What you need to know
- Microsoft is trying to buy Activision (Call of Duty, Candy Crush, World of Warcraft) for $69 billion dollars.
- The UK regulator blocked the deal this past week, leading to an appeals process. The US and EU are yet to issue final decisions.
- In a new report, Microsoft Gaming CEO Phil Spencer called an all hands meeting today, where he reassured staff that Xbox’s vision will proceed with or without Activision.
A new report from Bloomberg details how Microsoft is describing the deal internally to staff after UK regulators potentially handed it a hammer blow this past week.
Microsoft is trying to acquire Activision-Blizzard for $69 billion dollars. The massive acquisition would hand Xbox control of Call of Duty, World of Warcraft, and Candy Crush saga, giving it a boosted foothold in mobile gaming and growing its nascent Xbox Game Pass service. UK regulators previously cooled on their criticisms that the deal could harm PlayStation, the market leader, and instead the CMA opted to block the deal on the grounds of “possible” harm to the fairly theoretical cloud gaming market. Cloud gaming represents around 1-2% of the overall gaming industry right now, and Microsoft has worked hard to offer competing cloud firms access to all Activision games should the deal close — something they don’t have access to today.
Bad news for Xbox often comes with a wave of doom and gloom punditry. Xbox is in third place in the so-called console war, selling fewer console units than PlayStation and Nintendo globally. However, Xbox has among the highest volumes of monthly active users, chasing a service-type engagement model popularized by Activision and Tencent. To that end, Xbox chief Phil Spencer has reportedly sought to calm nerves within Xbox that the death of the ABK deal could harm Xbox overall.
Bloomberg’s source claims that Spencer called an all-hands meeting today, describing how President Brad Smith was working on a response to the regulatory ruling into the early hours of the night, noting that other executive leaders like CFO Amy Hood are also working on getting the deal closed. Spencer reportedly said that while Activision “accelerates” the Xbox vision, it isn’t the entirety of the Xbox vision. Spencer reportedly emphasized that Xbox’s strategy will move ahead even if things do go south with the Activision acquisition. Microsoft reportedly declined to comment on the meeting.
Microsoft seeks to grow Xbox Game Pass on core platforms, while also growing its monthly active user base by having popular products on every device. Few publishers on earth boast the figures that Activision does, although, in its recent earnings call, Activision noted that monthly active users had dipped below 100 million.
Windows Central’s take
I know from my own conversations with Microsoft sources that the firm was wholly taken by surprise by the CMA ruling, who had reportedly shown a lot of positivity towards Microsoft’s proposed remedies behind closed doors. Competing cloud providers like NVIDIA came out in support of the deal today, since they stand to lose access to popular franchises like Call of Duty as a result of this block. Ultimately, the block only helps PlayStation, the market leader, but both the FTC and CMA had to omit that fact from their arguments in order for them to even come close to making sense.
Either way, the CMA itself has recommended that Microsoft seek to acquire smaller firms to accelerate its vision for Xbox on phones, TVs via cloud, and other platforms. If the Activision deal does fall through, I suspect it won’t be the last time we see Microsoft seek acquisitions.
