January 18, 2022
Megan and Stephen here with a huge day for news. Let's get into a packed bulletin about Microsoft and Activision Blizzard.
Today’s edition is 1,032 words, 4 minutes.
1 big thing: Microsoft is buying Activision Blizzard
Microsoft will acquire beleaguered Activision Blizzard — whose franchises include World of Warcraft, Call of Duty and Overwatch — for $68.7 billion in cash, a massive proposed deal announced today and the company's biggest acquisition yet.
Driving the news: The deal would push Microsoft into the third-largest gaming company by revenue, with Tencent and Sony leading.
- As for Activision Blizzard's games, which are not Xbox-exclusive, Microsoft says it plans to "continue supporting those communities moving forward," a spokesperson told Axios.
- "The acquisition is about increasing the availability of Activision Blizzard content across more platforms, including mobile. This is consistent with Microsoft’s commitment to giving players more choice to play the games they want, anywhere."
The acquisition would also give Microsoft access to every team across Activision Blizzard, a huge number of companies that includes:
- Infinity Ward
- Raven Software
- Sledgehammer Games
- Toys for Bob
Why it matters: It's a deal that could have a far-reaching impact that spans everything from Microsoft's ability to tap into a huge number of properties, to worker rights and potential regulatory scrutiny.
- Activision Blizzard continues to navigate its internal troubles in the wake of a massive harassment and abuse scandal, as well as high-profile lawsuits from California's DFEH and the federal EEOC.
- The deal comes just days after another major acquisition in games, Take-Two's purchase of Zynga for $12.7 billion.
What's next: Phil Spencer, whose new title is CEO of Microsoft Gaming, said his company and Activision Blizzard will "continue to operate independently" until the deal closes.
- Once finished, Activision Blizzard will report to Spencer.
2. Kotick's future in question
Activision Blizzard CEO Bobby Kotick will remain at the company in his current position "as he has for the last 30 years," a company spokesperson confirmed to Axios.
- That's at least through the transition, which is expected to be finalized by mid-2023.
- Kotick is expected to leave the company after the deal closes, reports Axios' Ina Fried.
Why it matters: Kotick's leadership has been under fire since last year's revelations of harassment and abuse at Activision Blizzard, with industry figures like Spencer calling the allegations deeply troubling.
- Figures across the industry have called for Kotick's resignation, including staff within the company and shareholders.
- "Together, Bobby and Phil will work together to ensure the transition to this exciting new combined enterprise," a spokesperson told Axios.
- During a recent interview with the New York Times, Spencer said that he's uninterested in "finger-wagging" at other companies, while also deflecting questions on what kind of work Microsoft was doing to help Activision Blizzard improve.
Yes, but: ABK Workers Alliance, a collective inside the company attempting to unionize, tweeted that while the news was surprising, it doesn't change their goals.
- "We remain committed to fighting for workplace improvements and the rights of our employees regardless of who is financially in control of the company," they tweeted.
- "We will continue to work alongside our allies across the gaming industry to push for measurable change in an industry that desperately needs it."
- Employees are in their fifth week of striking on behalf of quality assurance workers at Raven who lost their jobs.
3. Cleaning house
Activision Blizzard has reportedly disciplined roughly 40 employees and another 37 have exited the company in connection with the company’s misconduct scandals.
Driving the news: According to WSJ, Kotick held a planned summary of those findings back out of concern it could “make the company’s workplace problems seem bigger than is already known.”
- Activision Blizzard did not respond to a comment request from Axios.
The big picture: Activision Blizzard has undergone a series of high-profile departures in the wake of investigations, including Diablo 4 director Luis Barriga and Jesse McCree, the former namesake for the Overwatch cowboy (now known as Cole Cassidy).
- Other major departures include Blizzard’s SVP of global human resources Jesse Meschuk and Treyarch co-head Dan Bunting.
Between the lines: Many of these employees have been allowed to quietly leave the company — effectively protecting their reputations and allowing them to remain in the games space.
4. Need to know
🎮 Xbox Game Pass now has more than 25 million subscribers.
❤️ Awesome Games Done Quick raised a record-breaking $3,416,729 for charity during its most recent marathon.
📰 Seungwon Lee is taking over as CEO of mobile games developer and publisher Kabam Games.
🔪 Murder mystery game Danganronpa: Trigger Happy Havoc Anniversary Edition had a surprise launch on Xbox and Game Pass.
5. Worthy of your attention
- Microsoft Is Now Accountable for Activision Blizzard’s Mess (Emanuel Maiberg, Matthew Gault, Waypoint)
It’s not necessarily good for customers, but it makes sense for Microsoft, or any game company for that matter, to simply buy out the competition and become one of the only game companies, or cheapest ways to access many of the most popular games in the world. But Microsoft is buying Activision Blizzard at the precise moment where its customers and employees are demanding it be held accountable for severe workplace issues. Microsoft is buying the games, but it also means that it now has to actively address some of the worst abuses we’ve seen in the video games industry as opposed to sitting on the sidelines and wagging its finger at the competition.
- Read Microsoft Gaming CEO’s email to staff about the Activision Blizzard acquisition (Tom Warren, The Verge)
"Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players. 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."— Phil Spencer
6. What Microsoft could get
In acquiring Activision, Microsoft would obtain several top franchises, a big mobile presence, some esports ventures and lots of classic but dormant franchises, Stephen reports.
- The big series: Call of Duty, Candy Crush, Diablo, World of Warcraft, Overwatch and Starcraft.
- Mobile hits: Call of Duty Mobile and Candy Crush Saga.
- Esports: The Overwatch League and the Call of Duty League.
- Services: PC gaming service Battle.net.
- Big but dormant franchises: Guitar Hero, Skylanders, Tony Hawk and Crash Bandicoot.
Older trademarks: Sierra, King’s Quest, Pitfall, Hexen and more, as listed over at VGC.
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