What Microsoft Buying Activision Blizzard Means

For many, the day Microsoft announces a deal about buying another large gaming company or publisher is an important day in their life. For Microsoft, it was Tuesday. That isn’t just an altered quote from a video game movie, it’s also something that is ringing true for consumers, employees, and stockholders alike. Back in 2020, Microsoft announced a deal to acquire ZeniMax and everything under their umbrella, including Bethesda Softworks. At the time it was one of the biggest acquisitions at $7.5 billion.

On January 18th, 2022, at 5:25 am, after rumblings on Twitter and from news sources such as the Wall Street Journal, Microsoft announced that they have agreed to acquire the video game giant we all know as Activision Blizzard. This all-cash purchase is much larger than the ZeniMax deal and is valued at $68.7 billion.

We’re 18 days into 2022 and this is undoubtedly the biggest news of the year. I’d also say it is one of the biggest developments for the industry in general. It is certainly (at the very least) the most expensive development. Reactions to it have ranged from excitement and hope to confusion and worry. That only encompasses some of the feelings I have, as there are plenty of takes and opinions from all over that are wagering what this could mean for the industry.

For the majority of us that are consumers, it’s a mixed bag. When the deal for ZeniMax was announced, many assumed that games that had already been announced or were far enough in production for deals with competing consoles brands like Sony would still come out on the latter’s hardware, all future games would be Xbox and PC exclusive. Microsoft would essentially confirm this when the deal went through six months later, Phil Spencer would allude to it even more in an interview with GQ, and a trailer for Starfield confirmed its exclusivity.

Now, as huge as games from any of Bethesda Softworks developers are, it would make sense to make them exclusive to the Xbox brand and PC. It is potentially losing a large fraction of fans for particular series, but it circumvents the alternate choice which is letting your rival keep reaping the benefits from a company you now own.

There’s a reason why purchasing Activision Blizzard cost so much though. Not only does this include the video game giant Call of Duty, but also the Warcraft series, Overwatch, and the ever-popular Candy Crush, which has been generating over $1 billion in revenue for the past three years.

This deal would give Microsoft some of the biggest revenue generators in the industry. If they were to say, make Call of Duty exclusive to Xbox and PC only, that would be a huge detriment to Sony. It would make them lose out on some sales because not everyone will want to own an Xbox or has a PC to run the latest and hard-drive hogging entry in the popular FPS series. However, it is the games that move consumers to specific consoles. Making Call of Duty exclusive would be a strong push for a lot of fans to place their bets with a new Xbox console rather than a PlayStation console.

It’s also equally important to consider what Microsoft’s goals have been over the last few years. I’m of course talking about Xbox Game Pass. Even in the announcement of this acquisition, Xbox does note that “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“.

If Microsoft is going to continue this push for Xbox Game Pass, it would make sense that they would put future Activision Blizzard games on the service. Having huge exclusives like the Halo: Infinite campaign and Forza Horizon 5 be free on the service already felt like a game-changer (pardon the pun). Can you imagine that happening with a mainline Call of Duty? Xbox Game Pass, like any subscription service, is only profitable when you have growth and a lot of retention of subscribers. If there’s any game that will keep players subscribed and playing, Call of Duty is a big one.

While I’m getting excited now, I also want to point out that they do mention all the popular titles Activision Blizzard is known for, including Guitar Hero, Spyro, and Crash Bandicoot. All I want to say in regards to that is yes. Yes and please. My nostalgia craves more and the last we heard of the smaller dev teams within the company, including Toys for Bob who developed the Spyro Reignited Trilogy, Crash Bandicoot N. Sane Trilogy, and Crash Bandicoot 4: It’s About Time title, is that they were relegated to Call of Duty support. I’d love it if Microsoft flexed these other IPs more.

As much as it looks like PlayStation owners could be getting a short end of the stick here, it is important to step back and look at the industry as a whole. Microsoft finally acknowledging and working to bring their titles to PC was a great move. Xbox Game Pass has been a fundamental change for the industry and provides a great deal for gamers, although has questionably placed a larger focus on content. The purchase of ZeniMax was a landmark but did cause concern for some that worried Microsoft might be trying to take out competition by buying everything.

That last one is being repeated now. All of these acquisitions point to Microsoft growing quite a lot. Many are wondering if this is leading to a monopoly in the industry. Everyone may say competition is great in regards to console exclusives but is it still competition when one side owns so much? What does it mean for indies? What does it mean for PlayStation or Nintendo?

It’s easy to assume the worst and that Microsoft will try to buy everything and drive their competition out. I don’t believe they would, although I do have to admit they probably could if they wanted to. After all, they are a giant of a company with a market cap of over $2 trillion. Sony PlayStation meanwhile has a market cap of over $143 billion. There’s a reason that Sony makes some news when they acquire developers while Microsoft acquires publishers.

Some think this acquisition might be too much and breach some antitrust laws, but others think it will be ignored. Either way, just like Disney in media and Walmart in retail, companies having a huge stake in things can have some big downsides. We might not see it until quite some time after, but anti-monopoly laws exist for a reason. There isn’t much I can say beyond fingers crossed that the industry doesn’t suffer from that in the future.

If there’s any potentially great news that we can all agree on, it will be the hopefully better treatment of Activision Blizzard employees. Microsoft does delicately address the reputation and company culture that Activision Blizzard has garnered over the years, especially once so much of it was brought out into the limelight. The following quote is from their announcement:

“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players. We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard”.

I cannot confirm that Microsoft is a perfect angel of a company. There hasn’t been anything negative about their treatment of employees as the numerous takes that have been vocalized about Activision Blizzard though, and all of the horrible mistreatment must have been factored in somewhat. Upper management and especially Bobby Kotick has faced the brunt of allegations for allowing horrible work conditions to fester, and Microsoft has announced that he will continue to be CEO until the deal closes when it’s currently assumed that he’ll leave the company.

As big of news as it is, the effects of it may not be felt for a while as the deal is not expected to close until the fiscal year of 2023. The companies will continue as separate and independent entities for now, which means any potential exclusives may not be considered until that year or perhaps the following. Hopefully, employees at Activision Blizzard don’t have to wait until the Xbox Gaming Leadership Team is above them for better working conditions, but that will remain to be seen.