Recently, news broke that Microsoft is in talks to acquire Activision Blizzard, the gaming giant responsible for popular franchises such as Call of Duty, World of Warcraft, and Candy Crush. The acquisition, if successful, would represent Microsoft’s largest-ever purchase, with a reported price tag of $68.7 billion. While the deal is still subject to regulatory approval, it raises the question: why would Microsoft want to buy Activision Blizzard?
One of the most obvious reasons is the gaming industry’s rapid growth and the increasing demand for video games. According to a report by Newzoo, the global video game market is expected to reach $189.3 billion in 2023, a significant increase from $159.3 billion in 2020. With such potential growth, Microsoft, which already owns the Xbox console and a variety of game studios, is looking to expand its gaming portfolio.
In recent years, Microsoft has shown a commitment to expanding its gaming presence beyond consoles and into the PC and mobile space. The acquisition of Activision Blizzard would further this goal, giving Microsoft access to popular mobile games like Candy Crush, which boasts millions of daily active users. In addition, Activision Blizzard’s World of Warcraft is a hugely popular massively multiplayer online game (MMO) that could bolster Microsoft’s MMO offerings, which currently consist of games like Minecraft and the upcoming Fable.
Another benefit of the acquisition would be access to Activision Blizzard’s extensive library of game franchises, which could help Microsoft compete with other gaming giants like Sony and Nintendo. Call of Duty, for example, is one of the best-selling video game franchises of all time, and owning it would give Microsoft a competitive edge. Similarly, Blizzard’s Overwatch and Diablo franchises have loyal fanbases that could attract even more gamers to Microsoft’s platforms.
The acquisition could also provide Microsoft with a wealth of expertise in the gaming industry. Activision Blizzard has a vast network of talented developers and designers, who could bring their experience and knowledge to Microsoft’s gaming projects. This talent pool could be especially valuable in developing new game franchises or improving existing ones.
Finally, the acquisition could help Microsoft gain a stronger foothold in the esports industry. Activision Blizzard has made significant investments in esports, hosting major tournaments and leagues for games like Call of Duty and Overwatch. Owning the company could give Microsoft greater control over the esports landscape and provide opportunities for new revenue streams. However, that was put on hold due to the Competition and Markets Authority (CMA) blocking the bid due to concerns the acquisition will stifle competition in the cloud-gaming market.
Of course, there are also potential risks and challenges that come with such a large acquisition. For example, integrating such a massive company into Microsoft’s existing operations could prove difficult, and regulatory scrutiny could slow down the deal’s progress. Additionally, there is always a risk that some of Activision Blizzard’s popular franchises could decline in popularity, making the purchase less valuable in the long term.
The potential acquisition of Activision Blizzard could provide Microsoft with a significant advantage in the highly competitive gaming industry. By gaining access to popular franchises, mobile games, and a talented team of developers, Microsoft could strengthen its position and potentially tap into new revenue streams. However, the success of the deal will depend on Microsoft’s ability to effectively integrate the company and make the most of its new assets.