The gaming sphere has been in an uproar due to Microsoft’s announced plan to acquire Activision Blizzard. The implications of this acquisition are, for now, hard for gamers to truly grasp given the scale of the situation. The transaction is set to close in June 2023, and before that happens, Activision Blizzard and Microsoft Gaming will continue to operate independently.
The acquisition was in the works when Activision Blizzard allegedly shopped itself around in November 2022 and approached Microsoft, which started to work on the deal immediately. There are two things that make this acquisition ripe for conversations compared to others of its ilk such as Take-Two’s Zynga acquisition. One of these factors answers why Activision Blizzard is selling now, despite industry-tracking firm NPD confirming that the two top-selling games in 2021 in the US were developed by the company.
Firstly, Microsoft and Activision Blizzard are two of the biggest names in video games, the former owning a big slice of the console market with the Xbox, and the latter boasting numerous mega-franchises such as Call of Duty, World of Warcraft, Diablo, and more. These franchises have built up a loyal and devoted fan base through decades of blockbuster titles. Secondly, Activision Blizzard has been embroiled in controversies surrounding its alleged civil rights violations that cultivated a toxic work environment.
The scale of the controversies, which unfolded over the course of the past few years, came to a head when the California Department of Fair Employment and Housing (DFEH) concluded that Activision Blizzard discriminated against female employees after a two-year investigation. This also led to the Security and Exchange Commission (SEC) investigating the company, and a high-profile employees walk-off.
Given Activision Blizzard’s reputational nosedive, it is thus impossible to consider the acquisition without examining it through this contextual lens. The AAA game industry is always hungry for talent, and Activision Blizzard’s current state is unlikely to attract developers. As such, it’d become increasingly difficult to make games that outdo the previous ones year after year. The acquisition could give the company a larger pool of resources and talent to tap into, and move away from the practices that got them into hot soup.
As for Microsoft, this acquisition is an act of market consolidation, and it is clear that all the mature and fleshed-out intellectual properties (IPs) that Activision Blizzard owns will allow Microsoft to leverage on the huge fan base those IPs have accumulated over the decades. The question then, is whether this acquisition tips the scales too much in Microsoft’s favour in the video game market, and how long it’d take before gamers, and console gamers especially, feel the effects of this shift. There are no cut and dry answers to these questions, but hopefully, this will lead to better games for gamers and healthier work environments for people working in the industry.
Make no mistake, this is potentially an industry-defining event, and it is driving discussions because it’s not entirely clear how the gaming landscape will change due to this acquisition.