Microsoft to buy Activision Blizzard in $68.7 billion deal

Video game giants Call of Duty and World of Warcraft have a new home: Microsoft.

On Tuesday, Microsoft announced it will acquire Activision Blizzard, the publisher behind Call of Duty, one of the top-selling video games in the U.S., along with several other titles including Overwatch, World of Warcraft and Candy Crush.

Microsoft CEO Satya Nadella said the deal will help the company's expansion into the metaverse. For consumers, the deal could mean one of gaming's most successful franchises will only be available on a PC or Xbox.

"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,” Nadella said in a statement. "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."

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Microsoft will acquire Activision Blizzard in an all-cash deal valued at $68.7 billion.

The announcement follows reports in November that Microsoft was evaluating its relationship with the video game publisher amid allegations Activision Blizzard CEO Bobby Kotick had known about sexual misconduct claims at the company for years.

The state of California sued Activision Blizzard last year, claiming the publisher fostered a sexist culture and paid women less than men, despite doing more work.

Employees at Activision Blizzard staged walkouts urging the company to remove Kotick from the top executive position and make changes to the company's culture.

In its statement, Microsoft said Kotick will stay on as CEO of the publisher, reporting to Phil Spencer, head of Microsoft Gaming.

What does it mean for consumers?

Wedbush analyst Michael Pachter said the deal hurts Sony, which makes the competing PlayStation 5 video game console.

"You're very likely going to lose Call of Duty on PlayStation one of these days," said Pachter.

According to NPD Group, Call of Duty has been the best-selling video game franchise in tracked dollar sales for 13 straight years.

"If you're a consumer today, right this second, are you buying a PS5 if you're buying it to play Call of Duty? Would you think twice? That's the problem," said Pachter.

The possibility could become an issue for regulators, who could either block the deal or force an agreement with Microsoft to keep Call of Duty games on other platforms for a period of time, Pachter said.

Meanwhile, the deal provides another influx of video games to Microsoft's growing Xbox Game Pass, a subscription service similar to Netflix, where players can enjoy dozens of games for a monthly fee.

Last March, Microsoft closed a deal to acquire ZeniMax Media, which owns Bethesda Game Studios and properties including Fallout and The Elder Scrolls, for $7.5 billion.

Bethesda's next big project, the open world adventure Starfield, is expected to launch in November for PC and Xbox.

The deal could lead to Game Pass subscribers gaining access to new Activision Blizzard games on the day they launch.

Pachter said the deal might also lead to more Xbox franchises, including Halo, expanding their presence on mobile devices. Activision Blizzard owns King, the publisher behind the popular Candy Crush mobile games and the recently released Crash Bandicoot: On The Run.

Microsoft and the metaverse

Microsoft has joined other companies including Meta and Fortnite creators Epic Games in carving out their space in the metaverse, a virtual universe that supporters believe will take place of the modern internet.

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Microsoft to buy Activision Blizzard in $68.7 billion deal

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