Microsoft’s New Empire After Buying Activision Blizzard

Deepak Gupta January 18, 2022
Updated 2022/01/18 at 10:36 PM

The technology world woke up today with news that promises to move the game market even more in the coming years. Microsoft announced the purchase of Activision Blizzard for nearly 70 billion dollars.

And this amount already has a proportion that draws attention when we look in dollars, but bringing it to our currency can be even more frightening. The US$68.7 billion invested is equivalent to R$386 billion.

There are several ramifications to be considered from this purchase. At a first point, she raises a basic question: what makes a company buy another giant company for so much money?

Microsoft is slowly building its empire and expanding strongly, especially in the gaming world. She currently owns Mojang, creator and Minecraft, the most viewed game in YouTube history. It also owns ZenixMedia, which encompasses Bethesda and other studios.

Now, it is one step away from consolidating the purchase of Activision Blizzard, owner of titles such as: Call of Duty, Candy Crush, Crash Bandicoot, Diablo, Guitar Hero, Hearthstone, Overwatch, Tony Hawk, Spyro, StarCraft, Warcraft and so on…

And yes, this acquisition has a direct impact on the lives of millions of people who play games daily, but there are still other impacts related to this, which is the largest software company in the world.


Microsoft’s future with gaming

The basic thing that we have to think about is its direct effect on the gaming world. Microsoft has been investing heavily in this area for years and the Game Pass is the main reflection of that.

For those who don’t know, Game Pass, is the Netflix of games, the user pays a monthly fee to have access to a library of games. The newest acquisition reinforces this new service.

And of course, there is a limited catalog, you can’t find all the games there and the titles go in and out of the availability list monthly. Despite this, Microsoft is one more step away from making its product even stronger.

Another potential of Game Pass is its combination with xCloud, which allows people to play in the cloud in high quality without demanding high processing power from a cell phone, for example.

But Microsoft isn’t the only one who knows its potential. Cloud games are bets from the most varied technology companies, including Nvidia. Anyway, we are talking here about the company that has shown greater efficiency in the execution of this type of streaming.

And why such a high investment in video game? For some people this is quite obvious, and others just don’t know that the revenue of the games industry is greater than that of film and music combined.

On the issue of purchases directly related to games… Yes, those who play will receive more games directly in Game Pass and that shouldn’t take long to happen.

The studio’s purchase reflects Microsoft’s commitment to services like Game Pass and xCloud.

However, another question that arises is whether Microsoft’s games will become Xbox exclusives, if Activision Blizzard’s games can only be played on the company’s consoles. And the answer is no. And yes.

In a note, Microsoft said it intends to keep some of the games being released for PlayStation, but some content will be Xbox exclusives from now on.

And so, Microsoft’s exclusivity policy is much less aggressive than Sony’s, for example, so it’s possible that this exclusivity is not so severe, but it’s all in the beginning, we’ll have to wait and see

But it is a fact that many games sell better on PlayStation, as was the case with Call of Duty Vanguard.


Microsoft verging on antitrust

Another important point to be discussed is the legality and approval of the purchase. It may simply not be approved by market regulators, which makes us think about the technology market as a whole.

Microsoft begins to extend itself in the world of games as Facebook extended in the market of social networks.

Leaving aside scandals involving data leaks, Facebook now owns Instagram and WhatsApp, two networks that could develop into strong competitors if not adopted before this happens.

And competition is a positive thing for the market and for the consumer for several reasons. Giving too much power to a single company is not beneficial, it can impose the most varied demands that would not happen if it had a competitor. And the more the company grows, the harder it is to be reached by another company, which would be illegal.

Not that Microsoft is about to be accused of illegal market practices after this purchase, but the proportion is such that it’s worth commenting here.

On the other hand, Meta, or Facebook until recently, may have to sell WhatsApp and Instagram precisely because of this practice. The world’s largest social media company is going to trial in the US over the antitrust charge.

This is Microsoft’s biggest acquisition since buying LinkedIn for $26.2 billion in 2016

And it really dominates this market, leaving out social networks that don’t exactly do the same. YouTube and TikTok, two other big names that could be mentioned, are much more like a video network than social contact. Maybe Twitter could fit in, but it still doesn’t have the same status relationship caused by Facebook and Instagram.

Even with the charges, Facebook could escape trial, as the law may prove more complex in practice than it is on paper.

And just to give you an idea, at the time, Facebook paid 1 billion dollars for Instagram in 2011 and 19 billion for WhatsApp in 2014.

Microsoft is paying almost 70 billion dollars, which shows the size of its planning involving games.

Other Microsoft purchases:

  • 10. Visio Corporation ($1.37 billion)
  • 9. Mojang ($2.5 billion)
  • 8. aQuantive (US$ 6.3 billion)
  • 7. Nokia Mobile ($7.2 billion)
  • 6. GitHub ($7.5 billion)
  • 5. ZeniMax Media ($8.1 billion)
  • 4. Skype Technologies ($8.5 billion)
  • 3. Nuance Communications ($19.7 billion)
  • 2. LinkedIn ($26.2 billion)
  • 1. Activision Blizzard ($68.7 billion)

And there will still be plenty of competitors. But, despite that, it starts to take on a proportion that can make it unanimous in the market and then you can’t fight it and it can start to have different practices without having anyone able to deny them.

If the purchase is not made official, if not authorized, the terms of the agreement state that Microsoft will have to pay 3 billion dollars to Blizzard.

The purchase still needs to be approved by regulators and shareholders.

But, at least in numbers and in the gaming world, as a game developer, Microsoft enters as the third largest in the world. It still lags behind Tencent and Sony in numbers.

But it was commented here, this in games. Microsoft is a giant company that has investments in multiple areas. It is one of the companies that is betting the most on metaverse ideas, for example.

In fact, this is one of the Bill Gates Bets for Microsoft, for the future of the company.

And even the purchase of Activision can be seen as a long-term bet. The company’s most recent profit figures are for the last quarter of 2021, closed in September, and point to a profit of US$636 million.

Anyway, let me know what you think about all of this below. This was a brief piece of news with punctual information to try to bring out what is most important about this subject. We’ll keep an eye out for the next chapters in this series from the tech giants.

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