Microsoft to Buy Activision for $67.8 Billion
- Paul Thurrott
- Jan 18, 2022
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66
In a stunning development, Microsoft today said that it would acquire gaming behemoth Activision Blizzard for nearly $70 billion. If approved by regulators, it should be the biggest corporate acquisition in tech industry history.
“Over many decades, the studios and teams that make up Activision Blizzard have earned vast wellsprings of joy and respect from billions of people all over the world,” said Phil Spencer, who now goes by the title CEO, Microsoft Gaming. “We are incredibly excited to have the chance to work with the amazing, talented, dedicated people across Activision Publishing, Blizzard Entertainment, Beenox, Demonware, Digital Legends, High Moon Studios, Infinity Ward, King, Major League Gaming, Radical Entertainment, Raven Software, Sledgehammer Games, Toys for Bob, Treyarch and every team across Activision Blizzard.”
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Mr. Spencer also revealed that Microsoft’s Xbox Game Pass service now has over 25 million subscribers, and that Microsoft will offer as many Activision Blizzard games as it can within Xbox Game Pass and PC Game Pass, including both new and catalog titles. “The fantastic franchises across Activision Blizzard will also accelerate our plans for Cloud Gaming, allowing more people in more places around the world to participate in the Xbox community using phones, tablets, laptops, and other devices you already own,” Spencer added. “Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support those communities moving forward.
For now, Activision Blizzard and Microsoft Gaming will continue to operate independently. But once the deal is complete, the Activision Blizzard business will report directly to Spencer. So that answers one question: Activision Blizzard will not be operated as an independent entity.
Wow. I’m going to need some time to let this one sink in. But it’s fair to say that, over the past year or so, Xbox has gone from a near also-ran to an industry juggernaut. And that it’s now Sony’s move: perhaps it can look into acquiring EA.
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Conversation 66 comments
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jchampeau
Premium MemberLog in to Reply<p>$70 billion here, $70 billion there, and pretty soon you’re talking real money.</p>
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t182
Log in to Reply<p>For some reason, I read this with Cortana’s OOBE voice. Maybe not as loud. </p>
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LT1 Z51
Premium MemberLog in to Reply<p>What just happened?</p>
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jwdixonjr
Premium MemberLog in to Reply<p>One way to kick of 2022 – was wondering about Game Pass…it’ll be interesting to see how this unfolds.</p>
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Saarek
Log in to Reply<p>As an Xbox owner this is exciting stuff. </p><p><br></p><p>As a Mac owner and someone who loves strategy/RPG games I want to cry because it means I can say goodbye to Mac OS Support, Blizzard have historically been good supporters of Mac OS.</p>
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Bart
Premium MemberLog in to Reply<p>Play your games through xCloud?</p>
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thretosix
Log in to Reply<p>I don’t think they would end support for Mac OS. For example, Minecraft is still available on Mac OS. I don’t use Apple products, but I also don’t have a problem with them. I never thought of this though. Hopefully that won’t be the outcome. This really will bolster the Game Pass library. Microsoft definitely has a lot of talent to work with, I can’t wait to see what happens going forward. I wouldn’t be surprised to see some improvements for games from these developers for existing games as well.</p>
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Bart
Premium MemberLog in to Reply<p>xCloud is gaming through your browser. So, the only limitation is your internet speed.</p><p><br></p><p>Also, Spencer: <span style="color: rgb(0, 0, 0);">“Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support those communities moving forward."</span></p>
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thretosix
Log in to Reply<p>I missed that part. Thanks for correcting me. The xCloud only works for certain titles though doesn’t it?</p>
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Bart
Premium MemberLog in to Reply<p>Yes, but I think it would be fair to say, that Microsoft will try its hardest to bring every title to xCloud. Afterall, games can then be played on every platform.</p>
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olemann
Premium MemberLog in to Reply<p>You can buy a small country for that amount.</p><p><br></p>
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christianwilson
Premium MemberLog in to Reply<p>This is going to take a while to sink in, more than the Bethesda acquisition did.</p><p><br></p><p>If nothing else, this gives me hope that the toxic culture of Activision Blizzard will be more fully addressed as they fold into the Microsoft umbrella. </p>
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sabertooth920
Premium MemberLog in to Reply<p>This is ‘UGE.</p>
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rtodd_us
Premium MemberLog in to Reply<p>Not happy about this either. However, gamers have chosen exclusives as the reason they buy a particular console thanks to Sony’s practices last gen. The number of times I’ve heard fan boys scream "but such and such has better games" makes me sick. So this is the inevitable outcome, buy up all third party developers and put them in your ecosystem. The only redeeming item is that cloud gaming makes it easy to get into that ecosystem and at a low 15 bucks a month.</p><p><br></p>
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yoshi
Premium MemberLog in to Reply<p>Can’t imagine that 15 bucks a month being the case much longer.</p>
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ringofvoid
Log in to Reply<p>23 million Gamepass subscribers x $15 X 12 months = a bit over 4 billion per year in recurring revenue. Since that doesn’t come close to covering the 70 billion they’re paying, I’d expect Gamepass is just a small part of the revenue they’re expecting from the acquisition. Mobile gaming, other platforms & other media are probably going to be a bigger slice of the pie.</p>
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jgraebner
Premium MemberLog in to Reply<p>A significant chunk of Activision’s revenue must come from Playstation. I find it hard to imagine that Microsoft will make all their franchises XBox/PC exclusives going forward. It would be really hard to justify spending this much money and then cutting off a key revenue stream.</p>
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Donte
Log in to Reply<p>Why not? If you have not picked up and next gen console, and many have not because of shortages, I have no doubt that someone on the fence is moved towards the Xbox.</p><p><br></p><p>Microsoft can do a lot of things now. For sure all of it comes to Game Pass. If I was them I would 100% make these exclusives for at least a year, then go after the PlayStation customers….that have not moved to the Xbox.</p><p><br></p><p>One thing for sure, its never been a better time to be a PC gamer. With Microsoft pushing hard on the PC game pass content, and Sony releasing more of their games on the PC….I can happily sit back on the PC and watch the console wars unfold.</p>
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omen_20
Log in to Reply<p>Thanks to Sony’s practices? You mean buying studios over the years that were already a big part of the PlayStation brand, then building them up to do bigger and better? Microsoft tried this some back with the original Xbox, but then decided to just buy timed exclusives during the 360 generation. Sony played the long game and built up the art. Acquisitions made during PS3 era paid dividends for PS4. Xbox is just using the piggy bank of the parent company to buy away IP.</p>
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Bart
Premium MemberLog in to Reply<p>"<span style="color: rgb(0, 0, 0);">So that answers one question: Activision Blizzard will not be operated as an independent entity."</span></p><p><br></p><p><span style="color: rgb(0, 0, 0);">Xbox shows Microsoft how a company should be run. Among others, I am looking at you, LinkedIn. Or rather LinkedOUT.</span></p>
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markbyrn
Premium MemberLog in to Reply<p>Wow, for another 70 billion, could have bought Sony ?</p>
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lvthunder
Premium MemberLog in to Reply<p>Maybe next month.</p>
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ser barristan
Premium MemberLog in to Reply<p>I am blown away by this announcement. As an Xbox fan it is very exciting for the future, even if I have not stopped playing Call of Duty, which had been my main game that they offered. (After I broke my World of Warcraft addiction to CoD!)</p>
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ser barristan
Premium MemberLog in to Reply<p>I meant that to say "even if I had stopped playing Call of Duty"</p>
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Bart
Premium MemberLog in to Reply<p>Another interesting titbit from Spencer’s presentation on the acquisition I think, is how he mentions that Microsoft will be the number 3 in revenue in gaming, behind Sony and Tencent. I guess they’re slightly anxious to see if regulators approve the deal?</p>
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MoopMeep
Log in to Reply<p>Is activision that much better than bethesda? 8 billion for bethesda and 70 billion for activision?</p><p><br></p>
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Stokkolm
Log in to Reply<p>I would be World of Warcraft alone is bigger than Bethesda. </p>
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crfonseca
Premium MemberLog in to Reply<p>Yeah, and COD.</p><p>COD alone has made around 27 billion in sales.</p>
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matsan
Log in to Reply<p>10 times the money they put on Nokia!</p><p>Must feel nice to have that amount of money and no brains to spend it.</p>
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wolters
Premium MemberLog in to Reply<p>Wow this is stunning…I kind of wish they hadn’t dumped Mixer now as I found it so much easier to stream on both PC and XBOX. Maybe with two big acquisitions, they will examine having their own streaming service again. </p>
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curtisspendlove
Log in to Reply<p>Interesting. Maybe Microsoft can stop the hemorrhaging toxicity that seems to be coming out of Blizzard almost every day lately. </p><p><br></p><p>This should be very interesting to see. </p>
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lvthunder
Premium MemberLog in to Reply<p>I read a story yesterday that they said they fired something like 70 people for misbehavior. Maybe it was to make it easier for this to happen.</p>
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Cavorter
Premium MemberLog in to Reply<p>I would be much happier about this if Kotick’s explicit resignation had been a part of the deal.</p>
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Stokkolm
Log in to Reply<p>You know it will be. There’s no way Phil Spencer has that cancerous man hanging around. </p>
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bluvg
Log in to Reply<p>Goodness, think about how many testing/QC depts they could have bought with just one of those billions.</p>
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winner
Log in to Reply<p>Priorities…</p>
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ebraiter
Log in to Reply<p>You generally don’t buy testing departments. You hire hopefully competent people to test your products.</p>
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bluvg
Log in to Reply<p>Well, if they hadn’t fired their entire QC dept…. With $1B, they could build the most impressive and comprehensive testing ability in the world.</p>
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jgraebner
Premium MemberLog in to Reply<p>This purchase likely does include a large QA department…</p>
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Daishi
Premium MemberLog in to Reply<p>Well we know where the first round of cuts are going to be after the sale closes.</p>
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spacein_vader
Premium MemberLog in to Reply<p>Well that explains why they felt the need to review their harassment and equality policies, can’t see Kotick surviving once the deal is confirmed and transition completed. </p>
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kjb434
Premium MemberLog in to Reply<p>He’s out.</p>
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wunderbar
Premium MemberLog in to Reply<p>This is something that will be good for Microsoft, and in the short term good for gamers.</p><p><br></p><p>But long term? I can’t see this being good for the industry.</p>
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jgraebner
Premium MemberLog in to Reply<p>Finally, we should be able to get Kaboom! on Game Pass! :)</p>
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jeroendegrebber
Premium MemberLog in to Reply<p>So Disney owns everything when it comes to movies… and now Microsoft when it comes to gaming… wow … and … yikes. </p>
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Donte
Log in to Reply<p>This would make Micrsoft #3 in gaming behind Sony #2 and Tencent #1</p>
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scovious
Log in to Reply<p>Unless you take into account that both Apple and Google have higher gaming revenues than any of them.</p>
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John Craig
Log in to Reply<p>Wooohoooo candy crush yeah baby :)</p><p><br></p><p>On a serious note, fair play. Xbox is going from strength to strength. There’s no doubting Microsoft’s commitment to the platform.</p><p><br></p><p>All I really want, though, is a films and TV app for Android. I’ve diligently made all of my movie purchases through the Xbox Film/TV service, and it’s great to have them available on my Windows 11 laptops and Xbox, but it sure would be nice to have them on my Duo 2.</p>
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mattbg
Premium MemberLog in to Reply<p>Reminds me of the segment of Ken Williams’s (of Sierra On-Line) recent book where he said that in discussions with Microsoft about a deal to collaborate on The Sierra Network, that there had been basic discussions about Microsoft acquiring all of Sierra. But, Bill Gates didn’t like gaming as a business because it was so dependent on hit titles and didn’t have any recurring revenue. The online service was the only appealing part to him (except for Flight Simulator, which also gets some discussion).</p><p><br></p><p>I guess they are going about trying to solve that problem, but it’s expensive!</p><p><br></p><p>Surprised that the MSFT stock showed virtually no movement on this news given the price tag (up or down) beyond what the general market is doing today.</p>
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lvthunder
Premium MemberLog in to Reply<p>Well, the general market is in a nosedive today so maybe no change should be viewed as a positive.</p>
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fraXis
Premium MemberLog in to Reply<p>Ken William’s book was excellent. Brought back so many good memories of gaming in those days.</p><p><br></p><p><br></p>
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trevor_chdwck
Log in to Reply<p>Now they just need to axe all of the Activision publishing people and work with the studios directly…</p>
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vhaakmat
Log in to Reply<p>Today’s $Bilion is yesterday’s $Milion. I wonder what is left to buy for these folks that still gives them a stiff.</p><p>I can remember we all thought that when Microsft paid $19B for LinkedIn, it was too much money. Now that pales in comparison to this one. Sony can’t match these huge amounts so I am not expecting them to be able to counter this one.</p>
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vladimir
Premium MemberLog in to Reply<p>I’m not sure if to be happy or worried about this. As a gamepass subscriber I’m happy but as a gamer… not sure</p>
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bmatusz
Premium MemberLog in to Reply<p>I haven’t kept up, @thurrott, but are you playing CoD, Vanguard, and experienced the hellish bugs introduced with Caldera? I tried playing over the holidays and was extremely disappointed. Crashes, umbrella guns, rocks stopping movement, etc.</p><p><br></p><p>Or were you smart and quit?</p>
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Mike_Peluso
Log in to Reply<p><strong>My initial thoughts: </strong></p><p>Kotik is out even if there is a transition period. (This is really a good thing) and it also explains why his board kept him around, to finish this deal. </p><p>Sony should be scared and may react by buying something big. </p><p>EA and Ubisoft may consider a merge if Sony or Tencent doesn’t snap one of them up. </p><p>Microsoft won’t be able to make any more big moves in the gaming industry at least until the current political climate changes. </p><p>Stadia will be shut down sooner than it would be otherwise. </p><p> I agree with the previous comment. Good short term for Activision and for the growth of Game Pass. Maybe not as good long term for the Industry. </p><p><br></p>
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dashrender
Premium MemberLog in to Reply<p>Boy, this really puts it into perspective how much larger the gaming industry is than the movie industry. Less than a dozen years ago LFL sold for a mere $4 Billion.</p>
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jgraebner
Premium MemberLog in to Reply<p>The Activision Blizzard purchase is more comparable to Disney’s purchase of Fox, which was $71.3 billion.</p>
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jgraebner
Premium MemberLog in to Reply<p>It is also interesting to consider the history of that purchase. Disney originally announced the purchase for $51 billion, but then had to significantly increase the offer after Comcast tried to outbid them. Sony, who would be the most obvious competitor to try for Activision Blizzard, wouldn’t likely be able to afford to challenge the merger, but I wonder if this will get the attention of Amazon or Google.</p>
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winner
Log in to Reply<p>New product releases:</p><ul><li>Skype for Games</li><li>Microsoft Teams First Person Shooter</li><li>Server 2023, Machine Gun Edition</li></ul>
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justme
Premium MemberLog in to Reply<p>Yes, I can see it now – new to the Call of Duty franchise: COD, On Duty – the COD extension for Teams, for when those meetings are just too damned long. So irritated by business that you just want to frag someone? We’ve got you covered!</p><p><br></p><p>I kid, I kid. But only just….. :)</p>
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Greg Green
Log in to Reply<p>“<em style="color: rgb(106, 106, 106);">Satya Nadella says the deal ‘will play a key role in the development of metaverse platforms’”</em></p><p><br></p><p><span style="color: rgb(106, 106, 106);">metaverse is not a word that comes to mind when thinking about Blizzard or gaming in general. Nadella seems a bit mysterious, if not misguided, on this one.</span></p>
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mattbg
Premium MemberLog in to Reply<p>Other than being a vague plan to privatize the Internet, I think most companies are just looking around for properties that people already use to spend time in virtual reality, which is what the metaverse relates to and is essentially what gaming has always been… so it makes sense from that point of view, but beyond subscription revenue I’d be surprised if they had any concrete plans related to metaverse.</p><p><br></p><p>Where else are so many people comfortable spending real money for virtual product than gaming? People will literally pay real money for virtual broccoli if it achieves a gaming end.</p>
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valisystem
Premium MemberLog in to Reply<p>This is Matt Levine/Bloomberg’s take on one aspect of the purchase – such a good insight!</p><p><br></p><p>"Microsoft Corp. was able to buy Activision Blizzard Inc. at a discounted price because Activision had fallen into a deep reputational hole due to sexual misconduct allegations. “We’ll pay someone $20 billion to take our reputational risks away from us,” Activision’s stock price effectively told the market, and Microsoft said “hmm I think we can do it more cheaply than that and pocket the difference.” Which seems like a good bet! Microsoft’s situation right now is in some sense that it is the giant cash-rich tech company that is the <em>most efficient bearer of reputational risk</em>.[4] Here, read these two sentences:</p><p><br></p><ol><li>"Facebook (sorry, Meta Platforms Inc.) just spent $69 billion buying a gaming company with a controversial chief executive officer facing allegations involving a sexual misconduct scandal.</li><li>"Microsoft just spent $69 billion buying a gaming company with a controversial chief executive officer facing allegations involving a sexual misconduct scandal.</li></ol><p><br></p><p>"I submit that when you read the first sentence (which is not true) you were like “ugh, Facebook, are there any depths to which they will not sink,” and got all mad at Mark Zuckerberg. When you read the second sentence (which is true) you fell asleep after the word “Microsoft.” Microsoft has an ability to throw a thick blanket of boredom over scandals, <em>which is valuable</em>, and which it is now monetizing."</p>
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blue77star
Log in to Reply<p>This is what is destroying gaming in general. XBOX Service for PC is garbage and will never use it but better than even bigger garbage called EA. Anything EA and Microsoft touch, it is destroyed.</p>
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simard57
Log in to Reply<p>Will Microsoft manage the Activision segment different than they have done with Minecraft? Seems they have done right by that venture but I am not much of a Gamer.</p><p><br></p><p>I was interested by some commentary about the government intervening due to monopoly concerns. Sony PS is larger than XBox. As others say, Google and Apple are bigger. So the argument against this acquisition seem weak!</p>