After months of extensive global regulatory obstacles, Microsoft closed the monumental acquisition of Activision-Blizzard, valued at $69 billion, on Friday. The colossal deal propels Microsoft to a new pinnacle in the gaming industry, raising its global standing to third, just behind industry giants Tencent Holdings and Sony Group. The software giant from Redmond, Washington, is also becoming a significant player in the mobile gaming industry.
"By combining Xbox with Activision-Blizzard's skill, knowledge, and amazing legacy of games, we will bring the joy and community of gaming to even more players around the world," wrote Phil Spencer, chief executive of Microsoft Gaming, in an email to the company's employees. "We are eager to learn from their creativity, exchange insights and best practices, and empower our new colleagues to bring their visions to the widest possible audience. And today, we officially start the work of bringing more groundbreaking games to more players than ever before and across new platforms from mobile to cloud streaming."
No. 3 Game Publisher
The fusion of Microsoft and Activision-Blizzard is set to be a remarkable event in the gaming industry that brings together the technological prowess of Microsoft with the creativity of Activision-Blizzard. The gaming portfolio that emerges as a cardinal strength of the merge includes Microsoft titles like Flight Simulator, Halo, Forza, and Minecraft. Activision-Blizzard's powerhouse franchises include Call of Duty, World of Warcraft, and Candy Crush. This extensive repertoire promises to captivate a broader spectrum of gamers, augmenting the entity's market presence and appeal.
While $69 billion is a massive chunk of money, Activision-Blizzard brings lucrative franchises such as Call of Duty, which alone has generated over $30 billion in revenue. At the same time, Microsoft's Xbox has robust services like the Xbox Game Pass subscription, contributing significantly to its revenue stream. This union is expected to bolster the merged company's market position, driving substantial revenue through a rich portfolio of games and services.
The new entity also promises a lot of potential in emerging domains like cloud gaming, where Tencent and Sony are in the early stages of development. Meanwhile, the acquisition enables Microsoft to enter a new gaming frontier — the mobile gaming arena — with Activision's established mobile gaming footprint.
Cultural revitalization is another anticipated strength as Microsoft's influence is poised to foster an organizational transformation within Activision-Blizzard aimed at cultivating a more inclusive, equitable, and innovative workplace environment, something that the game publisher has been criticized for.
It's Not Over Yet
The combined Microsoft Activision-Blizzard entity will benefit from an expanded global reach, a vibrant user community, and enhanced revenue streams, collectively bolstering its market position, strategic alliances, and overall industry influence.
A critical turning point in the completion of the acquisition was the UK's Competition and Markets Authority (CMA) decision to greenlight the deal. Initially hesitant, the CMA required Microsoft to make significant concessions to prevent monopolistic dominance in the rapidly evolving cloud gaming sector. An agreement was reached when Microsoft decided to offload some of Activision Blizzard's gaming rights to Ubisoft Entertainment, assuaging concerns of stifled competition and paving the way for the deal's finalization.
In the regulatory arena, while the CMA gave its nod, the US Federal Trade Commission (FTC) remains a formidable opponent, continuing to challenge the legality of the acquisition. Despite the FTC's persistent resistance, the transaction's closing marks a significant milestone, albeit with the potential for future legal confrontations that could necessitate the revisiting and possible unwinding of the merger.
