What Does Microsoft’s $68.7 Billion Deal for Activision Mean for the Tech Giant?

Microsoft has announced that the company plans to acquire Activision Blizzard, the makers of popular games such as Warcraft, Call of Duty as well as Candy Crush, in an all-cash transaction valued at 68.7 billion dollars, the Redmond-based company said in its press release. 

The move that still needs to go through regulatory approvals is a massive move, when compared to the 7.5 billion dollars acquisition of another game maker, Bethesda, a year ago, CNBC reported. Microsoft has been working to strengthen its other offerings apart from the Windows operating software, which made the company globally renowned. While its focus has largely been on artificial intelligence and cloud services, the acquisition plans for Activision show that the company is not taking its gaming offerings lightly as well. 

According to the press release, at a valuation of 200 billion dollars, the gaming industry is the biggest and fastest-growing form of entertainment. Even in the pandemic year, game releases went up 64 percent in 2021 as people look for more outlets to spend their time on while being largely at home.  The acquisition of Activision will bolster Microsoft's offerings in this space which can be accessed across devices that include consoles, mobiles, PC and the cloud.

BBC reported that when the acquisition is completed, Microsoft will move above Nintendo to third place by revenue behind Tencent and Sony among video game makers. The software company's move has already affected Sony's stock prices whose PlayStation console is still a favorite among gamers as compared to Microsoft's Xbox. 

That might change rapidly as Microsoft's Game Pass, a subscription service that offers access to games from close to 30 development studios, will be able to tap into Activision's 400 million monthly active users from 190 countries. Microsoft currently has only 25 million subscribers for this service, while Sony's numbers have hovered over 100 million for the past two years, according to Statista.  

CNBC reported that the move signals the market power of the Big Tech companies. The valuation for Activision might have been too high for it to be acquired by legacy media outlets like Disney or Comcast but isn't a big bet for Microsoft that is valued at over $2 trillion. 

But the move is not just to tap into gamers on conventional platforms. In a statement, Microsoft CEO and Chairman, Satya Nadella said, "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.” 

Microsoft has already entered the race of building the metaverse and with Activision on board, the company can make major strides into gaming in the metaverse. Like we said, last time, Meta won't have an easy run.