarding how they will be affected when Microsoft acquire Activision Blizzard. However, usually when a huge company is acquired by another huge company in this fashion, it usually means employees being let go from the top down. Though, this is just pure speculation at this time based on other historical mergers.
The main takeaway from all of this is the sheer number of total huge IP that Microsoft now own. Below I will attempt to list all of the IP that Xbox now own following Microsoft’s move to acquire Activision Blizzard, just to give you an idea of how much of a monopoly is being created due to this deal.
- Crash Bandicoot
- Spyro The Dragon
- Call Of Duty
- Age Of Empires
- Gears Of War
- State Of Decay
- Tokyo: Ghostwire
- The Evil Within
- The Elder Scrolls
- Candy Crush
Since this news first broke on Tuesday of this week, multiple updates have emerged regarding both the parties directly involved as well as surrounding parties. Below, we will list the various updates which have occurred over the past two days since the deal was announced.
First off the bat, we reported in the original story that Bob Kotick would remain in his role of CEO of Activision Blizzard. A conflicting report from the Wall Street Journal has since came in stating that Kotick is in fact expected to leave the videogame publishing titan once the deal is finalised.
Not only that, but it has also since came to light that Kotick actually considered purchasing gaming news sites; Kotaku and PC Gamer, at the height of the company’s sexual harassment scandal. The logic being that he could deflect the negative press plaguing the company and shift the public narrative to paint Activision Blizzard in a more positive light.
As someone who has always advocated for unbiased journalism, this is a frankly disgusting tactic. It is bad enough that these horrific alleged acts went on under the company roof while he was CEO, but to try and simply sweep that under the rug takes things to a whole new level. To try and silence victims of sexual harassment for the good of your company is utterly deplorable.
The other major updates concern Microsoft’s primary rival; Sony. As expected, Sony shares have fallen fairly significantly since the deal was announced, dropping 13%. This is Sony’s biggest one-day drop since the global financial crisis in 2008.
Just before this news was announced, Sony’s shares were at a 21-year high. This 13% drop equates to a fall of around $20bn. Elsewhere in the financial market, shares in Square Enix and Capcom rise by more than 3.5%. Nintendo’s shares rose by 2.51% and Konami’s rose by 3.25%.
Sony also made their first statement with regards to the deal. Admits speculation that this deal could mean that all future titles released by Activision Blizzard will be exclusive to Microsoft systems, Sony told The Wall Street Journal that;
“We expect that Microsoft will abide by contractual agreements and continue to ensure Activision games are multiplatform.”
This statement can be construed in a few different ways. Bloomberg simply see this as Sony stating that they expect Activision Blizzard games to remain on available on PlayStation systems. I don’t know if I see it as being quite as cut-and-dry as that.
In order to try and predict what could happen with exclusivity going forward, the most obvious place to look back to would be the Bethesda acquisition. However, the circumstances aren’t the same here as they were then.
When the Zenimax takeover was announced, there were already deals in place for Deathloop and Tokyo: Ghostwire to be released as Sony console exclusives. Whereas, as far we know at the time of writing, no such exclusivity deals have been made for any upcoming Activision Blizzard titles.
Due to the way that the Sony statement is worded, it is also not clear whether the spokesperson is speaking with regards to specific contracts, which would ensure that Activision titles are released for multiple platforms, or if the company is speaking more generally, saying that they expect Microsoft to continue to allow games to be released for Playstation consoles after the acquisition goes ahead.
What do you think of Microsoft moving to acquire Activision Blizzard? Do you think that it could have a positive effect on the gaming industry, or are you worried that a monopoly of IP is being created? Let us know down in the comments section below and keep it tuned to BGCP for any future major developments in the entertainment industry.
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