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Xbox head Phil Spencer said he supports Raven Software union in internal meeting
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Xbox head Phil Spencer said he supports Raven Software union in internal meeting

Microsoft is buying Activision Blizzard for $68.7 billion

The deal is expected to close by June of 2023.

Jon Fingas
J. Fingas
January 18th, 2022
Xbox head Phil Spencer said he supports Raven Software union in internal meeting | DeviceDaily.com
Microsoft
 

Microsoft just made one of the largest-ever bids for a game studio. The company has announced plans to acquire Activision Blizzard for $95 per share, valuing the all-cash deal at an enormous $68.7 billion. The deal would make the combined entity the “third-largest” game company by revenue, according to Microsoft, and would put titles like Call of Duty, World of Warcraft and Candy Crush under the company’s wing. Microsoft plans to add Activision Blizzard games to Game Pass as part of the deal.

Mobile gaming is also a significant factor in the acquisition, Microsoft said. On top of folding King’s phone games into Microsoft’s business, the purchase promises to bring franchises like Halo and Warcraft to more devices.

The buyout is expected to close sometime in Microsoft’s fiscal 2023 (no later than June 2023) if regulators and Activision Blizzard shareholders greenlight the move. The boards of directors for both companies have already approved the deal.

While news of the acquisition comes as Activision Blizzard is still embroiled in a misconduct scandal, you shouldn’t expect significant leadership changes. Bobby Kotick will remain Activision Blizzard’s CEO despite calls for his resignation, and will now report to Microsoft Gaming chief Phil Spencer. Separately, though, the Wall Street Journal reports that Kotick will leave shortly after the deal is complete, a move that wouldn’t be unexpected given the that Spencer will be leading Microsoft’s gaming efforts. In a company letter, Kotick described Microsoft’s move as a chance to “further strengthen” Activision Blizzard’s workplace culture and “set a new standard” for inclusiveness. He didn’t outline specific plans for reform, but did say there would be “minimal changes” to staff counts after the union was complete.

If it moves forward, the merger would help Microsoft compete with heavyweights Tencent and Sony, which have both been on buying sprees in recent months. Kotick also saw this helping his company better compete as metaverse gaming rises to prominence. In that light, this may be as much a matter of future-proofing the company as anything else.

Some major questions remain, though. Microsoft didn’t say how many Activision Blizzard games would be Xbox-exclusive on consoles, or Windows-exclusive on computers. It’s also unclear how much Microsoft might influence development of key franchises. It’s not certain Microsoft will lock Call of Duty or other giant games to the Xbox in the near future, though — PlayStation sales represent a large chunk of Activision Blizzard’s revenue, and dropping that platform would significantly reduce the company’s clout in the games industry.

CEO Bobby Kotick’s letter to Activision Blizzard employees is below:

Team,

Today is an incredibly exciting day. As we continue our journey to connect and engage the world through epic entertainment, we will eventually do so as part of Microsoft. I am certain that our incredible talent and extraordinary games combined with our shared commitment to the very best workplace will enable us to grow in an increasingly more competitive race for leadership as gaming through the metaverse evolves.

How we got here and where we’re going

When you reflect on what we’ve built together, we have so much to be proud of. For the last 31 years, we’ve continuously shaped gaming through our commitment to deliver joy, fun, and the thrill of accomplishment.

We’ve transformed games into social experiences and enabled players to find purpose and meaning through the most engaging form of entertainment – our games. By doing so, we’ve created and entertained communities of hundreds of millions of players.

Connecting these communities together is the next step. Facebook, Google, Tencent, NetEase, Amazon, Apple, Sony, Disney – and many more – have ambitions for their own gaming and metaverse initiatives. Established and emerging competitors see opportunity for virtual worlds filled with professionally produced content, user generated content and rich social connections.

Our talent and our games are important components of the construction of a rich metaverse. We have always attracted the very best game makers and built the very best games, seizing opportunity with passion, inspiration, focus, and determination.

A partnership to define the future

As investments in cloud computing, AI and machine learning, data analytics, and user interface and experience capabilities are becoming more competitive, we believe this partnership will better enable our ambitions.

In considering possible partners, all roads ultimately lead to Microsoft. Like us, they have been making games for a long time. Microsoft has already distributed games to hundreds of millions of the world’s computers and computing devices and has technologies and innovation that will support the next generation of games.

Microsoft also will support our journey to further strengthen our culture. Satya Nadella, Microsoft’s CEO, has been a passionate advocate for caring as the currency of leadership. Inspiring people through empathy is a powerful motivator, and one we embrace as we renew our resolve – and in the work we are now doing – to set a new standard for a welcoming and inclusive workplace culture.

Importantly, Microsoft wants you – your talent, your creativity, and your dedication to each other. Activision Blizzard’s success throughout the years can be directly attributed to each of you. Microsoft recognizes the commitment to excellence and creative independence that sets us apart, and we anticipate minimal changes for our workforce following the close of the transaction. Microsoft’s diverse operations will give us access to valuable expertise, technology, and tools and provide even greater opportunities for learning and development.

No organization’s culture, including ours, is without need for improvement, and thanks to your input, we are making strides in improving ours. My commitment is to continue evolving our culture so that come closing, Microsoft is acquiring an exemplary workplace.

What’s next

Transactions like these can take a long time to complete. Until we receive all the necessary regulatory approvals and other customary closing conditions are satisfied, which we expect to be sometime in Microsoft’s fiscal 2023 year ending June 30, 2023, we will continue to operate completely autonomously. I will continue as our CEO with the same passion and enthusiasm I had when I began this amazing journey in 1991.

Of course, this announcement will give rise to so many questions. We will host numerous forums and events to make certain we address your concerns.

I am incredibly proud of this company, you, and the work we have done together. Now it’s on to our next chapter and the endless possibilities this transaction represents for us. I couldn’t be more appreciative of your efforts, focus, and the dedication to connecting the world through joy and fun.

With gratitude,

Bobby

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