Last week, Take-Two Interactive made waves by acquiring mobile gaming studio Zynga for ~$13B.
Turns out, it was only a dress rehearsal for big gaming deals: On Tuesday, Microsoft announced that it’s acquiring Activision Blizzard for a jaw-dropping $69B.
It is the largest gaming tech deal ever (besting the $67B Dell-EMC merger).
Activision is the maker of blockbuster franchises…
… including “Call of Duty,” “World of Warcraft,” “Candy Crush,” and “Tony Hawk’s Pro Skater.”
The company’s gaming empire has been shrouded in controversy over the past year.
According to CNBC, there have been “reports of sexual misconduct and harassment among the company’s executives.” Just Monday, Activision fired “dozens” of execs following a related investigation.
The deal is projected to close in 2023. If it passes regulatory scrutiny, Activision will report to Phil Spencer, the head of Microsoft’s Xbox division. (Embattled Activision CEO Bobby Kotick is expected to leave after the transition.)
Microsoft goes deeper into gaming
The software giant launched the Xbox console in 2001 and has since acquired 2 gaming platforms:
- 2014: “Minecraft” creator Mojang for $2.5B
- 2021: “Doom” and “Fallout” creator ZeniMax Media for $7.5B
In the near term, the deal will give the Xbox cloud gaming service a potential edge over PlayStation (and less-developed efforts from Netflix, Google, and Amazon).
In the long run, Activision provides Microsoft CEO Satya Nadella more talent and tools to build on his vision of an enterprise metaverse.
Nadella took over as CEO in 2014
At the time, Microsoft was valued at less than $400B. Today, it’s worth $2.2T+ as Nadella has successfully moved the company’s focus toward cloud technology.
Activision is now his largest acquisition ever, topping LinkedIn in 2016 ($26B) and Nuance Communications in 2021 ($20B).
While Microsoft stock fell ~2% on news of the deal, Nadella’s track record — *checks math* adding nearly $2T in market cap — means we should wait before passing judgment.
