For months, under-fire Activision Blizzard was pushing investors to take the company off of their hands. After facing sexual assault allegations, executive turmoil, staff turnover and disastrous stock performance -all within a year’s time-, the company has finally decided to call it quits by acquired by the Microsoft at a premium valuation of $68.7 billion in cash.
Activision Blizzard is navigating a rough patch following concerns of SEC investigations, sexual harassment and rumors that CEO Bobby Kotick may step down. Kotick reportedly had knowledge of sexual misconduct & rape accusations at his company for years, but he did nothing about it. Now that Microsoft has acquired him, he’ll remain CEO. This acquisition implies that Activision Blizzard will now report to Microsoft Gaming Head Phil Spencer which Kotick will oversee.
“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players,” Spencer wrote in a blog post this morning, implicitly addressing the ongoing unrest at Activision Blizzard. “We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”
Sources close to the deal say that Kotick will remain in his CEO position for now, but because he’s expected to step down in 2023. Three years ago, Activision Blizzard employees conducted a walkout and protested against sexual misconduct and excess layoffs. However, now that their protests have turned into a movement (and their contract termination lawsuits have begun), they insist that they won’t give up. Jessica Gonzalez announced her resignation in late November after making a name for herself as one of the loudest internal voices for change. She led the ABetterABK workers’ alliance from its start and has been a big advocate for taking a stand against what she perceives as wrong with the current state of things at work.
Microsoft to acquire Activision Blizzard
According to their press release, Microsoft will now be the third biggest company on the world when it comes to gaming revenue. This would put them behind Tencent and Sony and make them a massive employer in the industry. Activision’s franchises are popular like “World of Warcraft,” “Call of Duty” and “Candy Crush”. Microsoft recently announced that it would be including Activision Blizzard games in its Game Pass subscription service. They already have nearly 400 million subscribers and the addition to the Games Pass will allow these users to play their games on Microsoft’s cloud.
I’m on vacation today (lol) but if I were not I would be calling up some antitrust experts because Xbox buying Bethesda and now Activision sure seems like the type of horizontal merging that the DOJ frowns upon— Jason Schreier (@jasonschreier) January 18, 2022
Microsoft is not exactly a new company. They have several billion-dollar deals in recent memory, so their acquisition of ZeniMax Media Inc. isn’t too much of a surprise. Bethesda Game Studios are related to Zenimax Media and so this was the next logical step for Microsoft to take in the future games industry (within the past year). The acquisition of Activision Blizzard has potential antitrust concerns on the part of the Department of Justice and Microsoft. For example, Meta may soon face a lawsuit that results from its growing VR business. Despite this acquisition, Meta might be able to compete with the other tech companies in the virtual reality space.
“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,” said Satya Nadella, chairman and CEO, Microsoft.
As early as 2023, this acquisition of Activision Blizzard will close and the company is valued at $95 per share. The boards of both Microsoft and Activision have approved the deal.