Image source: Microsoft
In a historic move, Microsoft has successfully concluded its acquisition of Activision Blizzard for a staggering $68.7 billion, setting a monumental record as the largest purchase in Microsoft’s history and one of the most substantial acquisitions ever witnessed in the corporate world across all sectors.
This landmark transaction was met with significant regulatory challenges, subjecting Microsoft to global scrutiny by government bodies. Legal battles unfolded both in the United States and the United Kingdom. The initial announcement of this deal came in February 2022, and the news of its closure surfaced mere hours after receiving the UK’s CMA seal of approval, marking the final regulatory hurdle Microsoft needed to surmount.
Microsoft Completes Activision Blizzard Deal
A central concern for the CMA revolved around cloud gaming, and, to facilitate the deal’s completion, Microsoft made concessions by relinquishing cloud-gaming rights to Ubisoft.
Ubisoft stated in their own announcement related to the deal’s conclusion: “We now possess the streaming rights in perpetuity for all games from Activision Blizzard, those in existence today, and those to be released in the next 15 years.”
The financial terms of this agreement see Microsoft paying Activision Blizzard shareholders $95 per share for the buyout. Prior to this, Microsoft’s most significant acquisition had been LinkedIn, acquired for $26.2 billion in 2016, while, for perspective, Disney’s purchase of Lucasfilm and the Star Wars franchise stood at $4.05 billion.
A consequence of this acquisition is the departure of Activision Blizzard CEO Bobby Kotick and other high-ranking C-suite executives. Kotick will remain in his role until the end of 2023, reporting to Microsoft Gaming CEO Phil Spencer to assist with the transition. It is reported that Kotick will receive a $400 million compensation package as part of his eventual exit.
In the wake of the merger, a significant reshuffling of directors took place, aligning with the merger agreement.
While excitement abounds over this acquisition, don’t anticipate the immediate appearance of Activision or Blizzard games on Game Pass. The official Game Pass account on Twitter stated that the work to integrate games from Activision Blizzard and King into Game Pass “can now begin,” with more details to be shared in the months ahead, according to Microsoft.
Microsoft Gaming CEO Phil Spencer expressed his enthusiasm for the deal’s closure, promising to “learn, innovate, and continue to deliver on our promise to bring the joy and community of gaming to more people.” He emphasized a culture that encourages everyone to excel in their work, welcomes all individuals, and centers around their commitment to “Gaming for Everyone.”
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Spencer conveyed this sentiment in a memo to staff, expressing eagerness to exchange insights and best practices and empower their new colleagues to reach the widest possible audience.
Originally, the Microsoft/Activision deal had a deadline of July 18 for closure, but the two companies renegotiated their terms, extending the deadline to October 18.
In April, the UK’s Competition & Markets Authority initially obstructed the deal due to concerns about the cloud gaming market. However, Microsoft and Activision achieved a partial victory in July by winning a significant court case against the FTC in the United States.
The deal reached its culmination on October 13, just before the October 18, 2023 deadline. Per the terms of the merger agreement, failure to close the deal would have incurred a substantial breakup fee of over $4.5 billion payable to Activision Blizzard.
Microsoft’s acquisition encompasses the entirety of Activision Blizzard, granting ownership and operational control over beloved franchises such as Call of Duty, Diablo, Overwatch, and Warcraft, as well as King’s popular Candy Crush games. While Microsoft previously asserted that this acquisition was not imperative to its gaming aspirations (and Activision Blizzard maintained its independence), the acquisition of the Call of Duty powerhouse serves as a catalyst to accelerate Microsoft’s gaming initiatives.
A pivotal aspect of this narrative has been Call of Duty, and in July of the current year, Microsoft and Sony unveiled a 10-year agreement ensuring Call of Duty’s presence on PlayStation platforms until at least 2033. While Microsoft proposed this 10-year pact to Sony several months ago, it was only after the FTC’s decision that Sony accepted the deal. Microsoft has also secured a similar 10-year agreement with Nintendo, ensuring that future Call of Duty releases may find their way to Nintendo’s platforms, potentially including the rumored “Switch 2.”
