In what would be Microsoft's largest acquisition to date, the company has announced it will buy video game giant Activision Blizzard in a whopping US$68.7 billion (AU$95.7 billion) all-cash deal.
Activision is best known for popular games such as Call of Duty and Tony Hawk’s Pro Skater. It also owns one of the most popular and lucrative mobile games, Candy Crush, after it acquired Crush’s publisher King for US$5.9 billion (AU$8.2 billion) in 2016.
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But recently, Activision has been in the news for all the wrong reasons.
For many months now, the video game giant, which employs nearly 10,000 people, has been embroiled in controversy following reports of sexual misconduct and harassment among the company’s executives, and the CEO's failure to act despite alleged awareness of the turmoil.
Ahead of Microsoft's announcement on Tuesday, Activision said it fired dozens of executives after a thorough investigation.
It confirmed the exit of 37 employees and disciplinary action against 44 others since July, 2021 in a bid to address allegations of sexual harassment and other misconduct, according to the Wall Street Journal.
Following the mega deal announcement, which couldn't have come at a better time for the gaming giant, Activision shares shot up by about 36 per cent on Tuesday, but Microsoft shares fell almost 2 per cent.
Activision CEO Bobby Kotick will continue at the fore during the transition. He has faced severe backlash and calls to resign over the cultural problems within the company.
Microsoft said it expected to close the deal in its fiscal 2023 year, after which Activision would report to Phil Spencer, former head of Xbox.
Spencer will lead the Microsoft Gaming division team as it focuses on gaming across Xbox, PC, mobile, and the cloud.
Microsoft has been steadily and aggressively making headway in the gaming universe, first by purchasing Minecraft maker Mojang for $2.5 billion (AU$3.4 billion) in 2014 and also completing a US$7.5 billion (AU$10.44 billion) acquisition of game maker Bethesda in 2021.
Microsoft’s acquisition of LinkedIn in 2016 for $26.2 billion ($36.5 billion) was its largest until now but, with Activation Blizzard under its wing, the software giant is leaving no stone unturned to bolster its gaming efforts and give Meta (formerly Facebook) tough competition in building a metaverse.
In announcing the deal, both companies highlighted Activision’s strength in mobile gaming and stressed the opportunity to cross-promote popular gaming franchises from both companies.
In a conference call, Microsoft chairman and CEO Satya Nadella said: "Three billion consumers around the world play games.
"We expect this number will reach 4.5 billion by 2030 as new generations turn to gaming for entertainment, community and a sense of achievement.
“When we think about our vision for what a metaverse can be, we believe there won’t be a single, centralised metaverse and there shouldn’t be. We need to support many metaverse platforms, as well as a robust ecosystem of content, commerce and applications.
"Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms."