Microsoft will drop Activision in a $ 69 billion metaverse bet by Reuters

By Subrat Patnaik

(Reuters) – Microsoft Corp. “Call of Duty” Activision Blizzard (NASDAQ 🙂 is buying $ 68.7 billion in the largest gaming industry deal in history as global technology giants make claims for a virtual future.

The full-cash deal announced by Microsoft (NASDAQ 🙂 on Tuesday, the biggest purchase ever, will bolster its strength in the growing video game market, where it takes on Tencent and its leaders. Sony (NYSE :).

The American multinational also expresses its commitment to the “metaverse” in the virtual world of online work, play, and socializing people, as many of its biggest competitors are already doing.

“Gaming is the most dynamic and exciting category of entertainment on all of today’s platforms, and it will play a key role in the development of metabersion platforms,” said Satya Nadella, CEO of Microsoft.

Microsoft’s $ 95-per-share bid represents a 45% discount on Friday’s closing of Activision. Shares of Activision were trading at $ 83.35 at the start of trading.

The deal has come at a time of weakness for Activision, the creator of games like “Overwatch” and “Candy Crush.” Its shares have fallen by more than 37% since reaching a record last year as a result of sexual harassment of employees and allegations of misconduct by several senior executives.

The company continues to deal with these allegations and said on Monday that it had laid off or fired more than three dozen workers and disciplined another 40 since July.

CEO Bobby Kotick said Microsoft had contacted him to make a possible purchase following an agreement that he would remain CEO of Activision.

In a talk with analysts, Microsoft chief Nadella did not directly mention the scandal, but spoke about the importance of culture in the company.

“It’s important for Activision Blizzard to move forward with its renewed cultural commitments,” he said, adding that “the success of this acquisition will depend on it.”

‘METAVERSE ARMS RACE’

The global gaming market was $ 173.7 billion in 2021, and is expected to reach $ 314.4 billion by 2027, according to research firm Mordor Intelligence.

Microsoft can already claim a major beach in the gaming world as one of the top three console manufacturers. Minecraft producer Mojang Studios and Zenimax have made significant investments in recent years in multi-billion dollar deals.

It has also launched a popular cloud gaming service with over 25 million subscribers.

Executives spoke to Activision’s 400 million monthly active users as the main attraction of the deal, and how important these communities can play in Microsoft’s various metaverse plays.

Activision’s gaming library could give Microsoft’s Xbox gaming platform an edge over Sony’s Playstation, which has had a more sustained stream of exclusive games over the years.

“People like Netflix (NASDAQ 🙂 have already said they’d like to get into gaming, but Microsoft has been shocked by its relatively generous offer today, which would make Microsoft the third largest gaming company in the world,” Sophie said. Lund-Yates, stock analyst Hargreaves Lansdown (LON :).

From Microsoft to Nvidia (NASDAQ 🙂 technology companies have made big bets on the so-called metaverse, which intensified late last year when Facebook (NASDAQ 🙂 named itself Meta Platforms to reflect its focus on its virtual reality business. .

“This is a significant deal for business consumers, and more importantly, Microsoft’s acquisition of Activision is really starting the metabersal arms race,” said David Wagner, Equity Analyst and Portfolio Manager at Aptus Capital Advisors.

“We believe that an agreement will be reached,” he said, but warned that “this will take a lot of shape from a regulatory point of view.”

Capitol Hill lawmakers, who are looking at a long list of anti-competitive bills aimed at reducing Big Tech companies like Google (NASDAQ 🙂 and Facebook, will be skeptical of the deal, said Doyle, Barlow & Mazard of PLLC’s law firm Andre Barlow. ek. .

“Microsoft is already big in gaming,” he said.