The tech giant Microsoft will be growing with a new acquisition for one of the biggest gaming companies, Activision Blizzard, for $68.7 billion in cash that is being deemed the largest takeover in Microsoft history. Microsoft has already amassed a giant gaming audience being the manufacturers of the XBOX gaming console and is making a big bet on investing more in the gaming industry.
Activision Blizzard is a big name in gaming being the creators of popular games including Call of Duty, Candy Crush, and games for the “Spiderman” movie franchise. As of January 2021, Activision Blizzard was valued at $72 billion which is mainly attributed to the success created by the demand for their popular games and series that keeps gamers coming back for more. This acquisition will also be making history creating the world’s third largest gaming company posing as big competition against rival companies.
The billion-dollar deal will start with games and will be integral in Microsoft’s plan on expanding to the new tech trend by building the metaverse. The growing concept of the metaverse is being called the next generation of the internet combining the online virtual world with augmented and virtual reality.
One of the big obstacles in developing the metaverse is regulators in Washington as Republicans and Democrats both are pushing the power of technology giants. In acquiring Activision Blizzard, Microsoft is rebuffing a controversy of the game company’s workplace with accusations of discrimination that were ignored by the senior executives resulting.
The state of California sued the company regarding these allegations that resulted in an immediate share price dropping 27% in July 2021. Following the announcement of the acquisition, the stock price for Activision Blizzard (ATV) rose nearly 40% in premarket trading while Microsoft’s stock price dropped by 1%.
Activision’s longtime chief executive Boddy Kotick negotiated a huge premium for investors as Microsoft is paying $95 per share that is roughly 45% higher than the company’s stock prior to announcing the acquisition. Kotick will continue to run the company and this partnership is being considered a victory for Kotick as some critics sought to remove him due to the controversy.
Microsoft will be gaining a massive audience of an estimated 400 million monthly gamers and access to some of the most popular games in the world that can be beneficial in developing new games to attract more users. This deal isn’t just about gaming as combining the two tech companies will give both parties access to an array of artificial intelligence and other programming talents that will be beneficial in developing a metaverse.
The social media platform Facebook is one of the leading companies developing a metaverse for users and the acquisition of Activision Blizzard will give Microsoft a competitive advantage. Microsoft will also become a competitor of Facebook with virtual reality features on the Xbox to rival Facebook’s Oculus VR system.
This deal will bring drastic change for Microsoft that will be combined with owning the Xbox brand as well as the studios that created Halo and Minecraft. In the past, Microsoft has remained largely focused on corporate users for software such as Office 365 especially the cloud-computing business, Azure, that competes against Google and Amazon.
