With a huge bet of $75 billion, Microsoft wants to become the "Netflix of the game industry"?

With Activision Blizzard in its pocket, Microsoft intends to make a big move into cloud gaming.

Microsoft said that in the original plan, the planned acquisition of Activision Blizzard was $75 billion, and after adjusting Forevision's net cash, the transaction value was $68.7 billion. This is the largest investment Microsoft has ever made.

Once the acquisition is complete, Microsoft will become the world's third-largest game company by sales, with 30 game studios covering popular games such as Call of Duty, World of Warcraft, and Candy Saga.

With the acquisition of Activision Blizzard, Microsoft will gain a brand new library of games and a huge player base, and more consumers will use Microsoft's cloud services.

Microsoft CEO Satya Nadella said on a conference call with investors and the media on Tuesday:

"This is an incredible opportunity for us to work with Activision Blizzard to create the best content, community and cloud services for players, creating tremendous new value for our shareholders."

In announcing plans to acquire, Microsoft said Tuesday that Game pass users have increased by 39 percent in the past year to 25 million. Game pass includes cloud gaming, online multiplayer support, and a large game library.

Nadella said Microsoft plans to introduce As many Activision games as possible to Game Pass.

Bet heavily on cloud gaming

Over the years, many companies, including Microsoft, Amazon, Google parent company Alphabet, Sony, and so on, have explored their cloud businesses, especially cloud gaming.

Cloud gaming is an emerging technology that allows people to run games using almost all connected devices with screens, just like playing videos on Netflix or other streaming platforms.

According to research firm Omdia, consumer spending on cloud gaming services reached $3.7 billion last year, with Microsoft's Game Pass accounting for 60 percent; Omidia expects total cloud gaming revenue to reach $12 billion by 2026.

However, the game is more challenging than the video because the game is interactive and requires more data to run smoothly. Netflix also entered the mobile gaming space last year, but so far it has only offered a handful of games that need to be downloaded to the device, rather than those that can be transmitted through the cloud.

This large-scale acquisition shows Microsoft's ambitions in the field of cloud gaming.

Mark Moerdler, an analyst at Bernstein Research, said:

"Microsoft has big ambitions in gaming."

"Microsoft has acquired a number of studios because they're trying to build games with Game Pass and subscription services."

Moerdler believes that if Microsoft can convert a portion of Activision Blizzard's nearly 400 million monthly active users into Game Pass users, it will significantly boost its cloud gaming business.

Microsoft's layout for gaming and cloud computing has been in the making for years. Since taking office in 2014, Microsoft under Nadella has relied heavily on cloud computing services for enterprise customers to power their businesses.

A few years ago, Microsoft decided to be more aggressive in expanding its cloud computing applications into the gaming space, which is the main touchpoint with consumers. Since then, Microsoft has begun to acquire game developers, spending more than $10 billion to acquire a variety of game studios and building a huge library of games.

Microsoft is not alone. In recent years, the global video game industry has been experiencing a wave of consolidation and investment. PitchBook's data shows M&A spending in the video game industry nearly tripled from $8.9 billion in 2020 to $26.2 billion in 2021; venture capital deals nearly doubled from $6.4 billion to a record $11.2 billion.

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