Microsoft plans to acquire Activision Blizzard for $68.7B in cash, or $95/share, in FY 2023; Activision's stock, which closed last week at $65.39, jumps 25%+

Legendary games, immersive interactive entertainment and publishing expertise accelerate growth in Microsoft's Gaming business across mobile, PC, console and cloud.

Microsoft 2022-01-19

Context & Ripple Effects

Microsoft’s proposal put one of gaming’s established publishers at the center of its broader gaming push, combining Activision Blizzard’s game portfolio and publishing expertise with Microsoft’s mobile, PC, console and cloud ambitions. The transaction later became a 20-month regulatory battle before closing, showing that its significance extended beyond a conventional content acquisition.

The deal also fits Microsoft’s acquisition-led expansion under Satya Nadella; related coverage later tallied more than $170B in Microsoft acquisitions, including moves that made gaming a more central business.

First-order effects

Activision Blizzard shareholders are immediately repricing the company toward Microsoft’s $95-per-share offer, while Microsoft commits to an all-cash transaction planned for FY2023.
Microsoft gains a planned route to add Activision Blizzard’s games and publishing capabilities across its gaming business, including the mobile, PC, console and cloud segments named in the announcement.

Second-order effects

The transaction’s scale put Microsoft’s gaming strategy under regulatory scrutiny; the proposed deal ultimately required a final UK CMA decision before it could close.
Competing game platforms face a stronger Microsoft content position, increasing the importance of how major titles are distributed across console, PC and cloud services.

Third-order effects

The deal points toward gaming competition being shaped increasingly by ownership of publisher catalogs and distribution platforms rather than by hardware alone.
If large publishers continue to be absorbed by platform operators, regulatory review of exclusive-content and cross-platform access will become a more persistent constraint on gaming M&A.

The trend: Gaming is consolidating around platform companies seeking to pair major content libraries with subscription and cloud distribution.

Discussion

@gregisenberg Greg Isenberg on x
Activision Blizzard sold for $70b today and the community is going to see $0 from this Play-to-earn couldn't come sooner.
@dinabass Dina Bass on x
Microsoft is nearing a deal to buy Activision Blizzard, sources tell us. Deal value is nearly $70 billion. Story on @TheTerminal
@jasonschreier Jason Schreier on x
BREAKING: The WSJ reports that Microsoft is buying Activision Blizzard, the troubled publisher behind Call of Duty and World of Warcraft, which has been facing crisis over the last year following numerous reports of sexual misconduct and discrimination. A seismic gaming deal
@satyanadella Satya Nadella on x
Together with @ATVI_AB, we will usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive, and accessible to all. https://news.microsoft.com/...
@charlieintel @charlieintel on x
NEW: Activision Blizzard CEO Bobby Kotick sent out the following email to the company today. He says that the deal is expected to only close June of 2023, meaning Activision will remain independent until then. https://twitter.com/...
@xbox @xbox on x
Xbox is committed to our journey for inclusion in every aspect of gaming. We hold all teams to this commitment. We're looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.
@ashleyesqueda @ashleyesqueda on x
I think all I need to say is this: Microsoft wants to be the Netflix of games before NETFLIX can become the Netflix of games. There we go. I did it. No thread required.
@jonerlichman Jon Erlichman on x
Microsoft's biggest acquisitions: Activision Blizzard: $68.7 billion Linkedin: $26.2 billion Nuance: $19.7 billion Skype: $8.5 billion ZeniMax: $7.5 billion GitHub: $7.5 bilion Nokia phone unit: $7.2 billion aQuantive: $6.3 billion Mojang (Minecraft): $2.5 billion
@zhugeex Daniel Ahmad on x
A reminder of the approach that Microsoft is taking towards gaming, which is informing its M&A strategy As the value of IP, content and talent grows, the Xbox business is placing its bets on ensuring it can increase the value of game pass and reach all players across all devices …
@pucknorris Vivek Sharma on x
What a time to be alive! Some thoughts on Microsoft + ActiveVision with my usual caveat of these being my own musing and nothing much to do with our work at Meta 1/
@adriennelaw @adriennelaw on x
Since California sued Activision in July for workplace sexual harassment, its shares have fallen 27%—allowing Microsoft to scoop up the company at a deal. Maintaining a culture that mistreats people is bad for business. Execs can't afford to ignore this. https://www.nytimes.com/.…
@microsoft @microsoft on x
When Candy Crush and CoD become your actual job. Microsoft x Activision Blizzard. 🎮❤️📱 https://news.microsoft.com/... https://twitter.com/...
@kristyt @kristyt on x
The fact that Microsoft will own LinkedIn and Call of Duty is kind of mindblowing.
@edzitron Ed Zitron on x
What the hell does that mean https://twitter.com/...
@jasonschreier Jason Schreier on x
I'm on vacation today (lol) but if I were not I would be calling up some antitrust experts because Xbox buying Bethesda and now Activision sure seems like the type of horizontal merging that the DOJ frowns upon
@damianburns Damian Burns on x
Is Meta still blocked from buying a gif company?
@anildash @anildash on x
It's not a big bet on “the metaverse”, it's a big bet on the (already-multi-billion-dollar) Xbox Game Pass subscription business, and the paper of record should know better than to just recite buzzwords unquestioningly. https://t.co/SmEsjYvoVF
@andrewrsorkin Andrew Ross Sorkin on x
This deal is about one thing and one thing only: The battle for the metaverse. It would catapult MSFT way ahead of Meta (formerly Facebook.) Will companies like Meta, Apple, Amazon + Alphabet go to DC to object? Can they do so given the scrutiny on them? https://www.nytimes.com/.…
@aarongreenberg @aarongreenberg on x
Love this focus from Satya and Phil, proud of the team and culture we have here at Xbox/Microsoft. It's encouraging to get so many positive messages from folks working inside the Activision Blizzard teams who are so happy about what this means for their future. 💚 https://twitter.…
@jasonschreier Jason Schreier on x
While monopolies are undoubtedly bad news for the video game industry, this acquisition could have some positive effects on Blizzard both culturally and strategically. Under Activision, every game had to be a billion-dollar franchise. Under Xbox, that will likely change
@atvi_ab @atvi_ab on x
We are joining the @Xbox family. Learn what this means for our iconic games and player communities: https://activisionblizzard.com/ ... https://twitter.com/...
@scottjohnson Scott Johnson on x
I'd have a VERY different feeling about today's news had it been Facebook doing the buying... https://twitter.com/...
@mkbhd Marques Brownlee on x
Just a casual reminder Facebook bought Instagram for $1 billion in 2012 and that was a HUGE deal
@technology @technology on x
3. Bypass App Store Fees. CEO Satya Nadella wants his gaming empire to be big enough that gamers will come to it directly, bypassing Apple. Microsoft has been at war with Apple, and Google, over the fees the app stores charge for games https://www.bloomberg.com/... https://twitte…
@technology @technology on x
4. Metaverse. Gaming is one of Microsoft's two big metaverse plays (the other is Office and conference software). The acquisition will offer even more massive and devoted game communities to create their own metaverses https://www.bloomberg.com/... https://twitter.com/...
@richlightshed @richlightshed on x
$900 billion Facebook cannot buy Giphy for ~$400 million but... $2.3 trillion Microsoft can buy Activision for $69 billion https://twitter.com/...
@technology @technology on x
5. The Three C's. Nadella's corporate strategy has been coalescing around cloud, content and creators. After failing to land social video service TikTok, Pinterest and Discord, Activision is the latest try, and this time it looks to be successful https://www.bloomberg.com/...
@ldignan Larry Dignan on x
$MSFT buying Activision for $67.8B is like buying a movie studio at a discount. Microsoft CEO Nadella: “Our vision is for a river of entertainment where the content and commerce flow freely.” https://www.techmeme.com/... https://twitter.com/...
@technology @technology on x
2. Mobile: It's the fastest-growing segment of gaming. Activision owns mobile-gaming studio King, maker of Candy Crush, one of the most popular mobile games of all time. Microsoft has next-to-no presence in mobile gaming https://www.bloomberg.com/... https://twitter.com/...
@richlightshed @richlightshed on x
Apple does not really buy things Facebook can't buy big things Google can't buy big things Amazon unclear what they can buy (MGM??) vs Microsoft “open season” for acquisitions https://twitter.com/...
@stopskeletons @stopskeletons on x
It only took a $70 billion deal and Microsoft to tread deep back into the waters of monopolistic behavior but Kotick is out. ...victory?? https://twitter.com/...
@levie Aaron Levie on x
Activision is essentially the “Microsoft Office” of the metaverse. Just as the productivity suite was the killer app of PCs, games are the killer app of VR. More and better games drive platform adoption, and accelerate the flywheel of better ecosystems as more users join.
@alexeheath Alex Heath on x
Lol yep https://twitter.com/...
@paultassi Paul Tassi on x
ATVI workers appear to be happy about the sale given the changes it could mean https://twitter.com/...
@andrewyang Andrew Yang on x
The Microsoft acquisition of Activision Blizzard is a game changer - and positions them much better for a virtual future. It's also just enormous in scale. https://www.cnbc.com/...
@ericnewcomer Eric Newcomer on x
my 2 cents on Microsoft+Activision antitrust: Microsoft should be allowed to accrue so much power in PC gaming that they can finally force a Windows gaming tithe for Microsoft equivalent to the mobile app stores. AND THEN the logic of mobile app stores rake will finally crumble
@snazzyq Quinn Nelson on x
Why are we now using the term “metaverse” as if it actually means anything...? https://twitter.com/...
@joshmunsee Josh Munsee on x
Excited that #Xbox marketing team will be back reporting directly to @XboxP3 . One team. One Xbox. One Microsoft. 🙌 https://twitter.com/...

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