Microsoft buys Activision for nearly $70B; Kotick to remain CEO

Kotick, who has faced calls to resign over the cultural problems within his company, will remain CEOGETTY IMAGES

Microsoft announced today it "will buy video game giant Activision Blizzard" in a $68.7B all-cash deal, according to Steve Kovach of Activision, known for popular games such as “Call of Duty” and “Tony Hawk’s Pro Skater,” has been "mired in controversy for the last several months following reports of sexual misconduct and harassment among the company’s executives." Yesterday, Activision said that it "fired dozens of executives after an investigation." Under the deal, Activision CEO Bobby Kotick, who has "faced calls to resign over the cultural problems within his company, will remain CEO and report to Microsoft’s Xbox boss Phil Spencer." Microsoft has "gotten more aggressive with gaming over the past several years." It bought “Minecraft” maker Mojang for $2.5B in '14. And last year, Microsoft completed a $7.5B acquisition of game maker Bethesda (, 1/18). THE VERGE's Tom Warren notes Microsoft "doesn’t detail exactly how it will approach solving" the issues at Activision. It "looks like Kotick won’t remain once the deal is fully closed and after the transition period to Microsoft, though" (, 1/18).

PLANTING THE FLAG: In N.Y., Sorkin, de la Merced, Weise & Browning note the deal "plants Microsoft’s flag in the emerging battle for dominance in the so-called metaverse, the next-generation internet that melds the traditional online world with virtual and augmented reality." It is also a "challenge to regulators in Washington, as Democrats and Republicans alike have pushed to limit the power of technology giants." The transaction "may be seen as a victory" for Kotick, whom some critics had "sought to oust over the controversy." Kotick "negotiated a big premium for investors -- Microsoft is paying $95 a share, roughly 45 percent above his company’s stock price before the announcement" (N.Y. TIMES, 1/18). Wedbush Securities Managing Director and Senior Equity Research Analyst Dan Ives said this is Microsoft “flexing their muscles in terms of doing a bigger deal here to really get aggressive on the consumer side.” CNBC’s Jim Cramer said “this is about Microsoft getting really premier first party content” and because Microsoft “flies under the radar screens” the deal should be passed by regulators. Cramer: “Ultimately, Microsoft wants a gigantic subscription revenue stream and they’re going to get it” (“Squawk Box,” CNBC, 1/18).

FUN & GAMES: The WALL STREET JOURNAL's Lombardo, Grind & Tilley note Microsoft’s gaming strategy "increasingly is focused on growing its subscription business, called Game Pass, which for a monthly fee lets gamers have access to a catalog of games." Microsoft said the deal for Activision would "bolster its Game Pass portfolio, with plans to bring Activision games into the subscription service." With Activision, Microsoft said that it would "have 30 internal game development studies." Buying Activision "would increase Microsoft’s videogame revenue by about half." Analysts estimate that Activision’s sales in '21 totaled $8.7B, while Microsoft reported $15.4B in gaming revenue for the fiscal year through June, accounting for about 9% of its total (WALL STREET JOURNAL, 1/18). Bloomberg Intelligence’s Anurag Rana said despite the large price tag, “this completely changes the ecosystem for Microsoft” as Activision as over 400 million active players globally. This is a "very, very serious gaming company at this point” (Bloomberg TV, 1/18).

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