Microsoft has announced the shock decision to buy the games publisher Activision Blizzard. This could be one of the biggest tech deals in history and it will send shockwaves through the industry. Although the nearly $70 billion deal has yet to be finalized it represents a bold move from Microsoft as it aims to take control of the tech market.
While Microsoft has a strong foothold in the gaming market thanks to its Xbox consoles, the move to absorb Activision Blizzard could make Microsoft the third largest gaming brand. Currently Tencent and Sony occupy the top spots in a global gaming market that is thought to be worth over $180 billion. However, the news that Microsoft was planning to buy Activision Blizzard was enough to send Sony Group’s share price plummeting by as much as 12.8%.
Prior to this deal, Microsoft had already set records for tech takeovers when it paid $26 billion for LinkedIn in 2016. However this $68.7 billion deal could be the biggest of all time and even eclipse the massive $67 billion paid by Dell for EMC in 2015. Microsoft hit the headlines last year when it paid $7.5 billion for another big gaming company – Bethesda.
Of course, such a monumental deal will inevitably come under the scrutiny of the Federal Trade Commission. However, the fact that Microsoft doesn’t suffer the same negativity that affects other tech brands like Facebook and Amazon should mean that the deal goes through.
A big change for Activision Blizzard
Activision Blizzard is a leading games publisher that is behind era-defining games such as World of Warcraft, Call of Duty and Candy Crush. Plus the brand has proven to be especially effective in the hugely promising mobile gaming industry.
However, recent troubles have seen Activision Blizzard struggling amidst a variety of allegations regarding discrimination and sexual harassment. While dozens of Activision Blizzard employees have been disciplined since these allegations emerged last year, chief executive Bobby Kotick will remain in charge following the Microsoft takeover. The success of the deal will depend on how well Microsoft smoothes over the troubles that have been plaguing Activision Blizzard.
The move by Microsoft to buy Activision Blizzard is all the more significant as it shows how the tech brand believes gaming to have a key role in the development of the metaverse. The move into gaming diversifies the brand alongside other big sources of revenue such as cloud computing and PC software.
It follows on from trends in other tech brands who have been in a rush to gain a toehold in the augmented and virtual reality futures. While Facebook’s rebranding as Meta and its $10 billion spending on the metaverse could seem like a rather glib attempt at staying relevant, the $70 billion acquisition of Activision Blizzard is a massive move from Microsoft and it puts the brand in a commanding position.