Hi there gaming friend! As someone who follows the business side of the industry closely, I know you’ve been tracking the seismic shifts happening around Microsoft’s proposed $69 billion acquisition of Activision Blizzard. It’s one of the largest buyouts in gaming history with huge implications across the sector.
When this deal was first rumored early last year, many experts doubted Microsoft could overcome inevitable monopoly concerns. After all, adding Call of Duty, World of Warcraft and other major franchises to Xbox’s arsenal looked like a transparent plan to dominate rival Sony.
But over the grueling 15-month road to completion, nuances have emerged suggesting approval may come on specific conditions. Regulators recognize blocking this marriage outright brings its own headaches. Now deal consummation seems more likely, albeit with noteworthy concessions from the suitor to assure fair competition.
As an industry analyst augmenting Microsoft’s playbook, let me walk you through recent developments and what I expect moving forward. I’ll also explore potential benefits this consolidated entity could unlock for end gamers like us.
Workplace Scandals and Leadership Voids Require Resolution
Before analyzing concessions and market effects, we need to revisit the human side of this equation. Activision Blizzard’s C-suite and broader organizational culture are utterly broken.
CEO Bobby Kotick has enabled years of workplace harassment, bias and toxicity with little accountability. Despite promising progress after California’s damning 2021 lawsuit, meaningful change has yet to take hold.
Review this track record of ethical failings on Kotick’s watch:
| Year | Incident |
|---|---|
| 2018 | Female employees stage walkout over culture issues |
| 2021 | California lawsuit exposes hotel room harassment, suicide |
| 2021 | Report reveals 500+ harassment complaints with little action |
| 2022 | Union alleges threatened retaliation for organizing effort |
Meanwhile, Kotick collected $150M in compensation amid these debacles. His board reinforced a warped status quo despite committing publicly to do better.
Inserting Microsoft’s gaming leadership into the mix would likely accelerate cultural reset efforts. Xbox chief Phil Spencer brings an inclusive perspective shaped by past Diversity & Inclusion initiatives across the tech giant. His oversight could pressure much-needed C-suite turnover.
Make no mistake – regulators recognize Activision Blizzard’s disturbing trajectory too. Blocking this buyout means further perpetuating management toxicity. Approving the deal with Microsoft as reformist steward may be the pragmatic solution, even considering monopoly qualms.
Microsoft Dangling Coveted Franchise Rights to Seal the Deal
Now onto concessions and guaranteed continuity for multiplatform gamers. Microsoft has focused recent lobbying on assurances that Call of Duty in particular will remain available across Playstation and Nintendo ecosystems.
Call of Duty generates annual revenues approaching $3 billion when tallying game sales, live services, and sponsorship/licensing. Here is a snapshot of financial performance since 2018:
| Year | Call of Duty Revenue | Total Activision Revenue | CoD % of Total |
|---|---|---|---|
| 2018 | $1.8 billion | $7.5 billion | 24% |
| 2019 | $1.9 billion | $6.5 billion | 29% |
| 2020 | $3.0 billion | $8.1 billion | 37% |
| 2021 | $2.2 billion | $8.8 billion | 25% |
Call of Duty’s outsized earnings contribution gives Sony justifiable anxiety over the franchise going Xbox/Windows exclusive. But Microsoft knows removing Call of Duty from Playstation after years of availability would draw antitrust objections.
Instead, reports suggest Microsoft will guarantee future Call of Duty access to Sony with a binding 10-year licensing deal. Nintendo announced a similar decade-long agreement for Call of Duty continuity last December. Securing CoD’s status as platform agnostic allays exclusivity concerns.
Beyond Call of Duty, I’d expect Microsoft to formalize availability commitments for Activision Blizzard’s titles across PC storefronts. Assuring Steam and Epic Games Store access for example prevents accusations of self-serving platform restrictions.
Essentially Activision Blizzard produces too many blockbuster cross-platform franchises for Microsoft to retreat behind Xbox/Windows-only walls long term. Locking down multi-year licensing agreements makes good faith gestures to get this acquisition greenlit in 2023.
Potential Post-Acquisition Upsides for Gamers
If Microsoft’s purchase goes through under appropriate guardrails, what upside could we see as gamers? A few high potential perks come to mind:
More Franchises Brought to GamePass: Microsoft would almost certainly offer a slate of Activision catalog titles as part of the GamePass library. Having 100+ million GamePass subscribers is too lucrative of an opportunity to ignore. Suddenly gaining access to Call of Duty, Diablo, Overwatch and even oldies like Guitar Hero via your $10 monthly subscription is pretty appealing.
Reviving Neglected Franchises: Remember Skylanders or DJ Hero back in the day? As Activision merged and grew, these series fell out focus. But Microsoft has a demonstrated history of reviving nostalgic franchises post-acquisition by resourcing ignored studios. After buying Bethesda, they greenlit new entries for Wolfenstein, Doom, and Fallout. I could absolutely envision fresh titles in Tony Hawk’s Pro Skater, Guitar Hero or Hexen with Microsoft restoration efforts.
Cloud Streaming Innovation: Under Phil Spencer’s oversight, expect novel integrations using cloud streaming and Xbox network infrastructure. Microsoft’s stack could enable creative CrossfireX esports shows or location-based Diablo mobile augmented reality games for example. Blending globally recognized Activision IP with Microsoft’s technical firepower is an alluring combo.
While risks certainly haven’t disappeared given the deal’s complexity, I’m cautiously optimistic regulators approve this merger later in 2023. Microsoft seems fully committed to meeting objections in good faith. And despite monopolistic concerns, a finalized acquisition with thoughtful constraints could bring some exciting innovations to our shared gaming experiences.
Let me know if you have any other perspectives on this unfolding transaction! I’m always eager to discuss gaming industry dealings with fellow players.
