Microsoft has completed its $69 billion (£56 billion) acquisition of Call of Duty creator Activision Blizzard in the gaming industry’s largest-ever transaction.
It comes as Microsoft, which owns the Xbox game system, received approval from UK regulators for the global acquisition. Microsoft Seals Historic $69 Billion Deal for Activision Blizzard in the gaming industry’s largest-ever transaction.
After blocking the original deal, the Competition and Markets Authority stated that its concerns had been addressed.
Activision’s acquisition was described as “incredible” by Microsoft’s Phil Spencer.
Following the deal’s announcement, Activision Blizzard CEO Bobby Kotick indicated in a message to employees that he would step away at the end of 2023.
“I have long said that I am fully committed to helping with the transition,” he told reporters. “[Phil Spencer and I] both look forward to working together on a smooth integration for our teams and players.”
Despite concerns from rivals such as Sony and authorities about competition in the gaming sector, Mr Spencer, CEO of Microsoft Gaming, sought to reassure gamers.
“Whether you play on Xbox, PlayStation, Nintendo, PC or mobile, you are welcome here – and will remain welcome, even if Xbox isn’t where you play your favourite franchise,” Mr Spencer said following the takeover.
Under the revised agreement, Microsoft has given French video game developer Ubisoft the rights to distribute Activision’s titles on consoles and PCs via the cloud.
While a concession has been made, Microsoft will now control games such as Call of Duty, World of Warcraft, and Candy Crush, which will generate massive earnings for the company.
According to the CMA, the updated agreement will “preserve competitive prices” in the gambling business while also providing greater choice and better services.
Despite accepting the merger, the watchdog blasted Microsoft’s behaviour during the nearly two-year struggle.
“Businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA,” said chief executive Sarah Cardell. “Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money.” After the competition watchdog blocked the takeover earlier this year, fMicrosoft’s president Brad Smith hit out at the CMA’s decision, which it said was “bad for Britain” and contradicted “the ambitions of the UK to become an attractive country to build technology businesses”.
It has proved controversial and received a mixed response from regulators around the world, but has already been passed by regulators in the European Union. The US competition watchdog recently saw its attempt to pause the purchase rejected by the courts. But the CMA’s Ms Cardell said with the sale of Activision’s cloud streaming rights to Ubisoft, which makes Assassin’s Creed, “we’ve made sure Microsoft can’t have a stranglehold over this important and rapidly developing market”. “We were clear that that deal couldn’t go ahead, because it would have harmed competition, and that would have been bad for UK gamers,” she added. “We take our decisions free from political influence and we won’t be swayed by corporate lobbying.”
‘Final hurdle crossed’
Microsoft, according to Mr Smith, is “grateful for the CMA’s thorough review and decision.”
Microsoft is paying cash for Activision at a premium price of $95 per share, which means Mr Kotick, Activision’s outgoing CEO, would get $400 million, with chairman Brian Kelly collecting $100 million, depending on the shares they own.
Microsoft has agreed to transfer the rights to broadcast Activision games from the cloud to Ubisoft for 15 years outside the European Economic Area (EEA) under the restructured arrangement. This comprises all EU member states as well as Iceland, Liechtenstein, and Norway.
After the 15-year period expires, Ubisoft will no longer own the cloud gaming rights to Activision’s material, but it is understood that the regulator hopes the time period will see rivals establish themselves, making the cloud gaming industry more competitive.
Microsoft is hoping that the acquisition would increase demand for its Xbox system and allow the company to add more titles to its Xbox Game Pass service, which allows customers to pay a subscription fee to access a portfolio of games from the cloud – either by downloading or streaming.
The agreement with Activision also implies that Microsoft will own its own mobile game company, with hopes of building on the popularity of hits like Candy Crush.
The acquisition solidifies Microsoft’s position as a video gaming behemoth, pushing it past Nintendo to become the industry’s third-largest participant, trailing only Sony, the owner of the PlayStation platform, and market leader Tencent.
Sony was vehemently opposed to the agreement, fearing that major Activision products like Call of Duty might become Xbox exclusives in the future.
The PlayStation presently outsells Microsoft’s Xbox, but as with any entertainment platform, access to the finest content is critical, while Sony is not opposed to buying up popular studios.
The decision to accept the merger, according to Nicky Stewart, a consultant and former commercial director of cloud services provider UK Cloud, is “great news for gamers.”
“[It will lead to] more choice, more innovation, better value, and improved gaming experiences, as well as a healthy, competitive market,” said Ms Stewart, a former Cabinet Office government department head of ICT.
“The CMA has forced Microsoft to make concessions in the UK that other regulators have not. This is good news for the UK’s nascent gaming industry.”
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