Microsoft Corp has successfully completed its $69 billion acquisition of Activision Blizzard Inc, following a nearly two-year battle with global regulators. This monumental deal is the biggest acquisition in the video game industry to date and catapults Microsoft from fifth to third place globally, positioning it behind Tencent Holdings Ltd and Sony Group Corp.
The acquisition faced significant challenges from antitrust objections, leading Microsoft to request a three-month extension of the deal's expiration period from Activision. Despite the obstacles, Microsoft was able to close the deal by making alterations to its merger agreement to win over UK authorities, but the US Federal Trade Commission continues to pursue legal action in its own administrative hearing.
The UK's Competition and Markets Authority approved the deal after accepting a restructuring plan that involves the sale of certain gaming rights to French publisher Ubisoft Entertainment SA. The regulator expressed concerns about maintaining competition in the emerging market of cloud-streamed games.
Now that the acquisition is finalized, Microsoft's gaming chief Phil Spencer faces the task of leveraging this deal to boost the company's struggling mobile games business. Acquiring Activision grants Microsoft access to popular titles such as Candy Crush and its spin-offs. However, the delay in closing the deal has caused Microsoft to fall behind even further in the competitive mobile gaming sector.
Additionally, Microsoft continues to face challenges in its standoff with Apple Inc. over access to the app store. The tech giant criticized Apple's terms, including the 30% cut of developers' revenue and restrictions on cloud gaming. Despite Epic Games Inc's lawsuit against Apple for alleged anti-competitive practices opening the possibility of change, Microsoft's cloud gaming service still faces obstacles on iOS.
Furthermore, the gaming landscape has evolved since the initial announcement of the Activision deal in 2022. The expected commercial potential of the metaverse, an online world for gaming and shopping, has not materialized as anticipated. This is significant, as the metaverse was identified as a key motivator for the acquisition.
The delays in closing the deal have also postponed Microsoft's ability to address any necessary cultural reforms within Activision. While Microsoft has traditionally maintained a hands-off approach to acquired gaming studios, it may take a more active role this time. Activision has faced criticism regarding certain business decisions, such as saturating the market with multiple releases of Tony Hawk's Pro Skater and Guitar Hero, which diminished the value of these franchises. Fans have also expressed dissatisfaction with the lack of resources allocated to the StarCraft series.
Microsoft has announced plans to make Activision's game library available on Game Pass, its cloud-streaming service. Activision CEO Bobby Kotick, who faced criticism for mishandling harassment complaints at the company, will continue to serve as chief executive through the end of the year, reporting to Phil Spencer.
The deal encountered opposition from Sony, the maker of PlayStation consoles. Jim Ryan, Sony's video games chief, voiced concerns that Microsoft could sell them an inferior version of the popular Call of Duty shooting game. However, Microsoft and Sony signed a 10-year deal in July to ensure future Call of Duty entries remain on PlayStation consoles.
The UK regulators initially vetoed the deal, citing concerns about higher prices, reduced choices, and lack of innovation for gamers. The revised agreement ensures that Microsoft cannot limit access to Activision's content on its own cloud gaming service or withhold games from competitors.
Founded in 1979, Activision is renowned for its popular game franchises, including Overwatch, World of Warcraft, and Crash Bandicoot. The Call of Duty franchise alone has sold over 425 million units and generated more than $30 billion in revenue prior to the most recent installment in 2021.