Feb 4, 2022 - Technology

Microsoft's Phil Spencer: Activision deal "well beyond anything I’ve ever done"

A collage of logos showing the franchises and studios Microsoft will acquire if it buys Activision Blizzard

Image: Microsoft

Microsoft gaming CEO Phil Spencer describes his company’s planned acquisition of Activision Blizzard as personally “daunting,” but downplays the influence it would give his team over the gaming industry.

Why it matters: The proposed $69 billion purchase would be the largest consolidation of gaming companies in history.

  • It would add the makers of Call of Duty, World of Warcraft and Candy Crush to a company that makes Halo, Flight Simulator, The Elder Scrolls, Doom and the Xbox itself.
  • If approved by stockholders and government regulators, it’ll be managed by Spencer, an executive with a good-guy rep who is facing tougher scrutiny given the implications of the acquisition.

Spencer tells Axios that he feels responsible to ensure that the thousands of employees who come on board will feel there is "a long-term place for them where they can do their best work in a supported way.”

  • Xbox has been a serial acquirer in recent years, but, given Activision's estimated 10,000 employees, has not tried a deal of this scale.
  • “That's something well beyond anything I've ever done. I don't know that I'm equipped to do it, and the responsibility for that definitely hits home.”

Though the purchase could make Microsoft the largest employer of game developers in the United States, Spencer pushes back at the idea that his gaming team could set new industry standards about pay-scale, unionization and more.

  • “I do not feel like we're in a position, assuming this deal gets closed, to start to uniquely, on our own, shape policies around video games.”
  • Spencer, like Microsoft CEO Satya Nadella, says Microsoft would become only the third biggest company in terms of gaming revenue, behind Sony and Tencent.
  • “I want to stand for things that make teams better and people feel safe. I think we've been public about those things, but I would push back that we're in some kind of hyper power position that is unfettered. I don't believe that.”

The intrigue: Activision brings distinct controversies. It’s huge and it’s also under investigations over alleged sexual harassment and workplace misconduct.

  • When asked if the deal potentially lets controversial Activision CEO Bobby Kotick off without proper accountability, he side-steps, “One hundred percent of our focus is on the teams,” he said, alluding to ongoing internal reforms. “We know there's work. We have our own work."
  • And how he feels about a deal that only seemed possible because allegations of misconduct sunk Activision's stock price? “There was no thermometer that said, ‘Oh, OK, now we can afford it, as a company.' That was never part of any conversation.”

Spencer maintains Microsoft's bid was greatly influenced by the completion of the company’s $7.5-billion-dollar ZeniMax/Bethesda gaming deal in early 2021. “The board of Microsoft, on the day that we got approval for ZeniMax, asked, 'What was next?'”

  • “And the constant conversation had always been about mobile and casual”
  • Activision Blizzard’s most popular division, King, is a mobile giant with 240 million monthly users.

The bottom line: Spencer is focused on raising player counts for Microsoft’s games these days, and says he will consider the Activision Blizzard deal a success if it succeeds there.

  • “The longest goal for us is: ‘Do creators on our platform feel like they have the best opportunity to reach the maximum number of players with the maximum creative diversity that they need?'” he said.

Go deeper: What makes Microsoft gaming chief Phil Spencer tick

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