buys Call of Duty maker Activision Blizzard in multibillion-dollar
deal - 19th January 2022
cash cow Call of Duty. CREDIT:ACTIVISION
By Dina Bass and Nate Lanxon
announced on Tuesday it was buying Activision Blizzard
in a $US68.7 billion ($95 billion) deal that will
unite two of the biggest forces in video games and
create the worlds third-biggest gaming company.
its largest purchase ever, Microsoft will pay $US95
a share in cash for one of the most legendary gaming
publishers, known for titles like Call of Duty and
World of Warcraft, but which is also grappling with
a cultural upheaval over its treatment of women.
chief executive officer Bobby Kotick will continue
to serve in that role, Microsoft said. Once the deal
closes, the Activision Blizzard business will report
to Phil Spencer, who heads Microsoft Gaming. The deal
value includes Activisions net cash.
Activisions stable of popular titles will help
Microsoft expand its own offerings for the Xbox console
and better compete with rival Sonys PlayStation.
has a long history with the Xbox. The publishers
largest franchise, Call of Duty, became successful
largely due to Microsofts online platform Xbox
Live, which allows players to connect for multiplayer
matches. Most of Activisions games are published
on Xbox consoles.
Activision will help jump start Microsofts broader
gaming endeavours and ultimately its move into the
metaverse with gaming the first monetisation piece
of the metaverse, Dan Ives, an analyst at Wedbush
Securities, wrote in a note to investors.
Activisions stock under heavy pressure (CEO
related issues/overhang) over the last few months,
Microsoft viewed this as the window of opportunity
to acquire a unique asset that can propel its consumer
shares slid about 1.3 per cent in early trading on
the news. The bid is a 45 per cent premium on Activisions
closing price Friday. However, its a bargain
compared with the stocks performance in the
first half of last year, before a sexual bias lawsuit
filed by a California state agency in July plunged
the company into crisis. The shares hit a high of
more than $US100 apiece in February and then lost
nearly half their value by the end of the year.
scandal has taken a toll on a company already struggling
to adapt to the end of a pandemic-fuelled video game
November, Activision delayed two of its most anticipated
games and gave a sales forecast for the fourth quarter
that fell short of Wall Streets expectations.
Kotick, who has led the company for three decades,
has come under pressure from employees to resign in
the wake of the ongoing lawsuits and allegations reported
in the Wall Street Journal that tie him to reports
of mistreatment of women and suggest that he was aware
for years of sexual misconduct, including rape, at
the company but didnt report it to the board.
Kotick has apologised and pledged to make changes.
said last November that Microsoft was reevaluating
its relationship with Activision and making proactive
adjustments in the wake of the Wall Street Journal
also recognise that after the close, we will have
significant work to do in order to continue to build
a culture where everyone can do their best work,
Microsoft CEO Satya Nadella on a call with investors.
in 1979, Activision is home to some of the most popular
game franchises in the world, including Candy Crush,
Guitar Hero, Skylanders, Destiny, Crash Bandicoot
and the Tony Hawk skateboarding titles. The mobile
edition of Call of Duty launched in China in December
2020, quickly hitting the top of the download charts.
It brought in tens of millions of new fans, with
player investment in the first quarter on par with
the rest of the world combined, the company
said in May.
franchise is arguably Activision Blizzards most
important business. In 2020, the companys Activision
segment nearly all of which is Call of Duty
accounted for 55 per cent of the companys
some of Activisions games arent capturing
the zeitgeist the way they once did. In 2021, Baird
analysts published a report that revealed searches
for Call of Duty and World of Warcraft were down markedly
from the prior year.
plans to keep making some of Activisions games
for PlayStation consoles but will also keep some content
exclusive to Xbox, said a person familiar with the
has made several acquisitions recently to bolster
its roster of games studios. In 2020, it agreed to
acquire ZeniMax Media, home to The Elder Scrolls and
Doom publisher Bethesda Softworks, for $7.5 billion.
At the time, this was Microsofts biggest video
game purchase ever. Microsoft said the Activision
deal will vault it to No. 3 in the industry, behind
Chinas Tencent Holdings and Japans Sony.
Microsofts ambition is its Game Pass subscription
service, which gives members access to all of its
first-party games -- those from the studios it owns
-- for no extra charge, and on the day of their commercial
release. Recently, its added titles from other
publishers, such as Electronic Arts Inc., but owning
the underlying developers gives Microsoft the freedom
to keep the most popular titles from competing platforms,
such as the PlayStation.