Microsoft has announced the acquisition of Activision Blizzard in an all-cash transaction valued at $68.7 billion, which includes Activision Blizzard’s net cash.
It is the software company’s major push to grab more share of the burgeoning game industry. The transaction is at $95.00 per share and will include Activision’s franchises such as Warcraft, Diablo, Overwatch, Call of Duty and Candy Crush.
The game industry is one of the fastest growing sectors in the world and offers Microsoft the opportunity develop its metaverse platforms.
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“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. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”
Under the deal, Bobby Kotick will continue to serve as CEO of Activision Blizzard, working with his team to sustain the company’s values and accelerate business growth. The Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming, at the closing of the deal in 2023.
Activision Blizzard has studios around the world, and in addition to metaverse, the acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud.
“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” said Phil Spencer, CEO, Microsoft Gaming. “Together we will build a future where people can play the games they want, virtually anywhere they want.”
Gaming has recorded rapid year-on-year growth to become a $200+ billion industry, attracting the flotsam and jetsam in the tech industry as the number of game players jump globally 3 billion. In 2021 alone, the total number of video game releases was up 64% compared to 2020. The U.S leads the pack with 51% of players reported spending more than 7 hours per week playing across console, PC and mobile. The number of gamers is expected to grow to 4.5 billion by 2030 despite China’s recent tight regulatory policies that has limited the game industry’s growth in the country.
With more than 100 million gamers, including over 25 million Xbox Game Pass members, playing Xbox games across console, PC, mobile phones and tablets each month, Microsoft is focusing on them, especially mobile phone to accelerate its game ambition.
“Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like “Halo” and “Warcraft,” virtually anywhere they want. And with games like “Candy Crush,” Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment,” Microsoft said.
Another area Microsoft is looking to use this acquisition to bolster is its Game Pass portfolio, counting on Activision Blizzard’s three-billion dollar franchises and nearly 400 million monthly active players in 190 countries.
The deal, which has been approved by the boards of directors of both Microsoft and Activision Blizzard, will give Microsoft 30 internal game development studios, along with additional publishing and esports production capabilities. The transaction is subject to regulatory review and Activision Blizzard’s shareholder approval, and will be accretive to non-GAAP earnings per share upon close.
“For more than 30 years our incredibly talented teams have created some of the most successful games,” said Bobby Kotick, CEO, Activision Blizzard. “The combination of Activision Blizzard’s world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry.”