Microsoft Acquires Activision Blizzard
Microsoft is acquiring Activision, the troubled publisher of Call of Duty, World of Warcraft, and Diablo. The deal will value Activision at $68.7 billion, far in excess of the $26 billion Microsoft paid to acquire LinkedIn in 2016. It’s Microsoft’s biggest push into gaming, and the company says it will be the “third-largest gaming company by revenue, behind Tencent and Sony” once the deal closes.
Microsoft plans to add many of Activision’s games to Xbox Game Pass once the deal closes. With the acquisition of Activision, Microsoft will soon publish franchises like Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush. “Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” says Microsoft’s CEO of gaming Phil Spencer.
Microsoft framed the deal as strengthening the company’s hand in the so-called metaverse, the nascent world of virtual and augmented reality. The metaverse has attracted huge amounts of investment and talent, though so far is more of a buzzword than a thriving business. Facebook renamed its parent company to Meta late last year to underscore its commitment.
Microsoft’s Xbox Game Pass is available on the iPhone and iPad through Safari, but not the App Store.
Game Pass subscriptions cost between $10–15 per month. Let’s just call that about $150/year per subscriber. That’s just under $4 billion per year. Assume that the Game Pass subscriber base will keep growing, and $69 billion for Activision doesn’t seem absurd as a long-term investment. And that’s just counting Game Pass subscription revenue, not traditional game sales.
It’s wild how Microsoft has been able to vertically integrate gaming.
They now own the distribution (Xbox Cloud Gaming, Xbox Game Pass), the games (Call of Duty, WoW, Starcraft + what they owned before), the OS (Windows, Xbox), the hardware (Xbox, many PCs), and the back end compute (Azure). The only thing they’re missing, the network bandwidth, is mostly a commodity anyway.
Microsoft’s biggest acquisitions:
Activision Blizzard: $68.7 billion
Linkedin: $26.2 billion
Nuance: $19.7 billion
Skype: $8.5 billion
ZeniMax: $7.5 billion
GitHub: $7.5 bilion
Nokia phone unit: $7.2 billion
aQuantive: $6.3 billion
Mojang (Minecraft): $2.5 billion
Previously:
Maybe they could bundle Zork with Windows...