Microsoft, which has been on a buying spree in the game development space for the past few years, is making its biggest purchase to date, announcing plans on Tuesday to purchase Activision Blizzard in a $68.7 billion all-cash deal.
The takeover, if completed, will put the maker of Xbox in charge of several billion-dollar game franchises, including Call of Duty, World of Warcraft, Overwatch, Candy Crush, and Diablo. All of those are likely to eventually become Xbox console exclusives, giving the company a notable competitive advantage over Sony’s PlayStation.
“Over many decades, the studios and teams that make up Activision Blizzard have earned vast wellsprings of joy and respect from billions of people all over the world,” said Phil Spencer, CEO of Microsoft gaming, in a statement. “We are incredibly excited to have the chance to work with the amazing, talented, dedicated people across Activision.”
In premarket trading, Activision Blizzard shares were up more than 35%. Meanwhile, Microsoft shares were off 1.4%, in line with the tech-heavy Nasdaq.
Activision and Microsoft will operate as separate entities until the merger is completed. And given the size of both companies, that could be a hurdle with regulators. Once the deal is closed, said Spencer, “we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog.”
Game Pass is Microsoft’s Netflix-like all-you-can-play subscription service, which customers pay $15 per month for.
The announcement comes as Activision has been in the midst of a crisis, with disturbing harassment allegations that have led to an employee walkout and a lawsuit by California’s Department of Fair Employment and Housing. Activision CEO Bobby Kotick was allegedly aware of the issue for years, but the Wall Street Journal reported in November he had withheld it from the board of directors.
At the time, Microsoft said it was “reevaluating” its relationship with Activision.
Spencer didn’t address this directly in announcing the merger but did pledge a more employee-friendly work environment.
“As a company, Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players,” he said. “We deeply value individual studio cultures. We also believe that creative success and autonomy go hand in hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”
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