Microsoft is buying Activision-Blizzard, makers of Call of Duty and Candy Crush

Microsoft is buying Activision-Blizzard, makers of Call of Duty and Candy Crush

It’s Microsoft buys Activision Blizzard for $ 69 billion. For those of you who play video games or pay attention to video games – and there are many of you – we don’t have to explain why this is a really big deal.

The rest of you may want some context. Remember when Disney bought most of Rupert Murdoch’s Fox Empire and formally launched a wave of consolidation in Hollywood? This is so.

Maybe even bigger: jobs are about the same size. Microsoft’s contract estimates Activision at about $ 69 billion, and Disney paid just over $ 70 billion for Fox’s film studio and other assets. But this deal – if it passes – is both horizontal and vertical integration, pairing Microsoft’s business with Xbox consoles, which already owns huge game franchises like Minecraft and Halo, with one of the world’s most valuable gaming companies, which has giant titles like Call of Duty, World of Warcraft and Candy Crush.

While streaming TV shows and movies capture a ton of media attention, video games attract a ton of regular attention: Microsoft says there are 3 billion gamers in the world today and that number will rise to 4.5 billion by 2030.

And if you want to become really imaginative: if any version of the future of the metaverse or virtual reality that we’ve been hearing about for the past few years comes true, it will almost certainly be based on games. Maybe the future You won’t want to wear face glasses during the day. But setting up a shooting device on virtual aliens is less difficult.

This is something Microsoft, who didn’t accidentally work on his face glasses, tends to justify his agreement. “When we think about our vision of what a metaverse can be, we believe there won’t be one, centralized metaverse,” Microsoft CEO Satya Nadella said after announcing the deal Tuesday.

You can also read this statement as a message Lina Khan, head of the Federal Trade Commission, together with the rest of the antitrust authorities of the Biden administration: I know it seems like we’re swallowing up a lot of gaming business, but don’t think of this as consolidation in an important industry – think of it as competition to Facebook in a new industry. The competition is good, isn’t it?

This deal is sure to attract a lot of attention in Washington, which has focused on the big and small jobs of most of the technology industry – but has so far largely left Microsoft alone. (The irony, of course, is that Microsoft has spent a long time fighting federal antitrust charges over its search engine dominance two decades ago; the company avoided a forced breakup but lost much of its will along the way).

This deal has a termination fee of $ 3 billion – that is, cash, which Microsoft will have to pay to Activision if regulators stop the merger – which seems like a lot of money to you and me, but is a pretty small amount of money for this type of transaction. However, this should signal the confidence of the two companies that this will be done. When it comes to arguing with Washington regulators, you can expect Microsoft to argue that 1) its Xbox business is much smaller than Sony’s Playstation business, and 2) the future of gaming is mobile, which means Microsoft isn’t competing only with Sony, but also with Apple and Google.

Those are good arguments, but we’ll see. Microsoft is also moving away from its console business – low-margin boxes that consumers buy for $ 300 or more but don’t change often – and to its Netflix-style subscription model called GamePass, where you pay the company $ 15 a month and can play your games on any type of device.

Microsoft already has 25 million subscribers to the service. I wouldn’t expect Microsoft to make most of Activision’s big games exclusive to GamePass – just like movies and TV shows, games are most valuable if they’re available to as many people as possible – but you can certainly see why Khan and her colleagues will want to get into this. .

It is also worth looking at: What is happening with the management of Activision, which has been involved in scandals due to sexual abuse for the last year. It was published by the Wall Street Journal last fall CEO Bobby Kotick did not tell his own board of directors about an employee who said she was raped by a supervisor and a subsequent out-of-court settlement. Recently, Activision says it has “came out“Dozens of employees after investigations into harassment and other misconduct.

There has been widespread speculation in the gaming industry that the scandals could cost Koticko a job and potentially lead to the sale of Activision. Now, Microsoft says Kotick will continue to run his company after the contract expires, but will suit Phil Spencer, who runs Microsoft’s gaming business.

It is possible that Kotick will stay indefinitely. But you don’t tend to see people running really big companies and earning really big salaries – Kotick earned $ 154 million in 2020, making him the second highest paid CEO in the U.S. that year – staying there long when a person who reports to the CEO applies.

Again, all of this comes into play only if Microsoft forces regulators to sign. A few years ago, that might have seemed pretty simple – Washington gave the big tech companies the green light to buy whatever they wanted, and few paid much attention. But a lot of people will worry about this. And because a lot of people play games – hence the $ 69 billion price tag – and fewer very influential people are newly skeptical about getting Big Tech bigger.

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