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What Happens When Microsoft Buys Activision Blizzard? A Deep Dive

Microsoft’s acquisition of Activision Blizzard is a landmark event in the gaming industry, and its implications are far-reaching. The short answer to “What happens if Microsoft buys Activision Blizzard?” is this: Microsoft now owns a vast portfolio of gaming IPs, studios, and talent, fundamentally altering the landscape of video game development and distribution. This acquisition, which officially closed after a lengthy regulatory review, has significant consequences for players, developers, and the broader tech world. More specifically, it means that Activision Blizzard and its subsidiaries become part of the Microsoft gaming ecosystem, under the Xbox brand. This includes access to the vast libraries of Activision Publishing, Blizzard Entertainment, and King, developers of iconic franchises such as Call of Duty, World of Warcraft, Diablo, Overwatch, and Candy Crush. This also grants Microsoft access to renowned studios like Treyarch and Infinity Ward. For Activision Blizzard shareholders, each share was exchanged for $95 in cash. While this initially sounded straightforward, the path to acquisition was anything but, as regulatory bodies worldwide scrutinized the deal over concerns about competition and market dominance.

The Immediate Impact of the Acquisition

The most immediate impact is the transfer of ownership. Microsoft now controls all developers under the Activision Blizzard umbrella. For gamers, this means a potential shift in game availability, though Microsoft has pledged to continue making games available on multiple platforms. However, it could also lead to:

Game Pass Integration: One significant driver behind the acquisition is Microsoft’s desire to bolster its Game Pass subscription service. Expect to see Activision Blizzard titles, eventually, appearing on Game Pass, potentially driving subscription numbers and making these huge franchises more widely accessible.
Mobile Gaming Push: The ownership of King allows Microsoft to significantly expand its footprint in the mobile gaming market. The success of Candy Crush saga is a huge opportunity and this will now be part of Microsoft’s future strategy.
Cross-Platform Play: While not guaranteed, Microsoft’s commitment to not locking down Activision Blizzard games to Xbox consoles suggests an increased likelihood of more cross-platform play in future titles, opening up games to a broader audience.
Cloud Gaming: Microsoft has also moved to secure cloud gaming approval by agreeing to sell the cloud gaming rights to Ubisoft. This potentially will allow more players to access their gaming catalogue without necessarily owning the console or PC where the game was developed.
Leadership Changes: While Bobby Kotick remained in his role through 2023, future leadership changes will likely come as Microsoft integrates Activision Blizzard into its structure.

The Long-Term Implications

Beyond the immediate changes, the Microsoft acquisition of Activision Blizzard has several long-term implications:

Market Consolidation: This deal marks a significant consolidation of the gaming industry. Microsoft, already a powerful player through Xbox, now controls some of the most valuable IP in the industry.
Competitive Landscape Shift: With this acquisition, the rivalry with competitors like Sony’s PlayStation intensifies. Sony has been outselling the Xbox console for some time now, and this move is a clear indication that Microsoft intends to compete more intensely. Microsoft has also used this acquisition to make a clear move to increase its influence in the mobile gaming sector.
Investment and Innovation: Microsoft’s deep pockets may lead to increased investment in the development of new and existing franchises, potentially driving innovation and enhancing the quality of games.
Content Strategy: Expect more Activision Blizzard games to appear on Xbox and other platforms as time moves forward. Microsoft now can leverage these titles, in addition to their other acquisitions like Minecraft, to strengthen their content strategy on multiple platforms.
Data and Ecosystem Growth: The acquisition enhances Microsoft’s data collection and user base, bolstering the entire Microsoft ecosystem.

Addressing Regulatory Concerns

One of the biggest hurdles of this acquisition was navigating regulatory concerns. The Federal Trade Commission (FTC) initially attempted to block the deal in the US, arguing it would harm competition. Similarly, the Competition and Markets Authority (CMA) in the UK also raised concerns about the impact on cloud gaming competition. Ultimately, Microsoft overcame these hurdles by restructuring the deal and making concessions, specifically regarding cloud gaming rights, in an attempt to appease regulators. This included an agreement to transfer the cloud streaming rights for Activision Blizzard titles for the next 15 years to Ubisoft.

What This Means for Gamers

For gamers, this acquisition is a mixed bag. While the potential for increased access to games through Game Pass and more cross-platform play is exciting, some gamers may be concerned about market consolidation and the impact on competition. Here’s a recap of what it could mean for players:

Potential Benefits:
- Wider access to Activision Blizzard games, possibly via Game Pass.
- Increased chance of cross-platform play.
- Potentially increased investment and development for franchise titles.
Potential Concerns:
- Less competition could lead to stagnation or price increases.
- Fear of some franchises becoming Xbox exclusives (though this has been disputed).

The Bigger Picture

The acquisition of Activision Blizzard by Microsoft signifies a dramatic shift in the gaming industry. It’s not just about one company buying another; it’s about the reshaping of the entire sector. The deal is a statement of intent by Microsoft to establish itself not just as a gaming console maker but as a major force in interactive entertainment across multiple platforms.

Frequently Asked Questions (FAQs)

1. Did Microsoft actually buy Activision Blizzard?

Yes, Microsoft completed its $69 billion acquisition of Activision Blizzard after overcoming various regulatory hurdles. The deal closed on Friday, officially making Activision Blizzard part of the Microsoft gaming division.

2. What is included in the Activision Blizzard acquisition?

The acquisition includes all Activision Blizzard developers, such as Activision Publishing, Blizzard Entertainment, and King. It also includes the rights to iconic gaming franchises like Call of Duty, World of Warcraft, Diablo, Overwatch, and Candy Crush.

3. How much did Microsoft pay for Activision Blizzard per share?

Microsoft paid $95 in cash for each share of Activision Blizzard stock, valuing the deal at approximately $68.7 billion, but closer to $75 billion when including their net cash.

4. What will happen to Activision stock?

Prior to the close of the acquisition, Activision Blizzard shareholders received $95 per share they owned. The Activision Blizzard stock (ATVI) no longer exists, as it is now part of Microsoft.

5. Will Call of Duty become an Xbox exclusive?

Despite concerns, Microsoft has stated that Call of Duty will not become an Xbox exclusive, at least in the near future. This indicates that the franchise will likely remain available on other platforms as well.

6. What happens to World of Warcraft now?

World of Warcraft will now be owned by Microsoft through the acquisition of Blizzard Entertainment. It’s expected that the game will continue to be supported and may see future expansions and content under Microsoft’s umbrella.

7. Will Activision Blizzard games come to Game Pass?

It is expected that Activision Blizzard games will eventually be added to Xbox Game Pass, although specific timelines have not yet been announced. Some speculate that games might not appear until 2024.

8. What is the future of Bobby Kotick?

Bobby Kotick remained CEO of Activision Blizzard through the end of 2023. Following that, future leadership changes were expected and have happened as the company integrated into Microsoft.

9. What was the biggest hurdle to the acquisition?

The biggest hurdles were regulatory reviews from bodies like the FTC in the US and the CMA in the UK. Both raised concerns about competition, which Microsoft addressed by restructuring the deal and offering concessions.

10. Why did Microsoft buy Activision Blizzard?

Microsoft aimed to bolster its Game Pass offerings, gain access to valuable gaming IPs, and expand into the mobile gaming market through the acquisition of King. It also helps to increase their rivalry with Sony PlayStation.

11. Did the UK block the Microsoft Activision deal?

The UK’s CMA initially blocked the deal due to concerns about cloud gaming. However, following Microsoft’s concessions, they approved the merger.

12. What cloud gaming concession did Microsoft make?

To satisfy regulatory concerns, Microsoft agreed to transfer the cloud streaming rights for all current and future Activision Blizzard games to Ubisoft for the next 15 years.

13. How much was the termination fee if the deal failed?

If the deal was terminated, Activision Blizzard was eligible to receive a termination fee from Microsoft, which was $3.5 billion if it was terminated after August 29, 2023, and $4.5 billion if terminated after September 15, 2023.

14. What about Microsoft’s purchase of Minecraft?

Microsoft purchased Minecraft in 2014 for $2.5 billion. This acquisition shows their commitment to big gaming IPs and their intent to spread this content across multiple platforms.

15. Does this acquisition signify a shift in the gaming market?

Yes, this acquisition marks a major shift in the gaming market. Microsoft’s acquisition of Activision Blizzard consolidates power in the industry and could potentially transform how games are developed and distributed.