what you need to know
- Microsoft is trying to buy Activision Blizzard for $69 billion.
- Activision Blizzard makes popular games like Candy Crush, Call of Duty, and World of Warcraft.
- Despite some regulatory jitters, Microsoft would still be a long way from overtaking its main gaming competitors, such as Sony’s PlayStation and Chinese tech giant Tencent.
- Nadella also discussed Microsoft’s approach to weakening the economy amid rising inflation.
Microsoft is working to acquire Activision-Blizzard for its Xbox gaming division. The deal is valued at around $69 billion and would provide a big win for current shareholders, given that the valuation is much higher than Activision’s lagged share price.
Activision is known for games like Candy Crush Saga, World of Warcraft, Call of Duty, and many more. Throughout the company’s decades-long history, Activision has laid waste to a massive library of content over the years. Despite Activision’s impressive library, it has lost much of its user base in recent years due to stiff competition from the likes of China’s Tencent, which owns Riot Games. Activision has also had trouble retaining key personnel due to repeated scandalswhich has seen its share price struggle to recover.
In an interview with BloombergMicrosoft CEO Satya Nadella offered some new 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 come under scrutiny, but we feel very, very confident that we will pull through.” Nadella said. Reacting to regulators, Nadella highlighted Microsoft’s position in the global industry, which places them behind companies like Sony, Nintendo and Tencent, based on the metrics used. Commenting on the recent wave of acquisitions and regulatory scrutiny of Sony PlayStation, he joked “If it’s about competition, let’s have competition.”
Microsoft has repeatedly signaled its intention 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 broader economy. Central banks around the world are raising interest rates to deal with rising inflation in an attempt to depress lending and lower consumer prices. The turmoil has pros and cons for lending, which will naturally affect those with debt and mortgages, as employers will also seek to cut their own costs with layoffs and decreased investment. However, Nadella is confident that Microsoft can weather the storm.
“Limitations are real. Inflation is definitely around us. I always come back
to the point that in an uncertain time, in an inflationary time, the software is the
deflationary force. [Microsoft is] ensuring that our customers can do more with less. So in terms of perspective, I’m optimistic about Microsoft’s value proposition. I am optimistic about our involvement, but we are not immune to anything that is a macroeconomic headwind.”
Microsoft hasn’t yet resorted to big rounds of layoffs, but like many tech bodies, they likely won’t be off the table. Nadella said Microsoft will join other companies in trying to “do more with less” as supply chain restrictions, Putin’s aggression in Ukraine and post-pandemic woes continue to disrupt the global economy.