Microsoft to acquire Activision Blizzard for $68.7 billion

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Microsoft is acquiring Activision, the troubled publisher of Call of Duty, World of Warcraft, and Diablo. The deal will value Activision at $68.7 billion, far in excess of the $26 billion Microsoft paid to acquire LinkedIn in 2016. It’s Microsoft’s biggest push into gaming, and the company says it will be the “third-largest gaming company by revenue, behind Tencent and Sony” once the deal closes.

Microsoft plans to add many of Activision’s games to Xbox Game Pass once the deal closes. With the acquisition of Activision, Microsoft will soon publish franchises like Warcraft, Diablo, Overwatch, Call of Duty, and Candy Crush. “Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” says Microsoft’s CEO of gaming Phil Spencer.

Xbox Game Pass now has 25 million subscribers, as Microsoft continues to acquire studios to boost the subscription service.

“We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all,” says Microsoft CEO Satya Nadella.

Microsoft’s deal comes after months of sexual harassment claims against Activision Blizzard. Last July, the California Department of Fair Employment and Housing (DFEH) sued Activision Blizzard for promoting a culture of “constant sexual harassment.” More employees have come forward with more allegations of sexual misconduct ever since, and the company reached an $18 million settlement with the US Equal Employment Opportunity Commission in September. That settlement is being appealed, and reports indicate that nearly 40 Activision Blizzard employees have reportedly “exited” the company since last July.

 

Microsoft’s new gaming org chart.  Image: Microsoft

Microsoft doesn’t detail exactly how it will approach solving these issues, and the company says Bobby Kotick will continue to serve as CEO of Activision Blizzard for now. It looks like Kotick won’t remain once the deal is fully closed and after the transition period to Microsoft, though. Spencer, formerly head of gaming at Microsoft, is now CEO of Microsoft Gaming, and the company says the Activision Blizzard business will report directly to Spencer.

“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players,” says Spencer. “We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”

Microsoft’s huge Activision Blizzard deal comes nearly a year after the company acquired Bethesda (ZeniMax Media) for $7.5 billion. At the time, that acquisition bolstered the company’s first-party Xbox game studios to a total of 23 and was seen as a huge boost for Xbox Game Pass.

Microsoft now expects the Activision Blizzard deal “to close in fiscal year 2023,” which means we might not see this deal approved for up to 18 months. That’s a long period of time for a deal to close, but Activision Blizzard operates in a number of markets, which could make regulatory approval more complicated for Microsoft.

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Due to this Sony stock fell by 9%