Microsoft, the tech giant behind the Xbox console, has finally got the green light to acquire Activision Blizzard, the video game company that owns popular franchises such as Call of Duty and World of Warcraft. The deal, worth $69bn (£54bn), is the biggest of its kind in the history of gaming and will reshape the industry landscape.
UK regulator clears the deal after revised offer
The Competition and Markets Authority (CMA), the UK’s competition watchdog, had initially blocked the deal in April, citing concerns that Microsoft would dominate the nascent cloud gaming market. Cloud gaming allows users to stream games over the internet without downloading them on their devices.
However, last month the CMA said that a revised offer from Microsoft had addressed its concerns, indicating that the takeover would be approved. Microsoft agreed to sell the cloud gaming rights outside Europe to Activision Blizzard’s French rival Ubisoft, which makes games such as Assassin’s Creed and Far Cry.
In a statement on Friday, Sarah Cardell, the CMA’s chief executive, said: “With the sale of Activision’s cloud streaming rights to Ubisoft, we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market. As cloud gaming grows, this intervention will ensure people get more competitive prices, better services and more choice.”
Microsoft faces opposition from other regulators and rivals
The UK regulator had appeared increasingly isolated in its position blocking the takeover after its EU counterparts passed the deal – after Microsoft offered alternative concessions on cloud gaming rights – and the US competition regulator failed to secure a court injunction to stop it.
The Federal Trade Commission (FTC) is maintaining its opposition to the deal but it cannot prevent Microsoft and Activision from completing it. The FTC has accused Microsoft of engaging in “anticompetitive conduct” and violating antitrust laws by buying up rivals and limiting consumer choice.
Microsoft’s main rival in the gaming industry, Sony, which owns the PlayStation console, has also strongly opposed the deal over fears that big Activision titles like Call of Duty could become Xbox exclusives over time. The PlayStation currently outsells Microsoft’s Xbox but like all entertainment platforms, the key to success is access to the best content.
Microsoft aims to boost its gaming portfolio and revenue
Microsoft’s long-running pursuit of Activision Blizzard is part of its strategy to expand its gaming portfolio and revenue. The tech giant already owns several studios that make games such as Minecraft, Halo, Forza and Gears of War. It also operates a subscription service called Xbox Game Pass, which gives users access to hundreds of games for a monthly fee.
By acquiring Activision Blizzard, Microsoft will add some of the most popular and profitable games in the world to its catalogue. Call of Duty alone has more than 400 million players and generated $1.9bn in revenue in 2022. World of Warcraft is one of the most successful online role-playing games ever made, with millions of loyal fans.
Microsoft’s president Brad Smith said that the deal would “bring joy to billions of people around the world”. He said that Microsoft would “invest in and empower” Activision Blizzard’s creative teams and “preserve their unique cultures”. He also said that Microsoft would “uphold our commitment to making gaming for everyone”, implying that some Activision games would still be available on other platforms.
Activision Blizzard hopes to overcome its troubles with Microsoft’s help
Activision Blizzard has been facing several troubles in recent years, including lawsuits, investigations, boycotts and protests over allegations of sexual harassment, discrimination and toxic work culture at the company. Several executives, including former CEO Bobby Kotick, have resigned or been fired over their handling of the issues.
The company has also seen a decline in its player base and revenue amid increased competition from other game makers such as Epic Games, which makes Fortnite, and Electronic Arts, which makes FIFA and Battlefield. Activision Blizzard’s share price has fallen by more than 40% since its peak in 2020.
The company hopes that joining forces with Microsoft will help it overcome its challenges and restore its reputation and performance. A spokesman for Activision Blizzard said that the approved deal was “great news” for its employees, players and shareholders. He said that Microsoft would provide “unparalleled resources” and “a shared vision” for the future of gaming.
