May 14, 2022

Microsoft, with the record takeover of Activision, reshuffles the cards in video games

A record operation. Tuesday, January 18, Microsoft announced its intention to get its hands on the video game studio Activision Blizzard, for an amount of 68.7 billion dollars (60.7 billion euros). The offer, to which the leaders of both parties consent, should be completed in 2023, after a vote by Activision shareholders and probably a review by the competition authorities.

This acquisition is the largest ever made by the Redmond giant, far ahead of the one that led it to take over the professional social network LinkedIn, for more than 26 billion dollars (22.9 billion euros), in 2016.

The tour de force of Microsoft, producer of the Xbox consoles, is all the more remarkable in that at the time of Bill Gates (the founder) and Steve Ballmer, the video game division had remained the “poor relative” of the company, emphasizes Julien Pillot, teacher-researcher at Inseec, a Parisian business school. Since then, under the impetus of Satya Nadella, CEO since 2014, and Phil Spencer, head of the video game division, she has become one of the pillars of the group. In 2021, it weighed almost 10% of its 168 billion dollars (148.2 billion euros) in revenue, up around 33% from the previous year.

“The greatest form of entertainment”

In announcing the takeover of Activision, Satya Nadella recalled his ambitions in the sector, noting that video games were, with 3 billion users, “the greatest and fastest growing form of entertainment”, with a prediction of 4.5 billion consumers in 2030. His thinking is not new. It was upon his arrival that Microsoft acquired Minecraft. Above all, it was under his aegis that the takeover of the Zenimax studio took place in 2021 – with its popular games Fall Out, Doom, Wolfenstein – for $7.5 billion.

By taking over Activision – 400 million monthly active players, 10,000 employees – Microsoft is aiming for a much higher target with prestigious titles on PC and consoles, such as Call of Duty Where World of Warcraft. It also opens a door to the mobile games segment, from which it was almost absent. In the bride’s basket is indeed the King studio (at the origin of the game Candy Crush), which will allow it to roll out its smartphone licenses more quickly.

The blow operated by Microsoft promises to reshuffle the cards of a market in strong consolidation. Promised to become the third world player in the sector behind the Chinese Tencent and the Japanese Sony, manufacturer of the PlayStation, it is putting a “huge pressure” on the latter, says Charles-Louis Planade, analyst specializing in video games at MidCap Partners. There are hardly any major studios left to buy, except Ubisoft, or Electronic Arts (EA), handicapped by the vagaries of its agreements with sports federations to develop its flagship titles in football games (with FIFA) or Formula 1 (with the FIA).

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