Microsoft Corp. on Tuesday agreed to buy video game company Activision Blizzard Inc. for $68.7 billion, making it the largest-ever acquisition by the tech giant.
The deal will also make Microsoft the world's third-largest gaming company by revenue, behind Tencent and Sony.
The planned acquisition includes iconic franchises like "Warcraft," "Diablo," "Overwatch," "Call of Duty" and "Candy Crush," in addition to global e-sports activities through Major League Gaming.
This acquisition is expected to accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.
"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," says Satya Nadella, chairman and CEO, Microsoft. "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."
This, according to Microsoft, comes at a time when three billion people are actively playing games and the number is expected to grow to 4.5 billion by 2030. The gaming industry, which is over $200 billion currently, is also the largest and fastest-growing form of entertainment, it says.
In 2021 alone, the total number of video game releases was up 64% compared to 2020 and 51% of players in the US reported spending more than seven hours per week playing across console, PC and mobile.
"The combination of Activision Blizzard's world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry," says Bobby Kotick, CEO, Activision Blizzard.
Kotick will continue as chief executive officer of Activision Blizzard. Once the deal closes, the Activision Blizzard business will report to Microsoft Gaming CEO Phil Spencer.
"Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them," says Phil Spencer, CEO, Microsoft Gaming. "Together we will build a future where people can play the games they want, virtually anywhere they want."
The acquisition also bolsters Microsoft’s videogame subscription service Game Pass' portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. Activision Blizzard has nearly 400 million monthly active players in 190 countries and three billion-dollar franchises.
Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and e-sports production capabilities.
Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile.