Activision Blizzard Inc is behind some of the world’s biggest video games, with blockbuster franchises such as Call of Duty and massively multiplayer online role-playing game (MMORPG) World of Warcraft giving it an edge in a gaming industry worth more than $200 billion.
Microsoft have said that its acquisition of Activision Blizzard will allow it to accelerate the growth of its gaming products across mobile, PC, console and ‘provide building blocks for the metaverse’.
It also looks to strengthen the position of Microsoft’s subscription service, Game Pass, and its vast portfolio of games – with the more than 25 million Game Pass subscribers likely to see Activision games made available to play for free on day one of launch once the deal goes through.
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Microsoft’s acquisition of the company for $95 per share in an all-cash deal comes after the Xbox producer and Big Tech giant bought ZeniMax Media, parent company of Doom, Elder Scrolls and Fallout developer Bethesda Softworks, in a $7.5 billion deal just last year.
This new transaction, once closed, will see Microsoft emerge as the world’s third-largest gaming company by revenue thanks to Activision’s popular titles including Candy Crush, Overwatch, Call of Duty and World of Warcraft – as well as increasing its number of internal game development studios to 30.
Activision stock (ATVI) was up 35.7% in premarket trading following Microsoft’s announcement of its all-cash deal as of 9.10am on Tuesday morning in the US.
“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,” said Satya Nadella, chairman and CEO at Microsoft.
Phil Spencer, chief executive officer of Microsoft Gaming, said: “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.”“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.”
“For more than 30 years our incredibly talented teams have created some of the most successful games,” said Bobby Kotick, CEO of Activision Blizzard.
“The combination of Activision Blizzard’s world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry.”
In an investor call on Tuesday, Phil Spencer, added: “This is obviously an extremely exciting day.
“At the broadest level, our mission at Microsoft gaming is to extend the joy and community of gaming to everyone on the planet, billions of people and this deal accelerates that strategy.
"When this transaction closes, Microsoft Gaming will be the world's number three gaming company by revenue behind Tencent and Sony.
He added: “We believe that Microsoft and our team are uniquely positioned with the technical capability, financial capacity, creative vision, and the gaming track record required to deliver a truly global Interactive Entertainment ecosystem.”
Current CEO of Activision Blizzard, Bobby Kotick, will remain at the helm of Activision under Microsoft for now, with Activision employees reporting to Spencer as CEO of Microsoft Gaming once the deal goes through.
Kotick’s position at the head of the company is a controversial one, after Activision employees in the US staged a number of walkouts last year as sexual misconduct allegations rocked the company.
The company first became mired in sexual assault and harassment claims last summer as a lawsuit filed in California by the US Equal Employment Opportunity Commission alleged decades-long complaints of sexual misconduct, harassment and gender discrimination at Activision Blizzard.
Activision settled the lawsuit for $18 million in September 2021, but a further 500 reports of sexual misconduct emerged in its wake, with allegations widening to Activision-owned developer studios such as Dead Space creator, Sledgehammer Games.
The Wall Street Journal reported that Kotick had previously been made aware of sexual misconduct allegations but did not inform members of the company’s board of these reports, including those of alleged rape.
In response, Activision Blizzard board members rallied around the CEO, issuing a statement on November 16 which said: “The Board remains confident that Bobby Kotick appropriately addressed workplace issues brought to his attention.”
The Microsoft-Activision deal is expected to close in 2023 following approval from the boards of directors at both Microsoft and Activision Blizzard Inc.