Microsoft has completed its acquisition of video game-maker Activision Blizzard for $69 billion, closing one of the most expensive tech acquisitions in history that could have repercussions across the video game industry.
The notice that the deal has gone through came seven hours after Microsoft got final approval from Britain鈥檚 competition watchdog, which reversed its earlier decision to , removing the last obstacle for the transaction.
Taking over the studios behind blockbuster games like Call of Duty, Diablo and Overwatch will be a boost for Microsoft鈥檚 Xbox gaming console, which ranks third in sales behind PlayStation and Nintendo. The software giant also has bigger ambitions to fold Activision titles into its multi-game subscription service that works something like a Netflix for video games.
The nearly 22 months it took to close the deal reflected concerns from rivals and government regulators that Microsoft could use its growing collection of games to lessen competition. It鈥檚 part of a broader industry consolidation that also has worried they鈥檒l get sidelined as the industry allocates its resources toward blockbuster franchises with a history of past success.
Microsoft has long defended the deal as good for gaming, saying its goal was to get Activision games to more people on more platforms rather than trying to deprive those games from console-makers such as Sony and Nintendo.
鈥淧layers have always been at the center of everything we do. And as we grow, we鈥檒l continue to keep players at the heart of it all,鈥� said a statement Friday from Phil Spencer, CEO of Microsoft鈥檚 Xbox division.
He shared a video celebrating the deal, featuring scenes from games to the tune of 鈥淥h, What A Beautiful Mornin鈥欌�� from the Broadway musical 鈥淥klahoma!鈥�
The blessing from the U.K.鈥檚 Competition and Markets Authority was expected after it last month to a revamped Microsoft proposal meant to address concerns that the deal would harm competition and hurt gamers, especially in the emerging cloud gaming market where players can avoid buying pricey consoles and stream games to their tablets or phones.
鈥淭he new deal will stop Microsoft from locking up competition in cloud gaming as this market takes off, preserving competitive prices and services for UK cloud gaming customers,鈥� the watchdog said.
Microsoft was grateful for the 鈥� and decision鈥� on a tie-up that 鈥渨ill benefit players and the gaming industry worldwide,鈥� President Brad Smith said.
Activision CEO Bobby Kotick says the game maker looks 鈥渇orward to becoming part of the Xbox Team.鈥�
The deal will benefit gamers and be 鈥減roductive for the gaming industry as a whole,鈥� said Josh Chapman, managing partner at venture capital firm Konvoy, which invests in video game startups.
However, it also tilts the 鈥渂alance of power significantly鈥� in favor of Microsoft, whose Xbox console has lagged behind Sony鈥檚 PlayStation and Nintendo, said George Jijiashvili, senior principal analyst at tech research and advisory firm Omdia.
Microsoft 鈥渘ow has a big opportunity to dictate the future of the games industry,鈥� he said.
Since the deal was announced in January 2022, Microsoft has secured approvals from antitrust authorities covering more than 40 countries. Crucially, it got a after agreeing to allow users and cloud gaming platforms to stream its titles without paying royalties for 10 years.
But the deal faced resistance from British and American regulators who in the video game industry. Top rival Sony also feared it would limit PlayStation gamers鈥� access to Call of Duty, Activision鈥檚 long-running military shooter series.
The U.S. Federal Trade Commission to pause the deal so that its in-house judge could review it. The FTC hasn鈥檛 given up, appealing the decision and last month filing notice of its plan to resume that trial. That signals the U.S. regulator鈥檚 intention to unwind the deal even after it closes.
In the meantime, the U.K. regulator was the last major hurdle to the transaction going through. To get its approval, Microsoft will sell off cloud streaming rights outside the EU and three other European countries for all current and new Activision games released over the next 15 years to French game studio Ubisoft Entertainment.
British regulators had initially blocked the transaction over concerns Microsoft could withhold Activision titles from the cloud gaming market. Then, in an unprecedented move, the .
One factor was the EU鈥檚 approval, granted after Microsoft promised to automatically license Activision titles royalty-free to cloud gaming platforms. Another 鈥渕aterial change of circumstance,鈥� according to court documents, was an to make Call of Duty available on PlayStation for at least 10 years.
But the regulator still criticized how the deal came together and warned other companies not to use the 鈥渢actics employed by Microsoft.鈥�
鈥淢icrosoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn鈥檛 work,鈥� the watchdog鈥檚 CEO, Sarah Cardell, said in a statement. 鈥淒ragging out proceedings in this way only wastes time and money.鈥�
The U.K. regulator 鈥渄eserves credit for imposing a structural remedy on Microsoft that is significantly stronger than the weak commitments accepted by the European Commission,鈥� said Max von Thun, director of the Europe office of the Open Markets Institute, a proponent of stronger antitrust enforcement.
But the CMA鈥檚 flip-flopping makes the U.K. regulator look 鈥渨eak and indecisive,鈥� he said.
鈥淢oving forward, there is now a serious risk that in their dealings with the CMA, merging companies and their advisors will no longer take no for an answer,鈥� von Thun said.
Up until now, computer-maker Dell held the record for the priciest tech deal after it bought data-storage company EMC in 2016 for around $60 billion. Microsoft鈥檚 own biggest deal was its $26 billion acquisition of professional-networking service LinkedIn around the same time.
Another contender, still pending, is to buy cloud technology company VMware.
Microsoft valued the Activision deal at $68.7 billion when it announced the acquisition in early 2022, 鈥渋nclusive of Activision Blizzard鈥檚 net cash,鈥� though Microsoft agreed to pay $95 in cash for each share of the game-maker, closer to $75 billion.
Started in 1979 by former Atari Inc. employees, Activision has created or acquired many of the most popular video games, from Pitfall in the 1980s to Guitar Hero and the World of Warcraft franchise. Bobby Kotick has been CEO since 1991, after working with a business partner to buy it from bankruptcy.
One of Activision鈥檚 key assets for Microsoft was its King studio, maker of popular mobile games such as Candy Crush Saga.
Microsoft had said when it announced the deal that Kotick will continue to serve as CEO. The Activision business unit would then report to Spencer, who has led Microsoft鈥檚 Xbox division since 2014.
While Sony鈥檚 PlayStation remains the industry leader, Microsoft in recent years has been scooping up game studios in an effort to drive more gamers to Xbox. Last year, it spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, maker of Elder Scrolls, Fallout and . One of Microsoft鈥檚 most popular games, Minecraft, came from its $2.5 billion acquisition of Swedish developer Mojang in 2014.
Rivals have also bought their way to bigger game collections, with Sony venturing near Microsoft鈥檚 headquarters to buy Bellevue, Washington-based independent game publisher Bungie Inc. for $3.6 billion last year. Bungie makes the popular game franchise Destiny and was the original developer of Xbox-owned Halo.
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