Microsoft is closer than ever to closing the $68.7 deal to acquire Activision Blizzard. Announced in late January 2022, the biggest merger ever seen in the gaming industry went through a veritable gauntlet of hurdles that started with the FTC’s decision to challenge the merger in December 2022 and the CMA’s actual block of the merger in April 2023.
However, despite these challenges, Microsoft remained steadfast in its purpose to complete the merger. It won approvals in 40 countries and ultimately beat the FTC in US federal court, where the Federal Trade Commission had requested a preliminary injunction to block the closure.
While the original deadline set for the merger expired two days ago, Microsoft announced a new agreement with Activision Blizzard to extend the deadline to October 18th, 2023. The extension’s main purpose is to resolve any outstanding problems with the CMA, with the divestiture of cloud gaming rights to a third-party the most likely outcome. The CMA said it intends to finalize its investigation of the restructured deal by late August, though it may be completed even sooner than that.
Microsoft could become the owner of some of the biggest IPs in gaming in a matter of weeks. More importantly, it would cement itself as an absolute powerhouse in at least two genres: roleplaying games (owning Elder Scrolls, Fallout, Starfield, Wasteland, Pillars of Eternity, Avowed, Clockwork Revolution, The Outer Worlds, Fable, and more) and shooter games (owning Gears, Halo, Call of Duty, Overwatch, DOOM, Wolfenstein, and more).
At the same time, it might be difficult for Microsoft to acquire new studios in the future that own strong franchises in these genres. As pointed out by ResetEra user Idas, the European Commission appears to have identified different markets based on criteria like genre.
The Advisory Committee agrees with the conclusions reached by the Commission in the draft Decision in relation to the definition of the relevant product markets for development and publishing of video games segmented by platform (PC, console, mobile), by types of video game (AAA games vs. non-AAA games) and by genre (action and adventure, shooter/battle royale, role-playing games, sports, racing, fighting, and strategy).
As such, it is not inconceivable that Microsoft could face strong opposition from the European regulator if it were to acquire, say, CD Projekt RED (The Witcher, Cyberpunk 2077) or Krafton (PUBG).
Of course, that is a consideration for the future, though Microsoft Gaming CEO Phil Spencer never hid that the acquisition spree wouldn’t stop at Activision Blizzard. Still, it is possible Microsoft would choose to stay clear of big acquisitions for a while, focusing on smaller independent developers instead.
