Activision Blizzard Acquisition: Key Details, Impact, and What Comes Next

Microsoft's acquisition of Activision Blizzard, valued at $68.7 billion, marks a significant shift in the gaming industry. This strategic move aims to enhance Microsoft's gaming portfolio across various platforms, including mobile, PC, console, and cloud. By integrating popular franchises like Call of Duty and World of Warcraft, Microsoft is poised to become a leading force in the gaming sector.

What Is Activision Blizzard?

Founded in 2008, Activision Blizzard is a leading entity in the gaming and entertainment industry. The company is renowned for its iconic game franchises such as Candy Crush™, Call of Duty®, World of Warcraft®, Overwatch®, Hearthstone®, and Diablo®. Activision Blizzard differentiates itself by creating immersive gaming experiences that foster community building. Additionally, it has been recognized for its strong workplace culture, being named one of FORTUNE’s “100 Best Companies To Work For®” for five consecutive years.

Who Acquired Activision Blizzard?

Microsoft is a leading technology company known for its extensive range of products and services, including software, hardware, cloud computing, AI, and gaming solutions. Key offerings include Microsoft 365, Windows, Surface devices, Xbox consoles, and Azure cloud services. The company holds a dominant position in the tech industry, serving both consumer and enterprise markets. Microsoft's influence spans various sectors, making it a pivotal player in business, education, and consumer electronics.

When Was Activision Blizzard Acquired?

Microsoft officially acquired Activision Blizzard on October 13, 2023. This acquisition came after a prolonged 20-month period of regulatory scrutiny and legal battles, including significant concessions to satisfy the UK's Competition and Markets Authority and overcoming opposition from the US Federal Trade Commission. The timing of this acquisition aligns with a broader trend of consolidation in the gaming industry, reflecting the sector's rapid growth and increasing importance in the entertainment landscape.

Why Was Activision Blizzard Acquired?

• Market Expansion: The acquisition allows Microsoft to significantly expand its presence in the gaming industry by acquiring popular franchises such as Call of Duty, Overwatch, Diablo, and Warcraft. This move positions Microsoft as a major player in esports, gaining control over significant properties like Call of Duty League and Overwatch League. Additionally, the deal enables Microsoft to bring gaming to more players across different platforms, including mobile, PC, console, and cloud.
• Technology Integration: Microsoft plans to leverage Activision Blizzard's titles to enhance its cloud gaming services, particularly through its Game Pass and Xbox Live platforms. The integration of these games into Xbox Game Pass will bring popular franchises to the subscription service, enhancing its value proposition. Furthermore, the acquisition is seen as a strategic move to strengthen Microsoft's position in the metaverse, a growing trend in the tech industry.
• Competitive Advantage: By acquiring Activision Blizzard, Microsoft gains control over some of the most valuable gaming IPs, bolstering its competitive position in the gaming market. The acquisition makes Microsoft the world's third-largest gaming company by revenue, behind Tencent and Sony. Additionally, the deal helps Microsoft to become the "de facto king of cloud gaming," reducing competition in this emerging market and potentially making gaming more accessible.

Acquisition Terms

• Acquisition Price: $68.7 billion
• Payment Method: All-cash transaction
• Key Conditions or Agreements:
  • The transaction is subject to customary closing conditions.
  • Completion of regulatory review.
  • Activision Blizzard’s shareholder approval.
  • Commitments to the European Commission and UK Competition and Markets Authority to ensure competition.
  • Ubisoft owns the cloud game streaming rights to Activision Blizzard games as part of a licensing deal.
  • Microsoft restructured the deal to address cloud gaming rights concerns raised by the CMA.
  • Microsoft reiterated its commitment to a labor neutrality agreement with the Communications Workers of America (CWA).
  • Activision Blizzard CEO Bobby Kotick will remain in his position until the end of 2023 to assist with the transition.
  • Microsoft will spin off the cloud gaming assets division to Ubisoft.
  • Microsoft has committed to keeping Call of Duty available on other platforms.
  • Microsoft will not take ownership of cloud gaming rights for any existing Activision Blizzard titles or new games released in the next 15 years.

Impact on Activision Blizzard

The acquisition of Activision Blizzard by Microsoft has led to notable changes in operations and management. Bobby Kotick will continue as CEO until the end of 2023, after which Activision Blizzard will report to Phil Spencer, CEO of Microsoft Gaming. This transition involves integrating over 8,500 Activision employees into Microsoft, with a commitment to labor neutrality agreements. Additionally, Microsoft has spun off the cloud gaming assets division to Ubisoft to address regulatory concerns, ensuring compliance with the UK's Competition and Markets Authority.

Product offerings and services have also seen significant enhancements. Iconic franchises like Call of Duty, Diablo, and Overwatch are now part of Microsoft's portfolio, with many titles added to Xbox Game Pass. This move has expanded the availability of these games across multiple platforms, including Xbox Cloud Gaming and services like NVIDIA GeForce NOW. Employee reactions have been cautiously optimistic, while customer feedback has generally been positive, appreciating the increased accessibility and new gaming experiences. For founders considering business transitions, tools like Sunset can assist in managing such processes compliantly, ensuring a smooth and efficient transition.