Microsoft on Tuesday announced a landmark $69 billion deal to buy US gaming giant Activision Blizzard, betting big on the prospects of the video game market by scooping up the scandal-hit “Call of Duty” maker.
Acquiring the troubled but highly successful Activision will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony, Microsoft said – a major shift in the booming gaming world.
If the deal is confirmed, it will be the largest acquisition in the industry, far ahead of Take-Two’s $12.7 billion purchase of Zynga announced last week.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Microsoft CEO Satya Nadella said, referring to the virtual reality vision for the internet’s future.
The news prompted shares in rival Sony to record their biggest one-day drop since the start of the coronavirus pandemic on Wednesday. They fell as much as 9.8% in the opening minutes of trading in Tokyo.
Employee Protests, Toxic Workplace Claim
Activision, the California-based maker of “Candy Crush,” has been hit by employee protests, departures, and a state lawsuit alleging it enabled toxic workplace conditions and sexual harassment against women.
Over the past seven months, the company has received about 700 reports of employee concerns over sexual assault, harassment or other misconduct, The Wall Street Journal has reported.
Nearly 20% of Activision Blizzard’s 9,500 employees have signed a petition calling for CEO Bobby Kotick to resign.
Kotick will continue to serve as CEO of Activision Blizzard, but is expected to depart after the deal closes, the WSJ reported.
The transaction – which is expected to be finalised by June 2023 — is subject to customary closing conditions, regulatory review and approval from Activision Blizzard’s shareholders.
“Acquiring Activision will help jump start Microsoft’s broader gaming endeavours and ultimately its move into the metaverse, with gaming the first monetisation piece of the metaverse in our opinion,” Wedbush analysts said after the news broke.
This would be the largest buyout ever for Microsoft, well ahead of LinkedIn in 2016 for $26.2 billion.
- AFP with additional editing by George Russell