Microsoft to buy Activision Blizzard for US$68.7 billion and what it means

Tech giant Microsoft will be acquiring Activision Blizzard, the game publisher behind AAA titles like Diablo and Call of Duty, for a jaw-dropping US$68.7 billion.

This easily eclipses Microsoft’s purchase of LinkedIn in 2016 for a “mere” US$26 billion. And it makes Microsoft’s acquisition of games developer Bethesda for US$7.5 billion looks like a “pasar malam” deal.

The planned acquisition means franchises like Diablo, Overwatch, Call of Duty and even Candy Crush, as well as esports activities will be under Microsoft’s ownership when the deal closes.

All these titles will belong to Microsoft when the deal closes. (Photo: Microsoft)

Activision Blizzard has studios all over the world with nearly 10,000 employees. However, it has recently been embroiled in sexual harassment scandals with many employees leaving the company. This is probably the first good news from Activision Blizzard for a while.

Mr Bobby Kotick will continue to serve as CEO of Activision Blizzard. But his fate is unknown, as the entire Activision Blizzard business will be under the charge of Mr Phil Spencer, CEO of Microsoft Gaming, when the deal closes.

Mr Satya Nadella, chairman and CEO of Microsoft, said: “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.”

Mr Spencer said: “Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them.”

In addition, once the deal closes, Microsoft will be the third largest gaming company by revenue behind only Tencent and Sony. And Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities as well.

WHAT IT MEANS
If you are a Microsoft’s Xbox or PC Game Pass subscriber, you must be rubbing your hands in glee. Microsoft’s Activision Blizzard acquisition means its vast portfolio of current and future games will be available for free on the Game Pass. Mr Spencer said Microsoft will offer as many Activision Blizzard games as they can, when the deal is completed.

But do not expect Diablo III to be available on Game Pass tomorrow, as this deal is only expected to close in the fiscal year 2023. So, you probably have to wait over a year to see that happening.

Still, this impending deal will offer a great advantage over its arch-rival Sony’s PlayStation Plus subscription, which is in similar mould of Xbox Game Pass.

However, Microsoft is still some way in catching up Sony in this respect. While Microsoft just announced that the number of Game Pass’ subscribers has just shot over 25 million, PlayStation Plus has over 47 million subscribers as of Sep 2021.

But Mr Spencer said the franchises of Activision Blizzard will accelerate Microsoft’s plans for cloud gaming. And Microsoft will continue to support the different platforms and communities moving forward. And from what we heard from Mr Nadella and Mr Spencer, this is just one move by the tech giant to prepare for the metaverse.

For Activision Blizzard staff, they are probably wondering if they still have a job next year. For gaming fans, we will be wondering if this deal will accelerate the development process of highly-anticipated games like Diablo 4.

But will the likes of Blizzard Entertainment still have full control of their famously-long development cycle? Or will Diablo 4 be accelerated at the expense of the quality we have come to expect from Blizzard?

There are so many questions. But only time will tell. We probably have to stay awhile and listen… to what Microsoft have to say in the days and months to come.