On Friday, October 13th, Microsoft finalized its acquisition of Activision Blizzard, the video game company known for popular franchises like Call of Duty, in a deal valued at $69 billion, marking the largest transaction in the gaming industry to date. The acquisition was completed after the United Kingdom’s Competition and Markets Authority (CMA) gave its approval, despite initial reservations and a temporary block of the bid in April.
The deal amalgamates Microsoft’s Xbox gaming platform and Xbox Game Studios with Activision, bringing popular game franchises such as Call of Duty, World of Warcraft, and Candy Crush under one corporate umbrella. This acquisition propels Microsoft to become the third-largest gaming company globally in terms of revenue, only behind Tencent and Sony.
The CMA’s approval came with a condition: Microsoft would transfer the rights to stream Activision games from the cloud to Ubisoft for 15 years outside the European Economic Area (EEA), which includes EU countries as well as Iceland, Liechtenstein, and Norway. After the 15-year period, Ubisoft will no longer hold the cloud gaming rights for Activision’s content, but the regulator believes that this timeframe will allow rivals to establish themselves, making the cloud gaming market more competitive.
Activision Blizzard CEO Bobby Kotick has confirmed that he will step down at the end of 2023, stating in a letter to staff, “I have long said that I am fully committed to helping with the transition.” He and Microsoft’s Phil Spencer have expressed their commitment to ensuring a smooth integration for their teams and players.
Despite the approval, the CMA criticized Microsoft’s conduct over the near-two-year battle, with CMA Chief Executive Sarah Cardell stating, “Businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA.” Microsoft President Brad Smith expressed gratitude for the CMA’s thorough review and decision.
The acquisition has been met with varied responses from global regulators and has been passed by regulators in the European Union. However, the United States competition watchdog’s attempt to halt the purchase was rejected by the courts. The deal has also sparked concerns among rivals, such as Sony, over the potential exclusivity of major Activision titles in the future.
The implications of this acquisition on the gaming industry are vast, potentially reshaping the landscape and dynamics of gaming markets and platforms. Microsoft aims to enhance its Xbox Game Pass service and expand into mobile gaming, leveraging Activision’s studio solely purposed for mobile games and capitalizing on successful titles like Candy Crush.
As the gaming industry continues to evolve, the impact of this acquisition on competition, game development, and player experiences will be closely watched by stakeholders, regulators, and gamers alike.