Microsoft Corporation is buying Activision Blizzard, the Call of Duty maker in a deal valued at $68.7 billion. The tech giant announced the deal on Tuesday and said that it seeks to "provide building blocks for the metaverse" and accelerate the growth of its gaming business across mobile, PC, console, and cloud.
Microsoft Activision Acquisition Deal
This is said to be the largest ever deal in the history of the gaming industry. The deal valuation is significantly higher than the $26 billion that the company paid to acquire LinkedIn. The deal negotiations will start in July and end in 2023, according to the tech company.
"Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition includes iconic franchises from the Activision, Blizzard, and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming," said Microsoft in a blog post.
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Microsoft seeks to refine the gaming experience by improving immersion and accessibility. "Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like “Halo” and “Warcraft,” virtually anywhere they want," said Microsoft. “We are 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,” said Microsoft CEO Satya Nadella.
Xbox Vs PlayStation
The company is also attempting to bolster its Xbox Game Pass and PC Game Pass portfolio by bringing support to games built by Activision. This move might give it an edge over Sony PlayStation as the latter enjoys a steady stream of exclusive gaming titles. Microsoft stands to gain the ownership of PlayStation exclusives including Spyro the Dragon and Crash Bandicoot, as well as the Tony Hawk series from Activision's stockpile of purchases and mergers.
The biggest concern for the gaming industry is regarding Call of Duty, a wildly popular FPS game around the globe. This is one of the gaming titles from Activision that has an established fan base consisting of both Xbox and PlayStation gamers. According to NPD, Call of Duty secured both of the top spots for US game sales for the whole of 2021.
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Sony has had a Call of Duty deal with Activision for more than five years. Last year, Sony had revealed that Call of Duty: Black Ops Cold War was the second most-played PS5 game of 2021. Now, the company faces the risk of losing Call of Duty support on its platform once the deal closes. Sony does expect the company to honor its contractual agreement with Activision, however, past experience suggests otherwise. The gaming community remembers that Starfield became an Xbox and PC exclusive following Microsoft’s Bethesda acquisition.
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It is certain that the deal negotiations will begin in July 2022, but Microsoft is bound to face some antitrust regulatory scrutiny. This is because giants of the technology industry including Meta (formerly Facebook) and Google have been facing several scandals including privacy from countries around the globe. As a result, governments are seeking to establish more restraints over influential tech giants. Since Microsoft stands to become the third-largest gaming company with this deal, it will face regulatory scrutiny.
MSFT Stock Price
Microsoft's (MSFT) stock rose by 2.6% following the acquisition announcement. At the time of writing, MSFT is trading around $310. MSFT stock prices are predicted to rise since the acquisition will position them as the third-largest player in the gaming industry.
Moreover, considering the fact that the Xbox creator will also get its hands on Candy Crush Saga, yet another popular game from Activision's portfolio played by over a billion people worldwide, Microsoft might actually be edging close to replacing Sony as the best gaming company in the market.
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