News & Thinking

Console Wars or Content Wars? – The Breakdown of Microsoft Buying Activision Blizzard

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Close up of an Xbox controller News 11 Feb

What happened?

In January, Microsoft announced it would be acquiring Activision Blizzard, one of the biggest gaming companies in the world, for $68.7 billion. This beats the record for the largest gaming acquisition ever, achieved only the previous week by Take-Two Interactive’s $12.7 billion deal of Zynga (Farmville, Words with Friends). This follows a trend of Microsoft acquisitions, such as ZeniMax Media, parent company of Bethesda (The Elder Scrolls, Fallout, Doom), for $7.5 billion, as well as Mojang, the company behind the huge franchise Minecraft.

What does this mean for Microsoft?

The Xbox giant will likely add Activision’s games to its ever-growing Xbox Game Pass, a strong feature of the service. Furthermore, Microsoft will have control of huge titles such as Call of Duty, Overwatch and World of Warcraft, meaning their Xbox and PC platform may receive future exclusives, early content access and other privileges that PlayStation players won’t. Xbox players may also get access to games they previously won’t have, as has happened with award winning PS5 game Deathloop (published by Bethesda). We may also see PC games like World of Warcraft somehow be adopted, either through Xbox or being added to the PC facet of Game Pass.

Along with the purchase, Activision’s business units also go to Microsoft, which includes the Major League Gaming Corp., well-known for MLG esports leagues which will likely be revitalised by its new owners. This opens a new source of revenue for Microsoft, with a focus on esports, where the company could build a whole international competition on one of their own titles and profit from viewership/partnerships.

The acquisition also means Microsoft have come into ownership of mobile game developer King, best known for Candy Crush, making Microsoft one of the largest mobile game companies in one foul swoop. This investment gives the company a foothold in the mobile gaming world, in which Microsoft has not previously made a notable contribution. This could lead to more Microsoft mobile games, such as a mobile Halo game, greater app support for their current titles, and possibly an expansion of Xbox Play Anywhere, which allows on the go play via cloud gaming. In time it’s possible that Game Pass extends to mobiles, allowing exclusive mobile games for a monthly cost. Who knows, this could herald the return of Microsoft mobile phones; okay maybe that is a stretch!

What does this mean for PlayStation?

The deal will have huge impact for the competition, starting off with Sony unfortunately suffering an immediate $20 billion share price drop.

Microsoft have maintained through all their acquisitions that all agreements will be upheld, and upcoming games will still be shared to PlayStation…at least for now. However, it is possible after planned titles/sequels, Microsoft may make big franchises exclusive, where the biggest hit to PlayStation would be the loss of ever-popular franchise Call of Duty. Another significant loss would be the exclusion of Bethesda’s catalogue of games (The Elder Scrolls, Fallout, Doom and highly anticipated Starfield), which Xbox chief Phil Spencer has already alluded to.

Just as we were about to press send on this mailer, Sony surprised us all with an indication of where their strategy lies, in announcing their acquisition of former Microsoft subsidiary Bungie for $3.6 billion. This deal could be an attempt to bulk up their unreleased rival subscription service, Project Spartacus, to rival Game Pass. However, the purchase has perplexed a few, considering that Bungie, despite creating the Halo series, doesn’t have a large, owned catalogue of games. One possible reason Sony made this acquisition is to expand on their multimedia offering, merging games with TV and film. A Destiny TV-series? We’re all in on that!

Why now?

The revelation of the Activision deal came as a surprise to many, with many asking, why now? From Microsoft’s angle, not only does this add to their leading console feature, but it potentially changes the console wars as we know, to a battle of console content. This is significant, as for many years, one draw to PlayStation was access to critically acclaimed exclusives such as God of War, The Last of Us and Spider-Man. However, times have changed, shown by the fact that both Spyro and Crash Bandicoot (originally fan-accepted mascots of the Sony console) are owned by Microsoft. This demonstrates that the Xbox platform could be increasing their focus on being iconic, where historically they invest in their franchises to the point where they’re not just synonymous with Xbox but integrally representative; one notable example is Halo and the use of Master Chief.

From Activision’s point of view, the reason to sell to Microsoft is less understood, as they are one of the biggest and most successful video game companies, developer and publisher. It is speculated that after a year of accusations of sexual harassment and toxic office culture, Activision is attempting to start with a clean slate under the guidance of Microsoft, where Activision CEO Bobby Kotick will likely stepdown and exit the company in an almost positive light.

The future of gaming

Will Microsoft’s acquisitions improve the gaming world? Hopefully. Microsoft have a tricky past with gaming studios, where some studios have struggled with the parent company’s business aims, notably Lionhead Studios. However, the belief is that Microsoft has learnt from previous ventures and see the importance of allowing studios to play to their strengths. This means with Microsoft’s support we could see improvements to many loved gaming franchises.

If Microsoft does decide to exclude Activision games from PlayStation, it could be seen as a major disadvantage to the Japanese company. But the loss of huge titles like Call of Duty or The Elder Scrolls could also have unforeseen benefits; by leaving a void in Sony’s catalogue, this allows other studios and new IP to fill the void. Alternatively, we could witness a figurative “space race” to see who can sweep up the remaining big name gaming companies, such as French company Ubisoft (Assassin’s Creed, Far Cry) and American company EA (Battlefield, FIFA). Nothing seems impossible right now!

2022 was firing on all cylinders for new releases. Breath of the Wild 2, God of War Ragnarök, Starfield and Elden Ring are just a few. Recent news has added rocket fuel to this fire. Here at MTM we’re stoked for how the rest of the year pans out. Strap yourself in, it’s going to be a wild ride!

MTM team
11th February 2022