Over 500 billion! Microsoft's "sky-high" acquisition completed Financing insights
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After 22 months, tech giant Microsoft finally completed the acquisition of game company Activision Blizzard. The approval means that the largest game acquisition in history, worth 69 billion US dollars (about 504.2 billion yuan), has crossed the last hurdle.
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Recently, Microsoft (Microsoft) finally completed the acquisition of game giant Activision Blizzard, completing the largest game acquisition in history. It follows more than a year of intense scrutiny of the deal by global antitrust officials.
Microsoft's announcement comes after Britain's competition regulator cleared the last regulatory hurdle for the deal.
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Microsoft ranks among the third largest gaming companies in the world
The $69 billion (504.2 billion yuan) acquisition of Santa Monica-based Activision Blizzard makes Microsoft the world's third-largest game company by revenue, behind China's Tencent and Japan's Sony.
First announced in January 2022, the deal faces intense scrutiny from regulators in the EU, US and UK, who believe that the acquisition could raise prices for gamers and hurt competition in the gaming industry, including cloud gaming. In total, more than a dozen countries evaluated the acquisition.
Microsoft President Brad Smith said in a statement that the combination "will benefit gamers and the gaming industry worldwide." ”
The acquisition is seen as a test of whether international regulators will approve such major tech deals. According to Amsterdam-based industry tracker Newzoo, the growing global gaming market is expected to generate nearly $188 billion in revenue in 2023, up 2.6% from last year.
In an email to employees, Activision Blizzard CEO Bobby Kotick said he will be with the company until the end of the year.
"Combining with Microsoft will bring new resources and new opportunities to our extraordinary teams around the world." "It will also allow us to bring more fun, more joy and more connection to more players than ever before," Kotick said. ”
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Microsoft is trying to redefine the gaming industry
Microsoft's acquisition is part of a years-long consolidation trend in the video game industry that has shifted power from game makers to platform holders. Joost van Dreunen said: "Microsoft is trying to redraw the boundaries or definition of the gaming industry. ”
Van der Ruening said. "In a traditional console-based world, they now have consoles, PCs, mobile devices, and the cloud. This allows them to compete on their own merits. ”
In terms of purchasing Activision Blizzard, Microsoft will add "Candy Crush Saga" and "Call of Duty Mobile Games" to boost its mobile gaming business. Currently, mobile gaming is the most important gaming area in consumer spending.
After the acquisition, Microsoft said it will begin offering games libraries from Activision, Blizzard and King on Xbox's Game Pass and other platforms.
Van der Ruening said closing the deal could have a ripple effect across the industry, prompting other companies to consider which assets they might acquire to compete.
"What happens in the world of video games? Worth $35 billion. That's nothing compared to the company they're about to close. He was referring to the Redwood City-based video game company. I wouldn't be surprised if, in 5 years, the top 10 companies in the gaming industry are all platform holders. ”
Over the past decade, the landscape of the industry has changed dramatically, he said. Several large companies, including Microsoft (Microsoft), have acquired other game studios during the pandemic. At that time, the gaming industry grew rapidly as people stayed at home.
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The regulator eventually let it go
Microsoft announced plans in 2020 to acquire gaming company Zenimax for $7.5 billion. Two years later, Sony acquired game developer Bungie for $3.6 billion, while Take-Two Interactive bought mobile game giant Zynga for $12.7 billion. That same year, Microsoft revealed that it would acquire Activision Blizzard.
The move comes as Federal Trade Commission Chair Lina Khan cracks down on tech mergers and turns out against Activision. But earlier this year, a federal judge in San Francisco ruled that the FTC had not proved the deal would hurt competition in the gaming industry.
Instead, there is evidence that the agreement allows more consumers to access the game because it keeps Activision's wildly popular Call of Duty franchise on PlayStation for 10 years, agrees that Nintendo will bring Call of Duty to the Switch and signs an agreement to bring Activision's content to several cloud gaming services for the first time.
Still, the FTC said it would resume administrative litigation against the deal even after it closes.
The UK's Competition and Markets Authority also initially blocked the acquisition, and the regulator later accepted a restructuring agreement to transfer cloud streaming rights to existing and new Activision Blizzard PC and console games released over the next 15 years to global game publisher Ubisoft Entertainment.
Under the new agreement, Microsoft will not be able to exclusively distribute Activision Blizzard games on its own cloud streaming service, Xbox Cloud Gaming, nor will it have exclusive control over the Activision Blizzard game licensing terms of rival services.
The UK regulator said: "The new agreement will prevent Microsoft from locking in competitors as the cloud gaming market takes off, thereby retaining competitive prices and services for UK cloud gaming customers."
The European Commission approved the deal in May, saying it was pro-competitive.
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The dust settled
This acquisition is not the first in Activision's history.
The company was founded in Sunnyvale in 1979 after the game developer left Atari due to labor issues and job performance.
By the late '90s and early 21st, the company, which started in a garage in California, had taken some steps to propel itself to the top of the gaming world. Activision acquired dozens of companies, including game developer Raven Software, Treyarch and Infinity Ward.
In 2008, the company merged with Irving Blizzard Entertainment for $19 billion, becoming the largest M&A deal in the video game industry at the time, making it Activision Blizzard.
Activision Blizzard acquired itself from French media company Vivandi in 2013 for $8 billion, and then in 2016 for $5.9 billion to buy "Candy Crush Legends" publisher King Digital Entertainment.
The latest deal with Microsoft follows a series of protracted labor disputes that Activision Blizzard employees accuse the company of having a workplace that is hostile, sexist and discriminatory — something Activision Blizzard denies.
California's Department of Fair Employment and Housing filed a lawsuit against the video game maker, and some employees filed a lawsuit.
A settlement with the Federal Equal Employment Opportunity Commission prompted Activision to form an $18 million fund to help employees who experience sexual harassment or discrimination and other workplace misconduct at the company. The company denies any wrongdoing.
Laine Nooney, an assistant professor of media at New York University, said: "Activision is still a long way from its rebellious origins. Activision's formation was a real blow to corporate power. Now, it's hard to imagine a gaming company with a more corporate touch than Activision. ”
Microsoft has expressed ambitions to change the company's culture, after adopting a different labor strategy and recognizing a quality assurance workers' union of American communications workers.
On Friday, cWA said the acquisition would improve working conditions in the gaming industry because Microsoft would remain neutral if Microsoft employees expressed interest in joining unions.
It's unclear what the deal means for gaming culture, Rooney added. They said the purpose of the acquisition was to create benefits for consumers in the form of lower prices. But Microsoft has raised the cost of Game Pass, an Xbox subscription service.
Although the main purpose of the Activision acquisition was to concentrate Microsoft's platform strength, Nooney said that console loyalty is difficult to maintain.
They said: "The most common video game platform owned by the younger generation I teach is not PlayStation or Xbox—but Switch."
"Microsoft can't predict its future, it just hopes that this acquisition will tilt the future better in its own direction."
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