For gamers, Microsoft’s deal for Activision raises questions
Microsoft stunned the gaming industry when it announced this week it would buy game publisher Activision Blizzard for $68.7 billion, a deal that would immediately make it a larger video-game company than Nintendo.
Microsoft, maker of the Xbox gaming system, said the deal would be good for gamers and advance its ambitions for the metaverse — a vision for creating immersive virtual worlds for both work and play.
But what the deal will really mean for the millions of people who play video games is unknown at this point.
Some industry watchers think the deal could benefit gamers if Microsoft maintains its games-for-everybody mission and uses its considerable cash to rescue Activision from its reputation for abandoning 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 everybody who plays video games and they want to bring that to a wider audience.”
He said the “most egregious” example of a popular franchise that Activision, founded in 1979, left by the wayside is “Starcraft,” last updated in 2015. Others include “Guitar Hero,” the Tony Hawk skateboarding games and “Mech Warrior,” which McKeon-White said “basically wasn’t touched for two decades.”
On the other hand, the prospect of Microsoft controlling so much game content — from “Call of Duty” to “Candy Crush” — raised concerns about whether the company could restrict Activision games from competing consoles.
Microsoft expects to bring as many Activision games as it can to its subscription service Game Pass, “with some presumably becoming Microsoft exclusives,” wrote Wedbush analyst Michael Pachter. However, he noted antitrust regulators may not allow Microsoft to keep games off Sony’s competing game console, the PlayStation.
One big unknown is will the purchase happen, as regulators and rivals could turn up the pressure to block the deal.
Other tech giants such as Google, Amazon, Apple and Meta — formerly Facebook — have all attracted increasing attention from antitrust regulators in the U.S. and Europe.
Microsoft is already facing delays in its planned $16 billion acquisition of Massachusetts speech recognition company Nuance because of an investigation by British antitrust regulators.
If the deal fails, Microsoft will owe Activision a “break-up fee” of up to $3 billion. That prospect should motivate Microsoft to make concessions to antitrust regulators to get it done, said John Freeman, vice president at CFRA Research.
Another potential complication is the controversy that has swirled arround Activision’s workplace culture.
The company disclosed last year it was being investigated by the Securities and Exchange Commission over complaints of workplace discrimination and in September settled claims brought by U.S. workforce discrimination regulators.
Microsoft CEO Satya Nadella noted in an investor call Tuesday that “the culture of our organization is my No. 1 priority.”
But a union representing technology and gaming workers said that concerns remain about working conditions and should be considered by regulators before any deal is approved.
“Activision Blizzard worker concerns must be addressed in any plan — acquisition or not — on the future direction of the company,” said Christopher Shelton, president of the Communications Workers of America.