Microsoft Acquires Activision Blizzard in $70bn Deal, What does the Future Hold for the Company %

Microsoft's acquisition of Activision Blizzard is set to get approval in 2023. Making it the largest in the Games Industry's history.

The deal will add some of the gaming industries most well-known IPs under the Microsoft banner. The likes of Call of Duty, Spyro, Guitar Hero, and Tony Hawk from Activision, Warcraft, StarCraft, Hearthstone, Overwatch, and Diablo from Blizzard. The deal will also see Microsoft acquire Candy Crush developer King, a titan in the mobile space.

The acquisition will also see a number of other major studios joining Microsoft. Treyarch, Beenox, Infinity Ward, Radical Entertainment, High Moon Studios, Digital Legends, Demonware, King, Sledgehammer Games, Toys for Bob, Infinity War, Major League Gaming, and Raven Software.

The deal is a year away from being approved. So it's unlikely we see major changes coming to Acti-Blizz. Speaking in a statement, Microsoft had this to say on the plans for the coming year:

“Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company's culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.”

Phil Spencer added:
“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players. We deeply value individual studio cultures, we also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We're looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”

Activision Blizzard come to Game Pass

So, the big question from a Microsoft point-of-view is how will this impact Game Pass. When Microsoft purchased ZeniMax Media (Bethesda, id) it was quick to put a number of their games on the service. Then, later in 2021, Microsoft added the remaining titles. Spencer spoke about Game Pass specifically in a media call:

“Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard's incredible catalog. We also announced today that Game Pass now has more than 25 million subscribers. As always, we look forward to continuing to add more value and more great games to Game Pass.

“The fantastic franchises across Activision Blizzard will also accelerate our plans for Cloud Gaming, allowing more people in more places around the world to participate in the Xbox community using phones, tablets, laptops, and other devices you already own. Activision Blizzard games are enjoyed on a variety of platforms, and we plan to continue to support those communities moving forward.”

Game Pass continued growth

Microsoft also announced that Game Pass has moved past 25 million subscribers. So it's no surprise to see Game Pass being a big part of the thinking with a move like this. Now, as for exclusivity, that's going to be a hot topic. With Bethesda, we already know that future Elder Scrolls titles will be exclusive to Xbox and PC, so we'd expect a similar situation to happen with the likes of Diablo and Overwatch. That said, Minecraft has remained a title across multiple platforms. This is likely due to its nature as a child-facing casual game.

What might be worth keeping an eye on is what happens with King (Candy Crush), and titles like Diablo Immortals (due out in 2022). Xbox Game Pass mobile is really just Xbox Game Pass Cloud, could we see mobile titles added to the platform in the future? Candy Crush has built its entire game model on microtransactions, something a lot of Game Pass titles feature (Halo Infinite features skins, Forza has car packs, etc). So it will be interesting to see how King gets integrated into Game Pass. What's more likely is Candy Crush gets featured in the Game Pass perks section. We could see $5/$10 worth of lives or X hours of limitless lives.

What it means for top Activision Blizzard IPs

We mentioned above some of the big IPs at Activision, but really it's all about Call of Duty. Yearly releases of CoD, Warzone, and CoD Mobile are massive for the financials of the company. While the latest CoD has seen a drop-off in sales, the IP is one of gamings most well known. Spyro, Crash, Tony Hawk all have a part to play, especially with children, and we'd suspect to see a lot of those titles flood Game Pass in due time. We've already mentioned King above, who gives Microsoft a dominant force in the mobile space. Though, it's Blizzard that most people will see as the meat of this deal.

It would be fair to say that Blizzard has fallen from grace in recent years. World of Warcraft has continued to struggle, and while the release of Classic saw a surge in subs, long-term that player base has fizzled out. WoW is also in a bit of a slump itself. With the game's next patch, 9.2, without a release date, WoW is currently around a year behind its expected release schedule. In fact, this past November should have seen the announcement of the next WoW expansion. With the event canceled due to the pandemic, 2022 is unlikely to have an expansion. Diablo 4 and Overwatch 2 have also been delayed into “late 2022” at the earliest.

Further compounding the issues facing Blizzard right now. Hearthstone continues to put out new expansions and updates, so it's not all doom and gloom. If anything, this new deal might just give Blizzard the breathing space they need to get back to what they do best. Releasing high-quality games, and releasing them when they're ready.

A fresh start for Blizzard?

The best solution for Blizzard might be to regain independence from Activision, at least creatively. Microsoft has left studios alone to do their own thing after purchase. Mojang has continued to update Minecraft, adding it to new platforms, and just recently adding it to Game Pass. The same happened at Bethesda after they were acquired. Obviously, these games will come to Game Pass, that's a given. We probably won't see WoW on there any time soon, and we don't know what the future holds for Blizzard's Battle.net launcher. For Blizzard, they clearly need support or at least refocusing. The company has gone from leaders in every genre they release games in, to the one playing catch up. Valorant has eclipsed Overwatch, Final Fantasy has swept up disgruntled WoW players, and Path of Exiles continues to dominate Diablo as the franchise awaits its fourth entry.

It will take a lot more than a change of ownership to change Blizzard's fortunes. With the right guidance, and the right people in charge, however, the company can flourish again. We've seen in recent years what Riot Games has done with League of Legends. They expanded the world, made a hit Netflix TV series, and are working on an MMO. Blizzard has powerful and recognized IPs with global fanbases, it needs to utilize those more.

Ongoing lawsuits, discriminations, lack of trust, and awful PR

There's not really any getting away from this issue when you talk about Activision Blizzard of late. The company stinks from the very top. The “Frat Boy” culture has been well documented and continues to be an ongoing talking point around the company. We've seen stories of mass layoffs, despite the company announcing record profits. Underpaid employees who can't afford to eat, and a CEO in Bobby Kotick who had his own board members turn against him for his part in the allegations. More recently, we've seen LEGO delay a new Overwatch 2 set as they review their partnership with the company.

ABetterABK speak out

ABetterABK, the worker's alliance, has weighed in on the news, releasing a statement which we will include in full:

“The news of Activision's acquisition by Microsoft is surprising, but does not change the goals of the ABK Worker's Alliance. We remain committed to fighting for workplace improvements and the rights of our employees, regardless of who is financially in control of the company. ABK will continue to work alongside our allies across the gaming industry to push for measurable change in an industry that desperately needs it.”

What the deal means for the wider gaming industry

Assuming the deal goes through, Microsoft will be the biggest fish in the video game pond. It's something that has turned some noses, with Microsoft not only being one of the three major console manufactures, and also basically the default PC gaming platform. They'll now own some of the most important IPs in the entire industry. Though, Microsoft is just continuing a trend that's been creeping into the industry in recent years. Already in 2022, we've seen Take-Two purchase Zynga, adding one of the other titans of mobile gaming to their portfolio. We've highlighted a few key deals from the past 5 years are listed below:

Microsoft – ZeniMax

EA – Glu Mobile, Playdemic, Codemasters,

Tencent – Sumo Group, Leyou, Supercell, Funcom

Take-Two – Zynga, Nordeus, Playdots, Social Point

Sony – Insomniac Games, Bluepoint Games

A look at the past year of Activision Blizzard, Inc., stock

And that ignores all the studios that these publishers have “created” from the ashes of other dead studios. It's very clear the industry is trying to consume any big independent studio left, even to the point when the publishers are buying each other. For now, it looks like we'll avoid a monopoly, with enough big publishers in the space. We shouldn't kid ourselves, either. This deal has gone through at $95 a share, that's around the value of the stock prior to the harassment scandal, before this morning the stock was at $65 a share. Had this deal happened just 12 months ago, you'd be looking at closer to $150bn.

Bobby Kotick

Bobby Kotick looks set to remain for the time being. Current speculations are that he'll leave when the takeover gets approval next year. Phil Spencer said words close to this today when speaking about the post-deal approval period — “the Activision Blizzard business will report to Microsoft gaming chief Phil Spencer”. A number of reports have suggested that his “sacking without reason” could cost upwards of $230m, so we suspect that's part of the reason.

We can only hope that going forward, Microsoft installs positive leadership. We want to see Activision, King, and, Blizzard's staff given a safe space to work and create. No one deserves to feel scared, belittled, assaulted, or not respected in life. That's especially true when it happens at your place of work. This past year has seen Blizzard's ugly past thrown into the spotlight. With “legendary figures” of the industry exposed or complicit in unthinkable acts. With a deal like this, it's easy to get distracted by the money, the flashy headline. But this is an industry of love and passion, and one that now, more than ever, needs our support.