Microsoft Boosts Video Game Business By Acquiring “Call Of Duty” Maker Activision Blizzard

Microsoft Now World’s Third-Largest Video Game Company

Reports indicate Microsoft (MSFT) will acquire Activision Blizzard (ATVI) for $68.7 billion. This marks the tech giant’s largest-ever acquisition following its 2016 purchase of LinkedIn. Microsoft says it’s now the world’s third-largest video game company by revenue, trailing only Japan’s Sony Group (SONY) and China’s Tencent (TCEHY).

The deal would add “Call of Duty,” “Candy Crush,” and “World of Warcraft” to Microsoft’s growing video game empire, which also includes its own games “Doom” and “Minecraft” as well as the Xbox console. Company executives say the acquisition will boost its “Game Pass” service, often referred to as “the Netflix (NFLX) of video games.” The video game sector has boomed throughout the pandemic, and with Activision Blizzard facing controversy recently, downward pressure on its stock price may have made an acquisition more appealing to Microsoft.

Activision Blizzard Stuck In Controversy, Dragging Down Share Prices

Following reports of workplace misconduct and a lawsuit in California, Activision Blizzard’s shares recently tumbled by almost 30%. Now, company executives and board members are facing increasing pressure that includes a petition calling on CEO Bobby Kotick to resign. Microsoft says Kotick will stay on as chief executive for the time being.

Analysts credit Microsoft for its ability to remain hands-off when acquiring new companies, leading to success. Specifically, outsiders tout the company’s ability to effectively provide funding and other support without altering daily operations. Looking ahead, the Activision Blizzard deal is key to the company’s video game aspirations that are likely to involve the metaverse.

Microsoft Has Big Appetite for Acquisitions, Metaverse a Target

Microsoft’s executive leadership continues to show a hunger for acquisitions, and a deeper look into the video game sector could further explain this latest deal. Many of tech’s major players are currently pursuing the metaverse, including Meta Platforms (FB), Alphabet (GOOGL), and Microsoft. The latter company has had success with its Hololens headset, but this product utilizes augmented reality technology (AR) that is typically used for business purposes and less relevant for video gaming.

Likewise, while virtual reality (VR) is considered most useful for metaverse gaming, Microsoft lacks a major product offering in this area: highlighting potential collaboration between the tech giant and Activision Blizzard to make this happen. Ultimately, analysts credit the current video game market and metaverse growth potential as making this deal attractive for acquisition-hungry Microsoft.

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ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

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