Microsoft has successfully concluded its acquisition of the renowned video game producer, Activision Blizzard for $69 billion, marking one of the most expensive tech takeovers in history. This monumental transaction has the potential to send ripples throughout the video game industry.
The official announcement confirming the completion of the deal came seven hours after receiving the approval, from the UK’s competition watchdog. This approval marks a change, in their stance of opposing the merger ultimately removing the hurdle for this massive acquisition.
With this purchase, Microsoft now has control over the studios that create games such as Call of Duty, Diablo, and Overwatch. This acquisition is expected to benefit the Xbox gaming console. However, Microsoft’s goals extend beyond dominating the console market. They plan to integrate Activision’s game titles into their game subscription service, similar to a gaming version of Netflix.
Microsoft Seals $69 billion Activision deal, Cementing its Position as a Gaming Powerhouse
The lengthy process of nearly 22 months required to finalize the deal underscores the concerns expressed by competitors and government regulators. There was a fear that Microsoft’s growing portfolio of games might be utilized to suppress competition.
This acquisition is part of a broader trend in the industry towards consolidation, leaving some independent game developers apprehensive about being marginalized as resources are increasingly directed toward well-established blockbuster franchises.
Despite successfully navigating the complex web of approvals in over 40 countries, Microsoft still faces opposition from the US Federal Trade Commission (FTC). The FTC has argued that this consolidation of a major game publisher could lead to the creation of “walled gardens” around Microsoft’s Xbox Game Pass subscription service and the emerging on-demand game streaming market.
However, after a legal battle that attempted to halt the merger was lost, the FTC must now undertake a challenging battle to undo it. Microsoft has consistently justified the agreement by stating that it will bring advantages to the gaming industry. They maintain that their main goal is to ensure that Activision games are available, to an audience across platforms rather than limiting access exclusively to competing console makers.
The UK Competition and Markets Authority has given the go-ahead for the acquisition as anticipated since they already approved the month before. However, there are conditions attached to this approval to address concerns regarding competition and its influence, on gamers in the growing cloud gaming industry.
Nevertheless, this acquisition represents a change in the power dynamics providing Microsoft with a position. In the past, Microsoft lagged behind Sony’s PlayStation and Nintendo. Now they have the chance to shape the future of the gaming industry.
To secure the UK’s approval, Microsoft will sell European cloud streaming rights for all current and future Activision games over the next 15 years to French game studio Ubisoft Entertainment. Despite the approval, the regulator criticized the way the agreement was structured and warned other companies against emulating Microsoft’s tactics, which the regulator deemed unworkable.
Even though the UK regulator’s ruling was seen as a solution to antitrust issues some skeptics viewed their wavering stance as a display of vulnerability and uncertainty. This landmark deal eclipses previous record-setting tech acquisitions, with Dell’s purchase of data-storage company EMC for approximately $60 billion in 2016 holding the prior record. Microsoft’s largest acquisition before this was the $26 billion purchase of the professional networking service LinkedIn.
Activision, a company established in 1979 by employees of Atari Inc., has a background in developing and obtaining some of the most beloved video games. Microsoft as part of their acquisition gained ownership of King Studio, which’s well known for its games, like Candy Crush Saga.
Bobby Kotick, CEO of Activision since 1991, has signaled his impending departure but expressed his commitment to aiding the transition through the end of 2023. He will continue to serve as CEO of the now Microsoft-owned subsidiary. Microsoft’s gaming division is led by Phil Spencer, who has been at the helm since 2014.
Although Sony’s PlayStation continues to dominate the gaming industry Microsoft has been actively acquiring game studios for years to bolster its position, in the market. The acquisition of Activision represents a milestone, in their endeavors to broaden their gaming portfolio and extend their reach.
Follow us for more entertainment coverage on Facebook, Twitter, Instagram, and YouTube.
