Microsoft Officially Joined the Metaverse Club After Spending $68.7 Billion to Buy Activision Blizzard

【TL; DR】

1. On January 18, Microsoft announced that it had bought the game giant Activision Blizzard in full cash at $95 a share, with a total amount of $68.7 billion, which is equivalent to Microsoft's annual net profit in 2021.
2. The generous acquisition of Microsoft is regarded by some players as a turning point in the development of Activision Blizzard.
3. As the largest and fastest-growing form of entertainment in the world, games are the breakthrough to reach the metaverse.
4.After the completion of this acquisition, many game masterpieces owned by Activision Blizzard will continue to supplement Microsoft's game IP ecology.
5. Activision Blizzard's huge number of users and rich experience in game design can also become a catalyst when Microsoft builds the metaverse in the future.

On January 18, Microsoft announced that it had bought the game giant Activision Blizzard in full cash at $95 a share, with a total amount of $68.7 billion, which is equivalent to Microsoft's annual net profit in 2021. This acquisition is the largest acquisition since the establishment of Microsoft and the largest transaction in the history of the whole game industry.

Activision Blizzard and King digital entertainment, one of its subsidiaries, are the developers of a series of classic games such as Overwatch, Diablo, Call of Duty, World of Warcraft and StarCraft. At present, there are nearly 400 million active players in 190 countries and regions. These games will also join Xbox Game Pass, one game library of Microsoft. This acquisition has also dropped a heavy bomb on the whole game industry. If successfully approved by the regulatory authorities, the acquisition will be completed in 2023. At that time, Microsoft will become the third-highest revenue game company in the world, surpassing Nintendo and second only to Tencent and Sony.


Referring to the acquisition, Microsoft said: "This acquisition will accelerate the growth of Microsoft's game business on mobile terminals, personal computers, game consoles and cloud, and provide the cornerstone of building the metaverse." Satya Nadella, the chairman and CEO of Microsoft, also said in the press release, "games are the most dynamic and exciting category of entertainment on all platforms today, and will also play a key role in the development of the metaverse platform."

The Halo around Former Giants is Generally Dim

Activision was founded in 1979, while Blizzard Entertainment was founded in 1991. In 2007, Activision merged with Vivendi SA (Blizzard's parent company) to establish Activision Blizzard. Under Activision Blizzard, Activision is mainly responsible for developing stand-alone games and console games, Blizzard mainly takes charge of designing large-scale PC online games, and King Studio specializes in mobile games. In the first 10 years of the 21st century, Blizzard is the "uncrowned king" of the whole game industry. However, in the past two years, the game company loved by many players has gradually lost its innovation ability due to the loss of personnel and gradually lagged behind in the competition.

In July 2021, Activision Blizzard was accused by the California Department of Fair Employment & Housing (DFEH) of serious gender discrimination within the company. Since then, Activision Blizzard has been in turmoil and laid off a large number of employees, and many senior managers and game engineers have left one after another. Since July, the company's share price has fallen by more than 27%.


In response to netizens' doubts about the acquisition, Bobby Kotick, the controversial (former) Activision Blizzard CEO, replied that Activision Blizzard is only a "small company" and has been unable to attract top talents. Before reaching an acquisition with Microsoft, the company also considered merging with EA. Therefore, the generous acquisition of Microsoft is also regarded by some players as a turning point in the development of Activision Blizzard.

Spending Money Extravagantly for the Layout of the Metaverse

Since the new CEO Satya Nadella took office in 2014, Microsoft has established the core strategy of "mobile terminal and cloud come first". At present, Microsoft has formed three business directions: productivity and business process, intelligent cloud and personal computing. The acquisition of Activision Blizzard will be included in Microsoft's personal computing business segment.

Microsoft's purchase price of $95 per share in its statement on January 18 was actually 45% higher than Blizzard's closing price on January 14. But even so, this acquisition is not necessarily a "loss business" for Microsoft. Since Roblox went public last March and Facebook changed its name to Meta in October, the metaverse, which combines games and social networking, has gradually been considered the next breakthrough by major technology and Internet companies, including Microsoft, and games are the shortcut to promote the implementation of the metaverse.

In 2001, Bill Gates officially stepped down as CEO of Microsoft and Steve Ballmer took office. Microsoft also released Xbox in the same year and officially set foot in the game industry. In recent years, Microsoft has significantly accelerated its layout in the game industry and successively acquired many medium-sized game studios. In 2014, Microsoft acquired Mojang, the publisher of the classic game My World, for $2.5 billion. On September 21, 2020, Microsoft again spent $7.5 billion to acquire Bethesda Software, the developer of games such as Radiation and The Elder Scrolls. After the news of the acquisition, the share price of Sony, another game giant, fell 10%, the largest decline since March 2020.

Previously, Phil Spencer, head of Microsoft's Xbox department, mentioned the company's vision for metaverse: "in our vision, the foundation of the metaverse is to make the player community of global classic games converge." For many players in the metaverse, content creation is a core competitive point. Metaverse will not be produced in a single and replied09 virtual world, but will be born in the aggregation of many IPs. At present, Microsoft's game department owns several classic games such as My World, HALO and Doom. After this acquisition, many game masterpieces owned by Activision Blizzard will continue to supplement Microsoft's game IP ecology. in addition, Activision Blizzard's huge number of users and rich experience in game design can also become a catalyst when Microsoft builds a metaverse in the future.

Conclusion

There are still many disputes about what the metaverse is and how to realize it best, but there may be a consensus that the metaverse is likely to become the "next-generation Internet" and completely change the way people socialize, work and entertainment. As the largest and fastest-growing form of entertainment in the world, games are the breakthrough to reach the metaverse.

Last year, Microsoft launched Mesh for Team, combined with VR and XR technologies to improve remote cooperation and mixed office experience, which also means the opening of Microsoft's "office metaverse" plan. The acquisition of Activision Blizzard means that Microsoft will try again in the game field and gradually build a new metaverse game system. With the entry of many technology giants such as Meta, Tencent and Microsoft, who will win the crown of metaverse? Maybe only time can tell us the answer.



Author: Gate.io Observer: Edward.H
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