Online gaming is one of the largest and fastest-growing forms of entertainment; more than 3 billion people actively participate in various online gaming platforms. According to reports, the global gaming market generated about $180 billion of revenues in 2021 and is expected to grow to $218.8 billion by 2024.
Today, Microsoft Corp. announced its plan to acquire Activision Blizzard — the embattled video game publisher behind hit franchises such as Candy Crush, Call of Duty, Overwatch and Warcraft. The acquisition valued at $68.7 billion deal would be the biggest-ever acquisition in Microsoft’s history and is set to be an all-cash acquisition on record.
Microsoft will become the world’s third-largest gaming company by revenue, behind China’s Tencent Holdings Ltd. and Japan’s Sony Group Corp, after this deal is closed. Microsoft plans to add many of Activision’s game like Call of Duty, Overwatch, Warcraft, and more to the Xbox game pass. Phil Spencer, Microsoft’s CEO of Gaming says, “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”.
Bobby Kotick, CEO, Activision Blizzard, had been rumoured to step down amid ongoing sexual harassment scandals and SEC investigations, which employ nearly 10,000 people. Yet with this acquisition, Microsoft says Kotick and his team will maintain their focus to accelerate business growth and strengthen its culture. After the deal is completed, Activision Blizzard will report to Microsoft Gaming CEO and Head of Xbox Phil Spencer.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, Chairman and CEO, Microsoft. ““We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”
With more than 95% of players globally enjoying games on mobile, making it the largest segment in gaming. After this acquisition, Microsoft and Activision Blizzard, through great teams and technology, will empower players to enjoy the franchises like “Warcraft” and “Halo” virtually anywhere they want. Activision Blizzard’s mobile business with games like “Candy Crush” represents a significant opportunity for Microsoft in this segment.
Microsoft’s Game Pass has reached over 25 million subscribers recently. With Activision Blizzard’s nearly 400 million monthly active players in over 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most captivating and diverse line-ups of gaming content. Microsoft will have 30 internal game development studios and other publishing and esports production capabilities upon close.
Microsoft’s offer of $95 per share represents a premium of 45% to Activision’s Friday close. Activision’s shares were last up 27% at $83.11, still a steep discount to the offer price, reflecting concerns the deal could get stuck in regulators’ crosshairs.
This purchase is expected to close in the fiscal year 2023, though both Microsoft and Activision Blizzard boards have approved the transaction.
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