If you’re interested in any element of gaming at all, you’ve probably heard a lot about the acquisition of Activision Blizzard by tech giant Microsoft. It’s been more than a year since the deal was first announced, and there’s still more happening.
To help you keep track of everything, we’ve put together this massive guide to answer every question you’ve got. We’re going to tell you what’s happened so far, why this deal is taking so long, when it’s expected to be over with and more. Read on to find out exactly what is happening with Microsoft’s acquisition of Activision Blizzard.
What’s going on?
Microsoft, world famous tech giant behind Windows and the Xbox consoles, is looking to buy Activision Blizzard King (referred to as Activision Blizzard from here on for simplicity). Activision Blizzard is a company that develops lots of hugely popular video games, and if Microsoft owns Activision Blizzard, they will own those games too.
Microsoft is offering $68.7 billion to buy Activision Blizzard, but before they can do that, it has to have the approval of competition authorities around the world. Exactly why this needs to happen will be explained a little further on. This acquisition bid was announced on Jan. 18, 2022.
If the deal closes (meaning world governments decide it’s allowed to happen), then this would be the most expensive gaming-related acquisition of all time. There’s a lot on the line for a lot of people in this acquisition case, and that’s why it’s such a big deal.
Why did Microsoft choose Activision Blizzard?
Microsoft specifically chose Activision Blizzard for a reason. Activision Blizzard own the Call of Duty franchise, one of the biggest in gaming history. If Microsoft’s acquisition deal closes, they will own the Call of Duty series, and be able to do whatever they want with it on their Xbox systems going forward.
Microsoft could have bought other companies, but it already did. In March of 2021, Microsoft acquired ZeniMax Media, another giant gaming company. This purchase gave them the rights to Bethesda’s games like the Elder Scrolls series (such as Skyrim) and Fallout, as well as other developer teams like id Software with the Doom and Wolfenstein series, and Arkane Studios, who made the Dishonored games.
Microsoft has a lot of money thanks to their Windows computer software being the biggest in the world, so it can buy whoever it wants if they’re up for sale. Activision Blizzard is a strategic platform for the games it offers, and how effective owning them would be in challenging the Xbox’s biggest competition. More on that later.
What games do Activision Blizzard own?
The biggest series Activision Blizzard owns is Call of Duty, but there’s a lot more than that at stake here. To use its full title, Activision Blizzard King can be broken down into three separate groups, each of which with their own games. Let’s break them down now.
Activision owns Call of Duty, Crash Bandicoot, Spyro the Dragon, Guitar Hero, the Tony Hawk games and more. They merged with Blizzard in 2008, combining their libraries of games.
Blizzard owns a bunch of popular series and games, such as World of Warcraft, Overwatch, StarCraft, Diablo, Hearthstone and Heroes of the Storm. In February of 2016, an acquisition deal closed between the combined Activision Blizzard and King.
King is a mobile gaming giant, and owns the Candy Crush series, Farm Heroes Saga, Bubble Witch Saga, Pet Rescue Saga and many more mobile puzzle games. After their merger with Activision Blizzard, King has also made spin-off games to series such as Crash Bandicoot with their now-discontinued Crash Bandicoot: On The Run.
Why is this acquisition such a big deal?
So we get it, there’s lots of games at stake, but there’s a reason that this acquisition deal is making such huge waves in the gaming industry and beyond. The first is the sheer scale of the acquisition. Microsoft is one of the ‘Big Three’, the core trio of home gaming platform holders, alongside Sony and Nintendo. One of these three suddenly owning so many high profile games overnight, and in the position to make more of them going forwards, is a big deal.
For some legislators, this acquisition bid is something of a monopolistic nightmare. A monopoly is a big deal, because in a monopoly, one company holds so much power in what it offers that competition becomes impossible. A lot of the legal debate going on around the world about this acquisition is questioning whether or not Microsoft owning Activision Blizzard’s properties is so substantial that it would edge them towards a monopoly.
While PlayStation and Nintendo certainly have many of their own popular and exclusive games, they don’t have a gigantic technology company behind them, or at least not as massive as Microsoft. Microsoft has a lot going on, including a cloud gaming service that allows games to be played on any computer or mobile device called Xbox Cloud Gaming. If Microsoft owns Activision Blizzard, it will easily have the best library in cloud gaming on the market, with almost no competition. Their only significant cloud competition at this point is Nvidia, and we’ll get back to them later too.
Because the deal is so giant, its effects could ripple from its major competitors to the smallest of indie developers making games out of their bedrooms. Microsoft could end up having huge influence on the world of gaming, and so regulatory bodies around the world need to make sure this doesn’t happen. If this deal was tiny we wouldn’t need to do all this, but because it’s so big, Microsoft needs to get approval that ensures their deal won’t cause significant harm.
What are the benefits of the deal?
It really depends on who we’re asking. For the general customer, it’s tricky to answer this. For Xbox fans, the deal will eventually bring them exclusive titles from Activision Blizzard, which may be coming from some of their favorite pre-existing games. There will also be greater value to Microsoft’s Game Pass service available on both PC and Xbox, as it could be filled with some of Activision Blizzard’s biggest games. Microsoft did a similar thing for ZeniMax Media, adding games like Doom Eternal to Game Pass once their acquisition closed.
For Microsoft, it’s easier to see the benefits. Having Activision Blizzard’s existing library of games and intellectual property to themselves immediately buffs their first-party catalog. Microsoft would be able to order more sequels for hit games, and draw lots of attention to their system. In the end, the acquisition of Activision Blizzard is an investment. They’re paying in big, because they expect to cash out even bigger in the end.
What are the drawbacks of the deal?
Activision Blizzard’s library of games could end up becoming exclusive to one platform in the future, which theoretically could exclude Nintendo and PlayStation gamers from playing games they’re interested in. Despite this being a big legal argument against the deal, it’s perhaps not the biggest drawback.
Something considerably more concerning would be Microsoft’s power in the gaming industry should the deal close. The ‘Big Three’ have all had their own markets for decades now, but Microsoft’s sweeping grabs for the big third-party developers is removing pieces from the board and growing its size. This can lead to retaliation, such as PlayStation’s acquisition of Bungie. Formerly, Bungie was a Microsoft studio, developing the Xbox’s flagship series, Halo. When Sony snapped up Bungie for $3.6 billion, it felt personal. When the biggest companies start snatching up the smaller players before the other can get to them, we’ll have a lot less variation in the gaming industry.
How have countries swayed so far?
The Activision Blizzard acquisition has been approved in five countries without any restrictions or problems. These are Brazil, Chile, Saudi Arabia, Serbia, and possibly the United Arab Emirates. The UAE’s approval isn’t completely clear, because their regulatory bodies don’t share public approvals, but a statement from Activision Blizzard CEO Bobby Kotick has suggested this is the case.
In other countries, the deal is under review. This includes Australia, the European Union, New Zealand, South Africa, South Korea and Turkey. Officially China is also under review, but new reports suggest that it’s expected to approve of the deal in the coming months. If you noticed I didn’t say the United States of America, there’s a reason for that. The Federal Trade Commission is positioning itself to oppose the deal, where it will be taken to a hearing in August with a decision to be made by a judge.
The country that has been the most critical of the merger is probably the United Kingdom. Although still officially under review, the Competition and Markets Authority of the UK has strong concerns around Microsoft’s acquisition, which could ultimately lead to a conditional deal, or even a block.
What do other companies think?
There’s a lot of opinions going on about the deal in other companies in the industry. The acquisition has had express support from Meta, and indirect support from Nintendo. Microsoft has signed a binding agreement with Nintendo to bring them 10 years of Call of Duty titles if the acquisition bid closes. Whilst not being vocal support, it does suggest Nintendo is happy to benefit from the deal if it’s an option.
As expected, Sony strongly protests the deal. As its primary competitor, Sony is rooting against the Microsoft deal with everything it has. Google has also expressed concern with Microsoft’s acquisition, arguing that competition would be reduced by the move, but they’ve not been very vocal about it after the shutdown of their Stadia service.
Computer hardware company Nvidia sided with Google back in January with their concerns, but had a shock turnaround this week as they also signed a 10-year Call of Duty agreement with Microsoft. This deal will put Microsoft’s games on Nvidia’s cloud gaming service, and eases monopoly concerns around Xbox Cloud Gaming. Since accepting the offer, Nvidia has become very quiet about their previous grievances. At this point, it feels like Sony vs the world.
What do the employees think?
Activision Blizzard isn’t on the best terms with its employees, so it’s important to also consider how the workforces feel about the acquisition. The Communications Workers of America (CWA) wrote to the European Commission recently in February of this year, and asked them to approve of the acquisition. The CWA has been working with some Activision Blizzard employees to unionize ahead of Microsoft’s potential ownership. The letter was penned Christopher Shelton, president of the CWA, and suggests the approval by Europe would “make history in rebalancing power in labor markets.”
Activision Blizzard has been accused of, amongst many other things, union busting. Microsoft’s ownership is seen by some employees and union representatives to at least be better than what they have with Activision Blizzard now. Microsoft has even let union efforts pass without any interference, adopting a neutral stance. A fresh start with a fresh owner could provide the opportunities the workforce needs to address systemic issues plaguing the company.
Why are Activision Blizzard in trouble?
The corporate culture of Activision Blizzard has been problematic to say the least. In 2021, California’s Department of Fair Employment and Housing took Activision Blizzard to court over alleged discrimination and sexual harassment. CEO Bobby Kotick is alleged to have known about the misconduct and turned a blind eye. The company’s response to the charges have been seen by many employees to be weak, resulting in walkouts from the company, and potentially even several high-profile departures which have occurred since the incidents.
Microsoft’s ownership isn’t guaranteed to fix the problems if the deal passes. Early reports suggest that Microsoft may keep Bobby Kotick as CEO, despite accusations against him, even if the deal closes.
What happens to Sony if this passes?
Should the acquisition of Activision Blizzard be secured by Microsoft, Sony will be on high alert. The PlayStation is the most popular platform for Call of Duty games. Even if they stay on Sony’s systems, the money gamers spend on the games and microtransactions will still be going to Microsoft. At this point, it’s expected Call of Duty would keep itself on PlayStation for 10 years regardless of Sony’s stance, with Microsoft publicly insisting on it many times.
There will always still be the potential for exclusivity, in which case Sony will likely scramble to compete. It’s no coincidence that Sony chose Bungie to acquire. Not only is it one of Microsoft’s former studios, but Bungie are responsible for Halo and Destiny, considered some of the best shooting games in terms of gunplay in the world. Sony is already said to be using Bungie’s expertise to develop some new live service games.
What happens to Nintendo if this passes?
Nintendo exists relatively separate from Microsoft and PlayStation. Despite the Nintendo Switch outselling every other Sony and Xbox console (except the PS2), they aren’t generally seen as competing with each other. The Switch is owned by many as a complementary system to their other console, for portable use or for children.
Nintendo is in a very advantageous position for the launch of their next console though, especially if the Microsoft deal closes. Their 10-year contract with Microsoft guarantees Call of Duty releases to arrive same-day on Nintendo hardware as they do on Xbox. With this, Nintendo may be able to push their market wider, bringing in a new audience such as hardcore shooter fans.
What’s happening next?
So there’s a lot going on. The most significant things that can happen going forwards are more approvals from regulators. Most decisions are expected to have been finalized before the end of Spring. The exception here is the FTC in the USA, with the final decision there potentially coming as late as 2024.
Sony also promised that more acquisitions would be coming, after its acquisition of Bungie. They have yet to announce any significant acquisitions following this, but speculation is rife online. From Capcom to Square Enix to Rockstar and Konami, there’s a lot of options Sony could pursue should it be willing to spend.
How likely is the deal passing?
After all that we arrive at our final question. At this point, it seems likely Microsoft will be able to close the acquisition. Between the turning of Nvidia in favor of the deal, and promising Nintendo’s huge audience access to Call of Duty, Microsoft is strongly showing its willingness to share its games if the deal can pass. The President of Microsoft even keeps a contract in his pocket, ready for Sony to sign at any minute to give them longer with the Call of Duty franchise.
It’s looking likely, but Microsoft’s acquisition of Activision Blizzard is still a very active situation. We hope this guide helped. Feel free to ask any lingering questions in the comments below, and keep your eyes on GameLuster for more breaking gaming news.
