Thoughts on Microsoft Announces Acquisition of Activision Blizzard

Today Microsoft announced their intention to acquire Activision Blizzard in a deal worth $68.7 Billion, all-cash deal. This is a huge acquisition for Microsoft for a couple of reasons.

First, because Activision Blizzard is the maker of some of the most notably franchises around, including Call of Duty, Warcraft, Starcraft, Diablo, Pitfall, and Guitar Hero, just to name a few. This is a huge get for Microsoft, and the Xbox in particular.

The second reason is that these franchises are already big on Microsoft's platforms, Adding the catalog of games to Microsoft means that even more games to Game Pass could easily entice even more subscribers to use the service.

Along with the announcement today, Microsoft also announced that they had 25 Million Game Pass, and as John Gruber pointed out, at an average of $12.50 per month, comes out to about $4 billion per year, and that is just the current subscribers.

Challenges

Even with the announcement there are some uphill challenges to overcome. These include regulatory pressure and Activision Blizzard culture issues.

Regulatory Issues

Today's political landscape could prove challenging for Microsoft to get approval for the acquisition. That is because governments are looking at every acquisition, particularly in the tech sector, and they could stop the acquisition. One thing that Microsoft does have in its favor is that if the acquisition were to go forward, they would still be smaller than Sony and Tencent. One thing that would be in favor for the acquisition is that it would keep the United States competitive with Japan and China.

The second, and bigger, challenge is the culture at Activision Blizzard. There have long been indications that Activision Blizzard has had a problem with sexual harassment and discrimination, to the point where the Security and Exchange Commission is investigating.

In order to help change the culture, Microsoft is making some changes to the leadership amongst the gaming unit. Here is a graphic that they produced showing the changes.

What you might notice is that among the leadership there are seven women and five men. This should help change the culture at the Activision Blizzard, at least that is the hope.

We will see if the acquisition is blocked or allowed to go through or whether it will be blocked. If it is approved, I hope Microsoft cane make some major changes to fix the issues at Activision Blizzard.

Source: Xbox News, Microsoft News