As the gaming industry attempts to navigate the metaverse, Microsoft has made what appears to be a defining deal that could spell the future of gaming as a whole. Their $75 billion acquisition of Activision Blizzard has sent shockwaves throughout the industry amid the striking allegations aimed at the company they have bought.
The purchase was made in cash and was announced on Tuesday. The move will see around 30 games developers joining an already formidable lineup that Microsoft now owns. The deal is the largest ever made within the young yet valuable industry, completely trumping the previous deal made by Microsoft when they bought out Bethesda Softworks for $7.5 billion.
Reverberations of the acquisition have reached all corners of the gaming landscape. Most notably, the stock market now reveals a 12.8 percent lower closing today in Tokyo for competing company Sony. Other game developers’ shares are bouncing up and down at the prospect of more acquisitions being made.
The massive deal promises to solidify Microsoft’s position as one of the world’s leading creators of interactive entertainment. It makes them the third biggest gaming company by revenue, just as Xbox intends to aggressively expand its already very popular gaming subscription service, Game Pass. It tilts the playing field much further in their direction, shaking up their competitive rivalries with large entertainment companies like Tencent, Nintendo and Sony.
The gaming industry is now worth over $200 billion, and Microsoft now owns a rather large slice. They are setting an imposing foundation for the potentially lucrative implementation of virtual worlds and the overarching metaverse. The move is likely to provoke criticism from multiple antitrust regulators, who have had their work cut due to many of tech’s largest companies all aggressively buying their way to the top.
Questions as to the future of some of Activision Blizzard’s largest intellectual properties, games like Call Of Duty, World Of Warcraft, Overwatch, Candy Crush and Guitar Hero have arisen. All have heavily impacted the industry, spanning PC, mobile and consoles, and for Microsoft to own them all is both exciting and unsettling prospect. It is yet to be announced whether the company intends to make the individual properties exclusive to their Xbox platform. It would make more sense to maximise revenue by keeping them third party, but if their acquisition of Bethesda is anything to go by, and they want to try and monopolise the market, it could be more than likely.
Phil Spencer, CEO of Microsoft gaming, made a somewhat ambiguous statement about exclusivity in an interview with Bloomberg.
“I’ll just say to players out there who are playing Activision Blizzard games on Sony’s platform: It’s not our intent to pull communities away from that platform, and we remained committed to that.”
Activision Blizzard chaos
Activision Blizzard has seen their fair share of headlines over the past year, after the claims of misogynistic misconduct and workplace harassment aimed at the company by former female employees. A spokesperson told Wall Street Journal that the developers have fired or forced out 37 employees since July 2021, and 44 have reportedly been disciplined. This information was supposed to be shared by the company before the turn of the year. However, it was delayed due to an apparent decision made by CEO Bobby Kotick, seemingly to not portray Activision’s problems as worse than they already are, although the spokesperson has denied this.
Activision was sued by the California Department of Fair Employment and Housing (DFEH), who said that the company boasted a “frat boy culture” where sexual harrassment and misogyny were commonplace. Blizzard’s former president, J. Allen Brack, left the company soon after claims from DFEH stating that he didn’t implement adequate “effective remedial measures” to mitigate the harassment. Jesse Meschuck, Activision Blizzard’s top HR representative, also left, alongside Diablo 4 game director Luis Barriga, Overwatch lead designer Jesse McCree and World of Warcraft designer Jonathan LeCraft.
150 employees of Activision Blizzard staged a mass walkout after the report was made public, and 2,000 employees signed a petition calling for Kotick to stand down from his position. However, the Activision board has issued a statement in support of him, despite reports claiming he knew about many of the worst cases of abuse inflicted for years.
Alongside other leading figures from the world’s biggest gaming companies, Phil Spencer made condemning statements regarding Activision Blizzard in notes to employees. Spencer said in an email to those working at Xbox that he was "disturbed and deeply troubled by the horrific events and actions" and that "this type of behaviour has no place in our industry". He added that he was "evaluating all aspects of our relationship with Activision Blizzard and making ongoing proactive adjustments". Although, it seems no one expected the ongoing adjustments would include swallowing the company.
The fact that Microsoft is more than aware of Activision Blizzard’s dysfunctional and deeply problematic workplace culture is positive. There is hope that with this acquisition, the issues may be addressed fully, and the company can become a safer place for people to work. Microsoft CEO Satya Nadella said in a statement:
"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."
Microsoft is absorbing technology companies left and right. Among the myriad of game developers they now own, they have been known to make bids in areas outside of gaming. The company bought Linkedin in 2016, Skype in 2011, and in 2021 made a pending bid to buy Nuance, a speech company marking Microsoft’s first foray into healthcare. The company was also approached by TikTok in 2020 for a deal, following President Trump’s threat to ban the app in America, although it never materialised.
However, the large purchase also signals a highly competitive new era for the videogame industry. This could prove fruitful for consumers, at least in terms of better games, but will also further divide gaming platforms. It is now time to look towards companies like Sony and Nintendo, and tech giants like Facebook (or Meta) and Netflix (who have started to venture into mobile gaming) for their responses to the market shift.
The size and power that companies like Microsoft, Facebook and Amazon have is astonishing. With each company attempting to reach similar end goals, it is also a frightening prospect to envision these tech giants dictating so much of our digital lives and entertainment avenues. The exponential growth of the world's biggest companies has soared further and more drastically in recent years, and that will only continue as they use their profits to buy out others. What could this dog-eat-dog landscape spell for consumers? Only time will tell, but the industry is certainly looking more transparent than ever before.