Microsoft, American’s leading multinational technology corporation that produces computer software, consumer electronics, personal computers, and offers other services, announced plans to acquire gaming giant Activision Blizzard for $69 billion, as part of a move to ramp up its gaming and Metaverse plans.
Activision Blizzard is home to a long list of iconic gaming franchises such as Call of Duty, Overwatch, Candy Crush and World of Warcraft. Following the deal, its games are set to be added to Microsoft Xbox’s Game Pass service that has 25 million subscribers.
Microsoft outlined that the acquisition will support the growth of its services across mobile, PC, console and cloud gaming, and also notably stated that it will “provide building blocks for the Metaverse.”
What you should know
Microsoft CEO and chairman Satya Nadella said this in the announcement; “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.”
In November, Nadella first unveiled Microsoft’s Metaverse plans via an upgrade to its “Teams” service and a product called “Dynamics 365 Connected Spaces.” The “Mesh” upgrade for Teams is set to introduce personalized digital avatars and immersive spaces to meet in the Metaverse later this year.
Nadella affirmed that people can “absolutely expect” to see Microsoft integrate Metaverse features with the Xbox gaming consoles but didn’t divulge any concrete plans or specific details.
The announcement from Microsoft reveals that the firm will acquire Activision Blizzard for $95.00 per share at a valuation of $68.7 billion and the deal is set to close in the 2023 fiscal year. It reads, “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 deal will see Microsoft become the third largest gaming company in terms of revenue behind Riot Games owner Tencent and PlayStation developer Sony.
The announcement reveals that Bobby Kotick will continue to serve as CEO of Activision Blizzard. It reads, “Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.”
Phil Spencer welcomed the deal and had this to say, “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.”
Although good news, there is a cause for concern. The Wall Street Journal reported that the CEO of Activision Blizzard knew about the sexual misconduct in his company but did not act. This caused over 2,000 employees to resign from the company in the past year and over 1,000 signed a petition for Bobby Kotick, the CEO of Activision Blizzard to resign.
There is also news of pouching of Microsoft employees. The Wall Street Journal reported last week that 100 employees from Microsoft’s augmented reality team have left the company over the past year to join metaverse competitor Meta (Facebook)
Microsoft trades $302.65, down 2.43% as at yesterday’s close. It is however up by 0.20% in pre-market skirmish.