- Also Read | Acquisition of Activision Blizzard by Microsoft: an opportunity born out of chaos
An announcement of such a nature could only inspire a good number of analysts, whose Games Industry site went to collect their points of view. “This deal is almost from another world and will change the industry forever. Microsoft’s first-party studios have, in my mind at least, been behind Sony’s for a very long time. They needed a sizeable solution to catch up with Sony, and Bethesda wasn’t enough: this deal can be a game-changer for them“, first notes Serkan Toto of Kantan Games. It is obvious, Microsoft will be in possession of the largest family of studios (well over 30) that the industry has ever known.
In its press release, Microsoft estimated that the integration of Activision Blizzard will allow it to climb to the 3rd rank of the biggest turnover in video games, after Tencent and Sony. Nick Parker of Parker Consulting, he especially sees Microsoft leap to the 1st rank of manufacturers with Sony relegated to third and last place. “If supply issues are resolved this year, the addition of Activision Blizzard franchises could finally make Xbox a tempting console for first-time buyers.“, he says.
Lisa Cosmas Hanson of Niko Partners judges that the scale of the operation is “amazing“and that she”testifies to the importance of the video game industry in the world.As a reminder, Disney’s highly publicized purchase of 21st Century Fox was worth $71.3 billion, not too far off the amount Microsoft will shell out in cash to afford this gathering of three major brands.
DFC Intelligence’s David Cole sensed something was going to happen with Bobby Kotick’s group, but didn’t think anyone would come to take over Activision, Blizzard and King at the same time. “We knew something was probably going to happen with Activision Blizzard. However, we did not expect a company like Microsoft to come and buy everything. Activision, Blizzard, and King were truly three unique companies and speculation was in the direction of a split. For shareholders, this is probably the best possible scenario, because the valuation is really solid. Microsoft was one of the only companies willing to swallow the pill, which came as a surprise“, he comments.
The fact is that this acquisition strengthens Microsoft in all three major market segments. The console, first of all, Call of Duty being the most played game each year on PlayStation and Xbox in the United States. The PC, with the famous Blizzard franchises (World of Warcraft, Diablo, Overwatch). But also mobile, both on the casual market (Candy Crush) but also increasingly on a gamer market (Call of Duty Mobile and Diablo Immortal being only the beginning of a major mobile offensive). Through all these platforms, the group claims close to 400 million active users.
Lisa Cosmas Hanson is one of those who precisely insists on the question of mobile, the only segment in which Microsoft was still not very present. “Importantly, this deal includes the acquisition of King and several other mobile game studios owned by Activision. Mobile games are essential for Microsoft to reach three billion players worldwide“, she underlines.
By integrating Activision Blizzard, Microsoft is also strengthening its presence in eSports as well as in Asia. “Activision Blizzard has a bigger presence in Asia than Microsoft, perhaps because the latter has focused on consoles and most Asian gamers favor PC and mobile. Additionally, Japanese console brands dominate console gaming in Asia. This acquisition allows several pieces of the video game industry puzzle to fit together nicely on a global scale.“, observes Lisa Cosmas Hanson.
Sony’s only response in terms of content would be to buy Take-Two, but that’s unlikely.
If we come back to the world of consoles, however, it is difficult to comment on this agreement without going back to the case of Sony Interactive Entertainment, Microsoft’s direct competitor since the latter’s debut in video games 20 years ago. Technically, Microsoft will soon be able to remove the Call of Duty license from the PlayStation ecosystem if it so desires, just as Bethesda’s next big productions (Starfield, The Elder Scrolls 6) are now expected on Xbox, PC and Game Pass only.
It’s very difficult to gauge the impact that the loss of a franchise like Call of Duty for PlayStation, whose economic health relies heavily on successful third-party games like CODs as well as PlayStation Plus subscriptions would have. they tow with them. One could even say that Call of Duty is part, along with FIFA, Grand Theft Auto and Fortnite, of a “Big Four” which must respond to it so as not to risk losing the affection of the general public. The PlayStation brand could well find itself facing a turning point: this is the first time in its history that it has faced the risk of losing such an important franchise. Its possible strategic reactions are all the more difficult to anticipate.
“The two biggest hits in this sense are Activision’s Call of Duty and Take-Two’s Grand Theft Auto, which are played by 55% and 41% of console gamers, respectively. Nothing else in MIDiA Research’s games tracker comes close. Fortnite and Assassin’s Creed were played by 28% of console players, FIFA by 23%, Spider-Man by 17%. Microsoft will be in possession of the most-played title, and with it, potentially tilt console gamers’ content proposal deliberations in favor of Xbox.“, explains Karol Severin of Midia Research.
“Making Call of Duty exclusive to Xbox – or even just including it in Game Pass – could be a major benefit for Xbox when these consumers decide between Xbox Series or PS5.“, adds George Jijiashvili of the Omdia agency. The latter believes that Sony is now suffering “enormous pressure to react“, but he notes that his options are more limited because he does not have a financial power comparable to that of Microsoft.
“Sony has made a number of acquisitions recently, but they were much smaller and involved studios it had already established relationships with.“, he recalls, referring to the recruitment of studios like Housemarque, Bluepoint Games or even Firesprite.The acquisition of Activision Blizzard could force Sony to be bold with its subscription offering. To be clearer, we could see Sony include some day one releases as part of its subscription overhaul, in a bid to better compete with Game Pass.“If it were to happen, such a response would not surprise Phil Spencer, in any case.
“Sony’s only content response would be to buy Take-Two, but that’s unlikely“, adds Karol Severin. “As of this writing, Microsoft’s market capitalization is $2.3 trillion. In terms of market capitalization, making a $68.7 billion acquisition would be equivalent to Sony (whose market capitalization is $146 billion) making a $4.4 billion acquisition. So there aren’t many big targets that Sony could aim for without going beyond its economic limits, compared to Microsoft.“
- Interview by Games Industry