What you need to know
- Microsoft is attempting to purchase Activision Blizzard for $69 billion dollars.
- Activision Blizzard makes popular games like Candy Crush, Call of Duty, and World of Warcraft.
- Despite some regulatory jitters, Microsoft would still be far from overtaking its primary gaming competitors such as Sony’s PlayStation and Chinese tech giant Tencent.
- Nadella also discussed Microsoft’s approach to the weakening economy amidst growing inflation.
Microsoft is working to acquire Activision-Blizzard for its Xbox gaming division. The deal is valued at around $69 billion dollars, and would provide a large profit for current shareholders, given that the valuation is far higher than Activision’s lagging share price.
Activision is known for games like Candy Crush Saga, World of Warcraft, Call of Duty, and many more. Across the company’s decades-long history, Activision has swept up a massive content library over the years. Despite Activision’s impressive library, it has lost much of its userbase in recent years owing to stiff competition from companies like China’s Tencent, who own Riot Games. Activision has also struggled to retain key staff owing to repeated scandals, which has seen its share price struggle to recover.
In an interview with Bloomberg, Microsoft CEO Satya Nadella offered some fresh comments on the deal, which is currently subject to regulatory scrutiny in the UK and other territories.
“Of course, any acquisition of this size will go through scrutiny, but we feel very, very confident that we’ll come out.” Nadella said. Reacting to regulators, Nadella noted Microsoft’s position in the global industry, which puts them behind companies like Sony, Nintendo, and Tencent, depending on the metrics used. Remarking upon Sony PlayStation’s recent acquisition spree and regulatory scrutiny, he quipped “if this is about competition, let us have competition.”
Microsoft has repeatedly signalled its intent to keep Call of Duty on PlayStation in perpetuity, but Sony has responded by continually pushing the idea that it could lose the franchise entirely to Xbox.
During the discussion, Nadella also discussed Microsoft’s position within the wider economy. Central banks across the globe are raising interest rates to cope with rising inflation in an attempt to depress borrowing and drive down consumer prices. The turmoil has trade-offs for borrowing, which will naturally hit those with debts and mortgages, as employers will also seek to cut their own costs with layoffs and decreased investment. Nadella is confident that Microsoft can weather the storm, though.
“The constraints are real. Inflation is definitely all around us. I always go back
to the point that in an uncertain time, in an inflationary time, software is the
deflationary force. [Microsoft is] ensuring that our customers are able to do more with less. So, in terms of outlook, I am optimistic about Microsoft’s value proposition. I’m optimistic about our share, but we are not immune from anything that is a macroeconomic headwind.”
Microsoft hasn’t resorted to large layoff rounds yet, but like many tech corps, they likely aren’t off the table. Nadella said Microsoft will join other firms in attempting to “do more with less,” as supply chain constraints, Putin’s aggression in Ukraine, and post-pandemic problems continue to upend the global economy.