Microsoft buying Activision Blizzard in $68.7B deal

Last updated 11:53 a.m. ET

Microsoft announced early Tuesday that it would be purchasing Call of Duty and World of Warcraft house Activision Blizzard in a gigantic acquisition.

The deal is worth $68.7 billion, or $95 per share, and comes amid a tumultuous time for Activision Blizzard which is under scrutiny for toxic workplace conditions. Activision Blizzard has nearly 10,000 employees.

Microsoft, house of Xbox, said the deal will "bring the joy and community of gaming to everyone, across every device." 

Bobby Kotick, who was subject to an explosive recent report in The Wall Street Journal in which he was accused of misconduct, "will continue to serve as CEO of Activision Blizzard," according to a statement from Microsoft. Kotick will be kept on board "to further strengthen the company’s culture and accelerate business growth," the statement added. There's no word on whether Kotick will stay on board for the long term.

New York Times tech reporter Karen Weise tweeted that she spoke directly with Kotick and asked if he will remain Activision Blizzard's CEO after the close of the deal. He declined to say if he would remain on board and said, "Post-close I will be available as needed."

Microsoft and Activision Blizzard will operate independently until the deal officially closes. At the close of the deal, the Activision Blizzard business will report to Phil Spencer, the Xbox head now turned Microsoft Gaming CEO following today's news.

Microsoft CEO Satya Nadella said in a written statement, "We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all."

In a conference call discussing the deal, Nadella added that despite the growth of the game industry, "too much friction still exists today between content, consumption, and commerce." The acquisition will help ease that friction, the CEO said.

During that call, each executive also noted the transaction's potential to bolster Microsoft's metaverse ambitions.

Both Nadella and Spencer mused on the metaverse possibilities, with Spencer pointing out that mobile is set to play a large part in what Microsoft envisions the metaverse to be, and the company has not had a huge presence in mobile. With the addition of Activision Blizzard's King studio, that is now set to change.

"Extending our horizon a bit, this transaction will make our approach to the consumer metaverse even stronger," said Spencer. "That's because our vision of the metaverse is based on intersecting global communities rooted in strong franchises. A big part of that is mobile is the biggest category of gaming, and its an area where we have not had a major presence before."

Nadella reinforced that removing the friction from "content, consumption, and commerce" will be increasingly important as the metaverse comes into play.

"When we think about our vision for what a metaverse can be, we believe there won't be a single centralized metaverse. And there shouldn't be," said Nadella. "We need to support many metaverse platforms as well as a robust ecosystem of content, commerce, and applications."

"In gaming we see the metaverse as a collection of communities and individual identities anchored in strong content franchises accessible on every device. And bringing fantastic entertainment together with new technologies, communities, and business models is exactly what this transaction is about."

Kotick added that joining Microsoft gave Activision Blizzard leadership and its board "confidence that we would have a far better chance to succeed in the increasingly competitive race for leadership as gaming through the metaverse evolves."

The deal is expected to close in fiscal 2023, and is subject to regulatory review and Activision Blizzard shareholder approval.

“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” said Spencer. “Together we will build a future where people can play the games they want, virtually anywhere they want."

Microsoft said the acquisition will also accelerate the company's growth into mobile games. Activision Blizzard is also home to King, creators of hit mobile franchise Candy Crush.

The acquisition will also mean that many of Activision Blizzard's hit franchises will become available on Microsoft's Game Pass, the company's 'Netflix for games' monthly subscription service. That particular side of the acquisition stands to benefit Xbox as much as it does Game Pass subscribers, with Spencer noting in the conference call that a stronger first-party catalog will ultimately encourage more publishers to participate in Game Pass down the line.

At close of the deal, Microsoft will have 30 internal game development studios. Last year, Microsoft closed another enormous acquisition: ZeniMax Media, parent company of The Elder Scrolls publisher and developer Bethesda, for $7.5 billion.

This is a developing story...