Microsoft’s Activision Blizzard Acquisition: A Done Deal
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The question “Is Microsoft going to buy Activision?” has been a hot topic in the gaming and tech world for nearly two years. The short, definitive answer is: No, Microsoft is not going to buy Activision; they have bought Activision. The monumental $68.7 billion acquisition was officially completed on Friday, October 13, 2023, after navigating significant regulatory hurdles and intense scrutiny from global antitrust authorities. This acquisition marks a pivotal moment in gaming history, reshaping the landscape of the industry and making Microsoft a dominant force.
The Road to Acquisition: Overcoming Obstacles
The journey to this landmark deal was far from smooth. Initially announced in January 2022, the acquisition faced fierce opposition from various regulators, particularly the Federal Trade Commission (FTC) in the United States and the Competition and Markets Authority (CMA) in the United Kingdom. Concerns were primarily focused on potential anti-competitive practices that could arise from Microsoft owning such a large portfolio of gaming franchises.
Regulatory Hurdles
The FTC, in June 2023, attempted to block the merger, arguing that it would give Microsoft an unfair advantage in the video game industry, stifling competition and potentially harming consumers. The CMA also initially raised concerns, but eventually approved the deal after Microsoft made concessions, including an agreement that allows Ubisoft to offer Activision Blizzard’s games on cloud services that do not run Windows. This revised agreement proved to be the key to finally receiving the necessary approvals.
The Final Approval
Despite the initial setbacks, Microsoft persevered, and after a long legal battle, the acquisition received the green light. The final approval from the CMA on October 13th, following their reevaluation of the revised deal, cleared the last major obstacle. This allowed the two companies to finalize the transaction and bring an end to months of speculation.
What Does This Mean for the Gaming Industry?
The acquisition of Activision Blizzard by Microsoft Gaming marks a significant shift in the gaming world. It brings under the Microsoft umbrella some of the biggest names in gaming, including the hugely popular Call of Duty, World of Warcraft, Overwatch, Diablo, and Candy Crush franchises. This move has broad implications for both gamers and the industry as a whole.
Microsoft’s Gaming Portfolio Expansion
With this acquisition, Microsoft substantially expands its already considerable gaming portfolio. The move will significantly boost Xbox’s position in the gaming console war, adding a vast library of hugely popular games to its ecosystem. This may well influence future strategies, content, and innovation in the gaming world.
Implications for Gamers
The immediate effect for gamers will likely be access to these franchises through Xbox Game Pass, Microsoft’s subscription-based service. The question of exclusivity and whether Call of Duty and other games will be available on competitor platforms like PlayStation remains a point of discussion.
Potential Impact on Activision Blizzard
The acquisition also could potentially impact the culture and employee well-being within Activision Blizzard. While Bobby Kotick, former CEO of Activision Blizzard, has expressed confidence in the deal, the move could offer some support to ongoing unionization efforts within the company. Microsoft has a better track record in supporting unionized labor.
Activision Stockholders and the Deal
As a result of the acquisition, Activision Blizzard shareholders received $95 for each share of Activision they owned before the closing date. This transaction effectively delisted Activision Blizzard as a public company, making it a wholly-owned subsidiary of Microsoft.
Frequently Asked Questions (FAQs)
Here are 15 FAQs to further clarify the situation surrounding the Microsoft-Activision Blizzard acquisition:
1. Why was the Microsoft Activision deal initially blocked?
The primary reason for the initial blockage was competition concerns. Regulators, particularly the FTC and the CMA, worried that Microsoft’s acquisition would give them an unfair competitive advantage, potentially harming consumers and limiting competition within the video game industry. They argued that Microsoft could limit access to Activision Blizzard games on competing platforms, which would create a monopoly.
2. Did Microsoft overpay for Activision Blizzard?
Whether Microsoft overpaid with the $68.7 billion price tag is subjective. Some analysts and commentators believe the price was high, while others argue the strategic importance of acquiring Activision Blizzard’s extensive catalog of popular franchises justifies the price. The move is seen more as a means to accelerate category growth than just simply consolidating a company in decline.
3. What happens to my Activision stock now that Microsoft has bought them?
As the acquisition is complete, Activision Blizzard stock (ATVI) no longer exists as it has been delisted. Stockholders received $95 per share for their holdings, so there is no need to actively sell stock. This transaction was automated as part of the acquisition.
4. Will Call of Duty become exclusive to Xbox?
Microsoft has stated that it intends to bring Call of Duty to as many gamers as possible. However, the exact nature of exclusivity arrangements remains unclear. There is also a ten-year licensing agreement with Sony (Playstation) that ensures they will receive each subsequent game. It is likely some games might arrive on Xbox Game Pass before other platforms.
5. Does Microsoft own Blizzard now?
Yes, as part of the Activision Blizzard acquisition, Microsoft now owns Blizzard Entertainment. This includes franchises like World of Warcraft, Diablo, Overwatch, and StarCraft.
6. How does this deal impact Ubisoft?
Ubisoft is a beneficiary of this deal. As part of the concessions Microsoft made to the CMA to get approval, Ubisoft now has the ability to offer Activision Blizzard’s games on cloud services that don’t run on Windows.
7. Who owns Xbox?
Xbox is a video gaming brand created and owned by Microsoft.
8. Is Microsoft the biggest gaming company now?
With the acquisition of Activision Blizzard, Microsoft has significantly strengthened its position in the gaming industry and is undoubtedly one of the largest players. However, it faces competition from giants like Sony and Tencent. The new acquisitions make them contenders for the top spot.
9. Will Microsoft have a gaming monopoly?
While the acquisition significantly expands Microsoft’s gaming portfolio, whether this creates a true monopoly is debatable. The gaming market remains competitive, and regulatory scrutiny will continue to play a role to ensure healthy competition. The ongoing scrutiny, specifically in relation to cloud streaming services, will play a part in future acquisition activity.
10. How much did Call of Duty sell for?
Call of Duty was not “sold” separately. It was included in the acquisition of Activision Blizzard by Microsoft, with the overall transaction totaling $68.7 billion. However, the Modern Warfare II title grossed more than $800 million in sell-through in the first three days of release.
11. Did Microsoft buy out Call of Duty?
Microsoft bought Activision Blizzard, the publisher of Call of Duty, meaning they now own the Call of Duty franchise. It was not a separate transaction.
12. What is Xbox Game Pass?
Xbox Game Pass is a subscription-based gaming service offered by Microsoft that gives users access to a vast library of games. With the acquisition, expect to see many Activision Blizzard games included on the service.
13. What happened to Bobby Kotick?
Bobby Kotick, the former CEO of Activision Blizzard, left the company upon closing the deal. It was stated that he would assist with the transitional arrangements and exit in early 2024. He is not involved with the business any longer.
14. Why was ATVI stock not trading at $95?
ATVI stock was trading below $95 before the deal closed due to the uncertainty and regulatory hurdles the acquisition faced. As shareholders were awarded $95 a share, this created some arbitrage opportunities for investors. Now that the deal is closed, the ATVI stock no longer trades on the market.
15. Does Microsoft own any other gaming studios?
Prior to acquiring Activision Blizzard, Microsoft owned several gaming studios including, Xbox Game Studios, Bethesda Softworks, Zenimax Media, Double Fine, and Ninja Theory, among others. The inclusion of Activision Blizzard only enhances its stable of studios and titles.
The acquisition of Activision Blizzard by Microsoft marks a significant turning point in the gaming industry. It signals the continuing trend of consolidation within the sector and points to Microsoft’s ambition to become the dominant force in gaming.