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Microsoft closes deal to buy Call of Duty maker Activision Blizzard after antitrust fights

by Ryan Lee
3 comments
Gaming Industry Acquisition

Microsoft has successfully concluded its acquisition of video game giant Activision Blizzard for a staggering $69 billion. This monumental tech deal, one of the most expensive in history, is poised to have profound implications for the video game industry as a whole.

The announcement of the deal’s completion came after Microsoft received final approval from the competition watchdog in Britain, marking a significant reversal of its earlier decision to block the merger. With this regulatory hurdle cleared, Microsoft can now proceed with its ambitious plans.

Taking control of studios responsible for iconic games such as Call of Duty, Diablo, and Overwatch represents a strategic move to bolster Microsoft’s Xbox gaming console. Currently positioned as the third-best-selling console behind Sony’s PlayStation and Nintendo, Microsoft aims to leverage its acquisition by integrating Activision titles into its multi-game subscription service, akin to a gaming-oriented Netflix.

The nearly 22-month duration it took to finalize this acquisition reflects the concerns expressed by competitors and government regulators. They feared that Microsoft’s expanding portfolio of games might be used to stifle competition. This acquisition is part of a broader trend of industry consolidation, causing some independent game developers to worry about being marginalized as the industry increasingly allocates resources to well-established blockbuster franchises.

While the deal has cleared hurdles in many countries, it still faces opposition from the U.S. Federal Trade Commission (FTC). The FTC argues that Microsoft’s consolidation of a major game publisher could create “walled gardens” around its Xbox Game Pass subscription service and the emerging business of on-demand game streaming. The FTC will now face the challenging task of attempting to unravel this acquisition after losing a court battle to halt it.

Despite these concerns, Microsoft has consistently defended the acquisition, emphasizing its intention to expand the reach of Activision games across various platforms rather than monopolizing them for its own console. Phil Spencer, CEO of Microsoft’s Xbox division, reiterated the company’s commitment to inclusivity, stating that players on Xbox, PlayStation, Nintendo, PC, or mobile platforms would remain welcome.

The approval from the U.K.’s Competition and Markets Authority was expected, especially after preliminary approval was granted last month. The revamped proposal from Microsoft aimed to address concerns about competition and its impact on gamers, particularly in the burgeoning cloud gaming market, where players can stream games to mobile devices and tablets without the need for expensive consoles.

While the approval opens new doors for Microsoft, it also tips the balance of power in its favor. George Jijiashvili, a senior principal analyst at tech research and advisory firm Omdia, believes that Microsoft now has a substantial opportunity to shape the future of the gaming industry.

This acquisition journey, initiated in January 2022, faced the most resistance from British and American regulators, with Sony also expressing concerns about limiting PlayStation gamers’ access to Call of Duty.

To secure U.K. approval, Microsoft agreed to sell European cloud streaming rights for all existing and upcoming Activision games for the next 15 years to French game studio Ubisoft Entertainment. However, the regulator criticized the process and warned against other companies attempting to adopt Microsoft’s tactics.

In conclusion, Microsoft’s acquisition of Activision Blizzard represents a monumental shift in the gaming industry’s landscape. It has navigated complex regulatory challenges and is poised to redefine the future of gaming, with implications that will resonate throughout the industry for years to come.

Frequently Asked Questions (FAQs) about Gaming Industry Acquisition

What is the significance of Microsoft’s acquisition of Activision Blizzard?

Microsoft’s acquisition of Activision Blizzard is highly significant as it represents one of the largest tech acquisitions in history, totaling $69 billion. This move has the potential to reshape the gaming industry by consolidating major game franchises under Microsoft’s umbrella.

What prompted the approval of this acquisition after initial regulatory opposition?

The acquisition gained approval after the competition watchdog in the United Kingdom reversed its earlier decision to block the merger. Microsoft’s revised proposal, aimed at addressing competition concerns, played a crucial role in securing approval.

How does this acquisition benefit Microsoft’s Xbox gaming console?

The acquisition of studios responsible for hit games like Call of Duty and Overwatch is expected to boost Microsoft’s Xbox gaming console, which currently ranks third in sales behind Sony’s PlayStation and Nintendo. Microsoft plans to integrate Activision titles into its multi-game subscription service, similar to a gaming-focused Netflix.

What concerns have been raised about this acquisition?

Some concerns include worries that Microsoft could use its growing collection of games to stifle competition, potentially sidelining independent game developers. Additionally, the U.S. Federal Trade Commission (FTC) has expressed concerns about creating “walled gardens” around Microsoft’s Xbox Game Pass subscription service and game streaming.

How does Microsoft respond to these concerns?

Microsoft has consistently defended the acquisition, emphasizing its goal to make Activision games available to a broader audience on various platforms. They have assured players on different consoles and devices that they will remain welcome.

What is the impact of this acquisition on the gaming industry’s future?

This acquisition is seen as a pivotal moment, with Microsoft gaining substantial influence in the gaming industry. Industry analysts believe Microsoft now has a significant opportunity to shape the future of gaming.

How has this acquisition affected other gaming companies, like Sony?

Sony and other competitors have closely monitored this acquisition, fearing potential limitations on access to Activision’s games. The industry has seen a trend of major players acquiring game studios to expand their collections and strengthen their market positions.

What concessions did Microsoft make to secure approval in the UK?

To secure approval in the UK, Microsoft agreed to sell European cloud streaming rights for all current and future Activision games for the next 15 years to French game studio Ubisoft Entertainment.

What does the regulatory process reveal about the gaming industry’s dynamics?

The regulatory process surrounding this acquisition highlights the increasing scrutiny of industry consolidation and competition concerns. It reflects the broader dynamics of the gaming industry as it evolves and adapts to new market realities.

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3 comments

GameChangerCEO October 15, 2023 - 6:58 am

15 yrs Ubisoft deal – smart move, helps ease the heat from UK peeps.

Reply
GamerGuy87 October 15, 2023 - 9:58 am

wowza, $69B fer Activision, that’s mega bucks! M$ wants to rule da game world.

Reply
TechNerd123 October 15, 2023 - 7:01 pm

kudos 2 Microsoft, but what ’bout fair play? Some peeps worry ’bout competition, y’know?

Reply

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