Microsoft loads up a $75 billion all-cash deal for Activision Blizzard
The Future. Microsoft is shelling out major money to buy top game-developer Activision Blizzard. The deal gives Activision Blizzard a lifeline from ongoing controversy over the treatment of female employees and gives Microsoft a powerful player in the ongoing cloud-gaming wars. It might even be the perfect scoop for Microsoft to make its Game Pass subscription a must-buy for gamers.
World of Mergers and Acquisitions
Microsoft is pulling off its biggest acquisition ever.
- It’s acquiring embattled video-game developer Activision Blizzard in an all-cash deal valued at $75 billion ($68.7 billion after adjusting for Activision’s net cash).
- The deal has already been approved by both company boards and is expected to close in July 2023.
- The inclusion of Activision will reportedly increase Microsoft’s game revenue by 50%, making it the third-largest gaming company in the world behind Tencent and Sony.
The deal also gives the tech giant a library of top-shelf titles, including Call of Duty and World of Warcraft, to add to its cloud-streaming platform, Game Pass. Billed as the “Netflix for games,” Game Pass currently has 25 million subscribers.
Despite being Microsoft’s biggest deal to date, the software company probably got Activision at an enviable discount. For the past several months, Activision has been embroiled in controversy after the state of California sued the company for alleged rampant sexual harassment and gender pay disparity.
Since then (and following a series of exposés), Activision has pushed out or disciplined eighty employees for misconduct, has seen its stock drop 30%, and has had employees calling for the ousting of CEO Bobby Kotick — who is expected to be shown the door.
The acquisition gives Microsoft a grand total of 30 in-house game studios. The company recently acquired Minecraft-maker Mojang AB and Bethesda Softworks-owner ZeniMax Media Inc. for $2.5 billion and $7.5 billion, respectively. Of course, the deals are part and parcel of the ongoing war with rival Sony, which is also bulking up for cloud gaming, for developers. In recent years, Sony acquired popular game-makers Insomniac Games and Bluepoint Games.