After months of uncertainty, Microsoft has achieved a significant breakthrough in its pursuit of acquiring Activision Blizzard.
KEY TAKEAWAYS:
- Microsoft has been attempting to acquire Activision Blizzard, the producer of Call of Duty, World of Warcraft, and more for months.
- Microsoft successfully convinced the EU to accept the acquisition through a series of concessions, including allowing Activision titles to be streamed via cloud gaming to other platforms, and allowing Call of Duty on Nintendo consoles.
- Microsoft will still have to convince the U.S. FTC that its acquisition does not harm competition.
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The European Union has granted clearance for Microsoft’s acquisition of Blizzard Entertainment, the renowned developer behind hit video games like World of Warcraft, Call of Duty, and Overwatch. This monumental deal, valued at $68.7 billion and initially announced in January, has finally gained the green light. This marks yet another big victory for Microsoft following the company’s highly successful $13 billion dollar bet on OpenAI — which has helped the stock surge higher in 2023.
Microsoft year-to-date has outperformed the S&P 500, the Nasdaq, the Dow Jones, and the Russell 2000. Source: Google.
The EU’s decision represents another major triumph for Microsoft, which has been determined to expand its presence in the gaming industry. With this acquisition, Microsoft secures control over some of the most sought-after and lucrative video game franchises worldwide.
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Microsoft-Activision Deal Concessions
However, the EU’s approval of the deal has not been without controversy. Detractors raised concerns about Microsoft’s potential monopoly over the gaming market. Microsoft countered with an offer allowing users to stream Activision games on any cloud streaming platform — meaning Microsoft wouldn’t be the only beneficiary of the expanded gaming deal.
Additionally, Microsoft cut a 10-year deal with Nintendo to allow Call of Duty on the Switch and other Nintendo consoles if the Activision deal goes through. Ultimately, despite a veto from the UK, the EU’s competition regulators concluded that the acquisition would not adversely impact competition.
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A History of Successful Microsoft Acquisitions
The acquisition of Blizzard adds to Microsoft’s impressive track record of strategic moves within the gaming sector. In 2014, the company acquired Mojang, the creator of Minecraft, for $2.5 billion. Then, in 2016, Microsoft made a groundbreaking $7.5 billion purchase of ZeniMax Media, the parent company of Bethesda Softworks. And although it wasn’t gaming related (yet), Microsoft’s $13 billion dollar partnership with ChatGPT-creators OpenAI has paved the way for yet another expansion of its reach.
Now, with the inclusion of Blizzard, Microsoft solidifies its position as one of the gaming industry’s major powerhouses. Armed with an extensive game library and a substantial user base, the company gains a strong foothold in the rapidly expanding market for cloud gaming.
Moreover, Microsoft’s acquisition of Blizzard reveals its ambitions to assert itself as a prominent player in the metaverse. This virtual realm, built upon existing online platforms, is widely regarded as the next frontier in computing. Microsoft’s substantial investments in metaverse technology demonstrate its belief in this transformative concept.
This acquisition signifies a significant stride forward for Microsoft’s metaverse aspirations — a back-from-the-dead buzzword of 2022. Access to Blizzard’s highly popular and immersive gaming experiences empowers Microsoft to construct a more captivating metaverse for its users.
Undeniably, the acquisition of Blizzard stands as a seminal moment in the gaming industry. Its ramifications will reverberate throughout the competitive landscape and shape the future of gaming. Other tech giants will closely observe this development, undoubtedly pondering their own potential gaming acquisitions as they attempt to compete with Microsoft.
Notably, Microsoft isn’t out of the woods yet. Despite its many concessions, Microsoft will still have to prove to the U.S. FTC that its latest acquisition of Activision Blizzard will not harm competition.
