On Tuesday tech giant Microsoft announcesMicrosoft is considering purchasing gaming company Activision Blizzard, which would cost nearly $69 Billion. Microsoft will acquire internationally recognized franchises, such as Call of Duty, World of WarcraftAnd Candy CrushTo name just a few. It also creates a new division in the company, Microsoft Gaming, to be led by the company’s head of its Xbox division, Phil Spencer.
For Activision Blizzard, this couldn’t have come at a better time. Since 1991, the CEO Bobby Kotick has overseen the operation. There have been numerous claims of harassment and discrimination and an unhealthy workplace culture. Incidents ranging from drinking on the job to multiple instances of sexual assault are said to have occurred under Kotick’s watch. Kotick was said to have been aware of at most some of these claims and was subpoenaed September 2021, by the Securities and Exchanges Commission.
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“Until this transaction closes, Activision Blizzard and Microsoft Gaming will continue to operate independently,” said Phil Spencer in a post explaining the future change in leadership. “Once the deal is complete, the Activision Blizzard business will report to me as CEO, Microsoft Gaming.” In the post, Spencer included an image of an organizational chart of the new Microsoft Gaming division, with Kotick nowhere to be found. Spencer also said the behavior described in the Activision Blizzard accusations have “no place” in the gaming industry in an email to his staff. Activision Blizzard has been a huge success despite negative publicity. In 2020 they earned $8.1 Billion in revenue, thanks to the franchises such as Duty CallAnd World of Warcraft.
Microsoft also receives an additional $1,500 as a result of the purchase. 400 million active monthly playersGame Pass’s subscription service was able to gain a significant boost. The Netflix-but-for-games service grew dramatically since its launch in 2017, and added over a dozen games to its lineup after its acquisition of the gaming giant Bethesda in 2021. This buy saw the service grow from 18 million in 2021 to 25 million users by January 2022.
Bethesda’s hit game Skyrim: The Elder Scrolls VActivision Blizzard’s games have an extremely broad appeal and are one of the top-selling games. Both Vanguard’s Call to DutyAnd Black Ops Cold War – Call of DutyThese were the top-selling online games in 2021, as well as the largest player base for the role-playing game. World of WarcraftThe year saw continued growth.
Microsoft buying a studio that makes games for multiple platforms could mean trouble for gamers uninterested in Microsoft’s Xbox platform. Skyrim’s success was due to its multiple release on different platforms, including the PC, Xbox 360 and PlayStation 3. Skyrim, a 10-year old title, has been made available to all major platforms, even the Nintendo Switch. A Microsoft acquisition could mean that a sequel will only be available for Xbox gamers, their mobile devices or Windows PC gamers. This would leave out those who use the Nintendo and Sony consoles.
“Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support those communities moving forward,” said Spencer in his announcement post. For Microsoft, playing nice with its competition is the fiscally responsible move, and selling games individually on platforms that won’t allow its streaming service (like Apple’s iOS or Sony’s PlayStation) is one way to extract a bit of value from the competition. Sony and other competitors have been reluctant to compromise. Developers have been chargedLike Fortnite’s Epic Games to connect players on its PlayStation consoles to those on other platforms in multiplayer games.
What’s concerning is what developers might have to do to make their independent titles more appealing to the companies that are increasingly fewer and farther between. “If we have to adjust what we’re doing to meet those platforms in order to survive, I feel like at that point, we’re all better off just getting jobs at those companies,” says Brandon Sheffield, director of independent studio Necrosoft. For Sheffield, who co-founded the company ten years ago, major success hasn’t exactly kept them afloat: deals with a variety of platforms have. Necrosoft’s journey was mostly funded by investments from companies looking to boost the number of titles in their catalog on new platforms. “Our last chunk of money that we got was from Google Stadia because they needed stuff there,” says Sheffield.
Itch.io, an indie friendly game marketplace, makes it possible to support small studios or solo developers. However, this requires that consumers actually purchase individual titles rather than just the Microsoft streaming all-you-can-eat buffet. Independent developers are left struggling with how to succeed as the market changes and corporations invest more in games that generate income or sustain a vibrant online community. Microsoft is focusing on in-house gaming and avoiding funding projects outside of its existing games.
“I just worry we’re trending in a direction that is less friendly toward innovation,” says Sheffield, concerned about an acquisition like this sucking all the oxygen out the room for smaller developers that don’t have the backing of larger studios or publishers who are no longer interested in promoting indie titles. “I don’t want us all working for the same three companies and making the same kinds of games, or different shades or flavors of the same games.”
