Microsoft’s acquisition of Activision, announced unexpectedly last Tuesday, January 18, 2022, has put the record straight. The company shelled out about $69 billion to purchase one of the top Western publishers. The company has among the most appealing video game licenses. Modern Warfare-style bombs are thrown and will transform the video game territory, resulting in serious consequences for the leaders of the past.
For over four years now, Microsoft has made a historic pivot toward video games following the difficult years 2013-2014, when Xbox’s future was at stake. 343 Industries, The Coalition, Mojang, Rare and Turn 10 were only five of Microsoft’s first-party developers in June 2016. At the time, it had 23 pursuing a policy of aggressive takeovers impacting both independent companies and publishers.
Activision-Blizzard and Microsoft
For Phil Spencer’s teams, a union between Activision-Blizzard and Microsoft would mean the addition of more than 30 first-party studios suitable for supplying the Xbox Game Pass and a portfolio of games tied to the Xbox network. If we include the many groups inside a single studio, this number might easily be close to 70.
Microsoft might become the third-biggest video game firm in the world (by revenue) if it acquires Nintendo and Sony; Tencent remaining the world’s largest video game publisher. The second place appears attainable in the medium term at this point. Microsoft’s gaming revenue was less than 10% of the company’s overall income in the fiscal year 2021. Now, it is expected to rise to 15% in the next years.
The worst-case scenario for the competitors is that Microsoft begins to take video games more aggressively.
Even though Bill Gates’ business launched a particular Microsoft Adventure as early as 1979, pixel entertainment never seemed to be a part of the company’s DNA.
In the late 1990s, the Xbox teams had a difficult time convincing the company’s executives to back their concept. It made things much more difficult for them to succeed. Phil Spencer convinced Satya Nadella, Microsoft CEO, that the Xbox brand could be extended to PCs, mobile devices, and other smart TVs throughout the world. All the while leaning on the group’s Cloud technology.
As part of the Xbox strategy, subscription gaming services must be remembered. Its goal is to reach as many people as possible with its 25+ million subscribers. Activision-Blizzard had previously refused to participate in the Game Pass program. Fortunately, this acquisition will allow the service to provide a greater selection from that publisher going forward. Essentially, the goal is to attract the roughly 400 million monthly active gamers who like the publisher’s offerings.
Almost one year ago, Microsoft CEO Satya Nadella vowed that his company will make an investment in video gaming. By completing the deal on January 18, 2022, he completed the gesture, echoing the words he had spoken earlier. This is the company’s largest buyout to date, more evidence that gaming has risen to the top of the company’s priority list. In addition, Nadella believes that games will play a significant part in the evolution of Metaverse platforms.
With anticipated exclusives like SIFU and Forspoken on the way, as well as the comeback of beloved series like Horizon: Forbidden West and Gran Turismo 7, the opening of 2022 was a pleasant one for PlayStation. The news of the Microsoft-Activision deal, on the other hand, sent shivers down gamers’ spines like a sandstorm in Returnal.
The market’s reaction was the first censure for the Japanese giant. On Wednesday, January 19, 2022, the Tokyo Shares Exchange closed with Sony stock down 12.8%, or $20 billion in market value. As of this writing, the stock has settled, despite the ongoing instability.
Officially, analysts predict that even if Microsoft agrees to offer future Call of Duty games on PlayStation 5, this move will undermine Microsoft’s grip on its present leadership position among the three major companies.
After Microsoft’s shocking revelation, the NPD organization revealed their yearly best-selling games list for 2021 (in the US) just a few hours later. Two installments from the Call of Duty series, Cold War and Vanguard, came in first and second. This is the 13th year in a row that Call of Duty has dominated the North American video game market.
Single-player AAA action/adventure games have been Sony’s specialty for a long time now. Games that are well-liked by gamers, frequently honored at the Game Awards, and frequently receive high praise from the gaming press.
Call of Duty Vanguard will not be the most popular PlayStation game in 2021 as a result of this measure. Redmond will acquire a franchise if regulators approve the agreement. Investors’ caustic reaction is partially due to this.
The Ball Is In Your Court
Sony issued its first public comment two days after the acquisition deal was announced (reported by Bloomberg). PlayStation on a stream provided by studios of its rival corporation is undoubtedly not to the appetite of the Japanese company. Threatening to close the tap one day.
“We believe Microsoft will abide by the contractual agreements and continue to ensure that Activision games are cross-platform.”
– Sony Spokesperson
It’s not the exclusivity of Activision-Blizzard games that experts are pointing out, but the fact that the Japanese giant has been unable to advance for so long. Rather than compete with the likes of Game Pass, Sony chose to disregard it. While Microsoft was trying to connect to as many people as possible on PC, mobile, and Xbox consoles, Sony opted to raise the prices of its first-party productions.
Let The Games Begin
Microsoft now has all the tools in this fight to the top. ” Network, resources, technology, and studios are all in place. The Activision-Blizzard teams will report directly to Phil Spencer, the CEO of Microsoft Gaming, once the transaction is completed (anticipated between July 2022 and June 2023).
His first task will be to straighten out Activision’s mess, which he will accomplish right away, we hope. By distancing from Bobby Kotick, firstly, involved in allegations of sexual harassment that took place within the company.
Better business culture is established, second. Encouraging creatives to work on projects that interest them. Spencer noted that the group had licenses for games like Guitar Hero, King’s Quest, and Hexen, which had been neglected for a long time.
Microsoft – Video Game Powerhouse
The group appears to be in a stronger position than other GAFAs that are also active in the gaming industry. In the long run, Microsoft may benefit from the acquisition, but new problems remain. There will be more market consolidation and new competitive blocks created. Microsoft entered the game market because it was concerned about a partnership between the Internet’s heavyweights and Sony. We all know the rest.
In order to successfully manage all of these studios, the new Microsoft Gaming organization must ensure that the creative staff is not smothered by the fumes from the machines. In other words, Spencer and his staff will have to ensure that the workers live in a realm of magic while avoiding monotonous ideas.
With a console history spanning more than two decades and a publishing history spanning more than four, Microsoft is now moving at great speed. Activision Blizzard’s acquisition by Microsoft will have far-reaching ramifications for both Microsoft and Sony, as well as the video gaming industry at large.
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