Microsoft stunned the gaming industry by announcing this week that it would buy game publisher Activision Blizzard for $68.7 billion (roughly Rs. 5,10,990 crore), a deal that would immediately make it a bigger corporation. of video games than Nintendo.
Microsoft, maker of the Xbox gaming system, said acquiring the owner of Candy Crush, Call of Duty, Overwatch and Diablo would be good for gamers and advance its ambitions for the metaverse – a vision for creating immersive virtual worlds. for work and play.
But what does this deal really mean for the millions of people who play video games, whether on consoles or on their phones? And will this really happen at a time when the government is increasingly scrutinizing giant mergers in the United States and elsewhere?
So, is it good for gamers?
“For the average person playing Candy Crush or whatever, there probably won’t be any change,” said RBC analyst Rishi Jaluria.
But Jaluria and other industry watchers think it could be good news for game development more broadly, especially if Microsoft’s Games for Everyone mission and mountain of cash can save Activision from its reputation as a game changer. ditching favorite game franchises while focusing on a few choice properties.
“Microsoft wants to increase the variety of intellectual property,” said Forrester analyst Will McKeon-White. “Their target is anyone and everyone who plays video games and they want to bring that to a wider audience.”
He said the “most glaring” example of a popular franchise that Activision, founded in 1979, has left out is StarCraft, last updated in 2015. Others include Guitar Hero, the skateboard games Tony Hawk and MechWarrior, which McKeon-White said “went virtually untouched for two decades.”
On the other hand, the prospect of a console maker like Microsoft controlling so much game content has raised concerns about whether the company could restrict Activision games from competitors.
Microsoft plans to bring as many Activision games as possible to the Xbox Game Pass subscription service, “some likely becoming Microsoft exclusives,” wrote Wedbush analyst Michael Pachter. However, he noted that antitrust regulators may not allow Microsoft to block games from Sony’s rival game console, the PlayStation.
Pachter said Activision presents a model for Microsoft on how to scale its classic console franchises. He’s adapted Call of Duty into hit mobile and free-to-play games, and he expects the company to help Microsoft do the same with its own games, such as Halo.
Is it really about the metaverse?
Microsoft says so. And there are ways Activision could help the tech giant compete with rivals like Meta, which rebranded itself as Facebook last year to signal its new focus on guiding its billions of media users. social to the metaverse.
Metaverse enthusiasts describe the concept as a new, more immersive version of the internet, but for it to work, a lot of people will have to want to spend more time in virtual worlds. Microsoft’s metaverse ambitions have focused on workplace tools like its Teams video chat apps, but online multiplayer games like Call of Duty and World of Warcraft have huge followings devoted to interacting virtually for fun.
“That’s where Activision really helps,” RBC’s Jaluria said. “Millions of people play Call of Duty online. The community element helps drive adoption.”
According to Elizabeth Renieris, founding director of the Technology Ethics Lab at the University of Notre Dame, pushing more people to such virtual social networks will not only be fun and playful and could amplify existing problems of online harassment, fishing for trolling and identity theft. .
Will this actually happen?
It’s a big unknown. Regulators and rivals could increase pressure to block the deal.
Other tech giants such as Meta, Google, Amazon and Apple have all come under increasing scrutiny from antitrust regulators in the United States and Europe. But Activision’s deal is so big — potentially the most expensive technology acquisition ever — that Microsoft will also step into the regulatory spotlight.
“I think it should be scrutinized and probably will be” by antitrust authorities, said Diana Moss, president of the American Antitrust Institute. Regulators could ask questions about Microsoft making games exclusive to their own systems and whether the company would use user data acquired in the acquisition to its advantage in its other businesses.
The Biden administration has taken steps to strengthen enforcement against illegal and anticompetitive mergers.
If the deal fails, Microsoft will owe Activision a ‘severance fee’ of up to $3 billion (about Rs. 22,340 crore). That prospect should motivate Microsoft to make concessions to antitrust regulators to get there, said John Freeman, vice president of CFRA Research.
Doesn’t Activision have problems at work?
Activision has drawn unwanted attention from U.S. labor discrimination regulators, the Securities and Exchange Commission and its own shareholders over allegations of a toxic workplace. California’s civil rights agency also sued the Santa Monica-based company in July, citing a “frat boy” culture that had become “breeding ground for harassment and discrimination against women.”
Microsoft CEO Satya Nadella said on an investor call on Tuesday that “the culture of our organization is my #1 priority,” adding that “it’s critical for Activision Blizzard to move forward. on the commitments made last year to improve its corporate culture. It’s unclear if its longtime leader, Bobby Kotick, CEO since 1991, will stay with Microsoft after the deal closes.
Activision’s legal troubles have depressed its stock price and may have made it easier for Microsoft to pull off a takeover bid. But a union representing tech and gaming workers said concerns about working conditions should be considered by US and state officials before any deal is approved.
“The concerns of Activision Blizzard workers must be considered in any plan — acquisition or not — about the future direction of the company,” Christopher Shelton, president of Communications Workers of America, said in a statement.
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