Why Has Microsoft Bought Activision Blizzard and How Much Is the Deal Worth?

Microsoft announced on Tuesday that it will be buying Activision Blizzard for a staggering amount of money, in the most expensive business acquisition in gaming history.

The Xbox (Microsoft) and PlayStation (owned by Sony) brands have been in direct competition with each for over 20 years. Both publishers are always looking for new ways to overshadow their rival, often by securing desirable games that will be exclusive to their respective consoles. For PlayStation, this has largely manifested in the company pumping lots of cash into first-party blockbusters like God of War, The Last of Us Part II and the Uncharted franchise.

Xbox, on the other hand, has taken a rather different approach lately, by going on a spending spree and acquiring as many talented studios as they can. In September 2020 the company purchased ZeniMax and all of its subsidiaries (which includes Bethesda Softworks); and they have also picked up the likes of Double Fine Productions, Ninja Theory and the Minecraft developers over at Mojang Studios.

Now, in an official press release, Microsoft has confirmed that Activision Blizzard (and all 10,000 of its employees) will be acquired. With this purchase, it will also be getting the teams responsible for Call of Duty, Overwatch, World of Warcraft, Crash Bandicoot and even Candy Crush.

How Much Did Microsoft Spend To Acquire Activision Blizzard?

It's worth noting that this purchase has not gone through yet and that Microsoft has only just "agreed" to buy Activision Blizzard.

That being said, the all-cash transaction is set to cost a whopping $68.7 billion, making it the most expensive acquisition in the history of the tech industry. The previous record-holder for this was when Dell bought EMC for $67 billion.

For comparison's sake, Disney invested just $4 billion to acquire Marvel Entertainment. So Microsoft is paying over 17 times that amount.

If you're wondering what Microsoft will get for this huge sum, here is a list of some of the subsidiaries and divisions that are currently owned by Activision Blizzard.

  • Activision Publishing
  • Blizzard Entertainment (Overwatch, Diablo and World of Warcraft)
  • Beenox (Call of Duty support studio)
  • Demonware (Respawn Heroes)
  • High Moon Studios (Call of Duty support studio)
  • Infinity Ward (Call of Duty)
  • King (Candy Crush)
  • Major League Gaming (eSports Organizer)
  • Radical Entertainment (Prototype Remasters)
  • Raven Software (Call of Duty: Warzone)
  • Sledgehammer Games (Call of Duty: Vanguard)
  • Toy for Bob (Crash Bandicoot and Spyro developer)
  • Treyarch (Call of Duty)

According to the press release, Microsoft and Activision Blizzard will continue to operate independently until the deal is closed.

What Activision Blizzard Brings to the Table

Activision Blizzard has recently been at the center of a number of major controversies and a high-profile lawsuit, with its CEO Bobby Kotick facing accusation that he enabled a culture of sexual harassment (claims which he has denied). You might therefore be questioning why Microsoft would choose to inherit all these problems by acquiring the publisher.

The simple fact of the matter is that Activision Blizzard owns a lot of valuable Intellectual Property (IP) and very lucrative gaming services like World of Warcraft and Call of Duty: Warzone. In purchasing the company, Microsoft will be in a position to make some of these titles Xbox exclusives in the future, or use them to prop up its flourishing Game Pass Service.

The precedent for this kind of thing has already been set by the Bethesda acquisition. After all, it's been confirmed that that company's titles—including Starfield and even the Elder Scrolls 6will be debuting on Game Pass at launch, and that many of them won't be appearing on PlayStation consoles at all.

The prospect of the same thing happening with new Call of Duty games or Overwatch 2 would be a huge victory for Microsoft, and an even bigger blow to Sony.

According to the press release, Activision Blizzard will also be instrumental in Microsoft's strategy for the Metaverse. Details are obviously thin on the ground at this early stage, but the release does say that the: "acquisition will accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse."

Reflecting on the implications of this, Mike Proulx, VP for Forrester Research, said: "This is yet another play by Microsoft to secure its stake in the nascent metaverse. The company previously announced it's vision for a metaverse tech stack back in May.

"The acquisition of Activision Blizzard gives the company a 3D gaming experience layer that complements their Xbox gaming hardware. What this means is that Microsoft is now holding a number of important cards in the developing metaverse: back-end infrastructure, devices, and now an experience platform."

What About Bobby Kotick?

Finally, for anyone that is wondering what will become of Bobby Kotick, the press release does state that he will continue to serve as Activision Blizzard's CEO following the acquisition. However, some journalists, including Forbes' Paul Tassi and Bloomberg's Jason Schreier, are sceptical that this will last.

Newsweek has contacted both Activision Blizzard and Microsoft for comment on this last point. At the time of writing, neither has responded.

Correction 01/19/21, 11.37 a.m. ET: This article originally stated that Dell purchased EMC for $67 million. The actual figure is $67 billion. Newsweek regrets the error.

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