Mega takeover in the games industry: Popular games like “Call of Duty” and “Candy Crush” are to come from Microsoft in the future. The software giant behind the Xbox games console is buying the games provider Activision Blizzard for almost 70 billion dollars.
Microsoft is willing to pay a hefty premium for Activision Blizzard’s $95 per share bid, up a good 45 percent from the previous Friday’s closing price of $65.39. The game company is thus valued at a total of 68.7 billion dollars (60.4 billion euros), as Microsoft announced on Tuesday.
The controversial Activision Blizzard boss, Bobby Kotick, will remain at the helm of the game company, the official statement said. However, the Wall Street Journal reported a few hours later, citing informed people, that he should leave when the takeover is complete.
Kotick had come under criticism in recent months following allegations of sexual harassment and discrimination at the company. Among other things, he was accused of not taking decisive action against misconduct by managers.
Activision Blizzard was sued by the US state of California in the summer. The group has promoted a sexist corporate culture in which women are systematically disadvantaged, criticized the authority responsible for maintaining fair working conditions in the state, DFEH. The company initially dismissed the allegations, but then hired a law firm to investigate the allegations.
The industry has also repeatedly raised the question of whether a fresh start at Activision Blizzard with Kotick at the helm is even possible. However, with the support of his board of directors, he remained firmly in the executive chair. After completion of the takeover, Activision Blizzard will now report to Microsoft’s games boss Phil Spencer, who would be Kotick’s boss.
Microsoft expects to close the deal by the end of its next fiscal year, which runs through mid-2023. Among other things, the approval of the competition authorities must be obtained beforehand. The stock temporarily rose to a good $82 in US trading on Tuesday, still well below the $95 offered – which shows a certain skepticism among investors.
Microsoft, which already has game studios with well-known titles such as “Doom” and “Minecraft” under its roof, would significantly strengthen its market position with Activision Blizzard. The company’s games attract nearly 400 million players every month. Around 245 million of these are attributable to the “Candy Crush” provider King, which was acquired a few years ago.
The gaming industry is currently undergoing a major transformation. For one, more business is shifting from consoles and PCs to smartphones. There, the games can usually be played for free – but many users spend money on additional content or help. Given the size of the smartphone market, these small amounts add up to significant sums.
On the other hand, Microsoft is one of the platform providers trying to establish game streaming in the market. The games do not actually run on the users’ devices, but on servers in the network. The model offers the prospect of ongoing subscription revenue rather than a one-off sale of a console. However, fast and responsive Internet connections are a prerequisite for the model, which is still a niche offering.
Microsoft’s business with the Xbox console – like its competitor Sony with its Playstation – has recently been held back by global bottlenecks in chips and other components. The latest generation Xbox and Playstation devices are still hard to come by more than a year after their launch.
Like other industry players, Activision Blizzard temporarily benefited from the corona pandemic, in which people are spending more time with video games and smartphone games. Most recently, the company posted a slight increase in sales to a good two billion dollars in the quarter ended September. Profit increased year-on-year by around six percent to $639 million.
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