Following the industry-shattering news that Microsoft intends to acquire Activision Blizzard for nearly $70 billion, Head of Microsoft Gaming Phil Spencer appeared alongside current Activision Blizzard CEO Bobby Kotick in an interview with CNBC.
During the conversation, Spencer didn’t shy away from confirming that this deal happened ‘pretty quickly’.
3 billion gamers on the planet today, people playing in all regions, creators coming from everywhere, and we’re always sharing our strategy with our partners and talking to them about their feedback. I think we’ve always just had a good connection with the team at Activision Blizzard about where we’re trying to go. But honestly, this is a deal that happened pretty quickly. Like I’d say we, we really had some formative discussions about this specific opportunity late in the year and we just felt like now was the right time to add the right resources and capability to both companies.
Indeed, while the deal might seem to be valuing Activision Blizzard at a significant premium of $95 per share, it’s actually lower than the company’s share high of $100+ reached less than a year ago. Then, of course, the publisher was hit by a series of scandals, lawsuits, and controversies that inevitably affected the share price as well.
This is likely why Spencer and the Microsoft leadership approached Kotick in late 2021. It was a window of opportunity that they deemed too good to pass up in their bid to increase the content pipeline for Game Pass (which has now surpassed 25 million subscribers) and their reach towards mobile with the likes of King (the makers of Candy Crush, acquired by Activision Blizzard back in late 2015).
Of course, with any acquisition of this size, there are always regulatory concerns. This would be Microsoft’s largest acquisition to date, with the company set to spend almost three times as much as it did for LinkedIn.
When a CNBC analyst prodded Spencer about the issue, the Head of Microsoft Gaming highlighted the competitiveness of the gaming industry.
This is an incredibly competitive marketplace in the gaming space. The truth is the largest gaming platforms on the planet are the mobile devices out there, distribution on those contents, control on those devices. It’s controlled by two companies. So you look at a company like Microsoft, and we’re bringing together content and intellectual property to offset the, the distribution capabilities we don’t have on mobile devices. This is our opportunity to fight to compete on the largest platform out there in gaming, which is mobile devices, that’s critically important to us and also as Bobby said, we have more creators on our platform than we’ve ever had. We have games coming from all, we have games coming from big publishers like EA and Activision and Take-Two. But you also look at a lot of homegrown games from small teams that are able to reach global scale because of the distribution that they’re finding on PC and gaming consoles. It’s an incredibly vibrant space right now.
The deal will undoubtedly face regulatory scrutiny, but even after the acquisition, Microsoft would still be behind Tencent and Sony in gaming revenue. Still, we’ll be following up with any updates on the biggest deal in the history of gaming – stay tuned.
