Microsoft Clears EU Hurdle for Microsoft Activision Blizzard Deal: What’s Next for the Gaming Giant? ($MSFT,$ATVI)

Microsoft\’s $69 billion acquisition of Activision Blizzard, publisher of Call of Duty and World of Warcraft, has received EU approval. The IT giant hopes to compete with Sony and Nintendo in the game business with this milestone.
Microsoft\’s concessions addressed the EU\’s antitrust regulators\’ concerns, particularly in cloud gaming. Cloud gaming lets users watch games from remote servers without downloading them.

Xbox Game Pass includes Microsoft\’s Xbox Cloud Gaming service. The EU regulators worried that Microsoft would limit consumer and rival choice by making Activision\’s games exclusive to its platforms. Microsoft committed to stream Activision\’s games purchased on any cloud gaming platform for 10 years to avoid this. This means Google Stadia, Amazon Luna, and Nvidia GeForce Now can sell Activision\’s games. Microsoft\’s claim that the merger will not impair competition in console and PC gaming, where Activision has many competitors and Microsoft has a modest market share, was accepted by the EU.

The EU underlined that new players and business concepts enter the gaming market frequently. Microsoft\’s EU certification is a major victory. The US Federal Trade Commission sued to prohibit the deal, claiming it would restrict innovation and boost game pricing. The UK Competition and Markets Authority denied the agreement because it would restrict cloud gaming competition and give Microsoft an unfair advantage.Microsoft claims it can overcome these barriers and finalise the purchase by mid-2023.

The business has also promised players and developers to respect Activision\’s creative independence and support its varied portfolio of games across numerous platforms.It will eclipse Tencent\’s 2016 $8.6 billion purchase of Supercell as the game industry\’s largest acquisition. Microsoft will become a major gaming company with over $20 billion in revenue and over 400 games.Microsoft hopes to use Activision\’s titles and talent to promote its cloud gaming service and increase Xbox Game Pass users. As other corporations try to match Microsoft\’s objectives, gaming consolidation may increase.

Microsoft Activision Blizzard deal – The EU Approval: A Major Milestone for Microsoft

Microsoft is one step closer to becoming the owner of Activision Blizzard, the gaming giant behind popular titles like Call of Duty, Overwatch, and World of Warcraft. The European Commission, the executive branch of the European Union, has given its green light to the $69 billion deal, subject to some conditions that aim to protect competition and consumer choice in the cloud gaming market.

The EU approval comes after a thorough investigation that looked into how the merger would affect the distribution of games on different platforms and services. The Commission concluded that Microsoft would not have an incentive to stop selling Activision\’s games on rival consoles like Sony\’s PlayStation, or on rival subscription services like EA Play. Even if it did, this would not significantly harm competition in the console market, where Microsoft faces strong competitors like Sony and Nintendo.

However, the Commission did find that Microsoft could harm competition in the cloud gaming market, where it offers its Xbox Game Pass service that allows gamers to stream games on various devices. The Commission was concerned that Microsoft could limit access to Activision\’s games on other cloud gaming services, or charge higher prices for them, reducing consumer choice and innovation.

To address these concerns, Microsoft offered some commitments that were accepted by the Commission. These include:

– A free license to consumers in the European Economic Area (EEA) that would allow them to stream Activision\’s games on any cloud gaming service of their choice, using any device and operating system.
– A free license to cloud gaming providers in the EEA that would allow them to stream Activision\’s games to their customers, without paying any fees to Microsoft.
– These licenses would apply to all current and future Activision games for PC and console, and would last for 10 years.

These commitments are unprecedented in the gaming industry and represent a significant improvement for cloud gaming as compared to the current situation, according to Margrethe Vestager, the executive vice president in charge of competition policy at the European Commission.

The EU approval is a major milestone for Microsoft, which announced its intention to buy Activision Blizzard in January 2023. The deal is still subject to regulatory approval in other jurisdictions, including the US and the UK. The UK\’s Competition and Markets Authority (CMA) blocked the deal in April 2023 over similar concerns about cloud gaming, and Microsoft is appealing the decision.

If the deal goes through, Microsoft will become the largest gaming company in the world by revenue, with a portfolio of over 40 studios and more than 400 million monthly active players across its franchises. Microsoft hopes that the acquisition will boost its Xbox business and its ambitions in cloud gaming, as well as create more opportunities for developers and gamers alike.

Microsoft Activision Blizzard deal – The Impact on Activision Blizzard: A Boost for the Struggling Publisher

Activision Blizzard, one of the largest video game publishers in the world, has been facing a series of challenges in recent years. The company has been dealing with declining revenues, shrinking player base, increasing competition, and a massive lawsuit over allegations of sexual harassment and discrimination. The acquisition by Microsoft, announced on January 18, 2022, could be a game-changer for the troubled publisher. Here are some of the ways that the deal will benefit Activision Blizzard in terms of financial stability, creative freedom, and reputation recovery.

Financial stability: The deal is valued at $68.7 billion, making it the largest acquisition in the gaming industry history. Microsoft will pay $95 per share in cash for Activision Blizzard, a 45% premium over the closing price on January 17. This means that Activision Blizzard shareholders will receive a hefty payout for their investment. Moreover, the deal will provide Activision Blizzard with access to Microsoft\’s vast resources and expertise, which could help the publisher improve its operational efficiency and profitability. Microsoft has a strong track record of growing its gaming business, which generated $15.4 billion in revenue in fiscal year 2021. Microsoft also has a loyal and engaged user base of over 100 million monthly active users on Xbox and over 25 million subscribers on Xbox Game Pass. By joining forces with Microsoft, Activision Blizzard could leverage these platforms to reach new audiences and generate more recurring revenue.

Creative freedom: The deal will also give Activision Blizzard more creative freedom to develop and publish its games. Microsoft has stated that it will respect the creative autonomy and culture of Activision Blizzard and its studios, which include Blizzard Entertainment, Treyarch, Infinity Ward, Sledgehammer Games, Toys for Bob, and King. Microsoft has also said that it will continue to support Activision Blizzard\’s existing franchises, such as Call of Duty, Warcraft, Diablo, Overwatch, Candy Crush, and Crash Bandicoot. Additionally, Microsoft has indicated that it will invest in new and original games from Activision Blizzard\’s talented teams. This could mean that Activision Blizzard will have more flexibility and resources to pursue its creative vision and innovation without being constrained by financial pressures or shareholder expectations.

Reputation recovery: The deal could also help Activision Blizzard recover its reputation, which has been tarnished by the lawsuit filed by the California Department of Fair Employment and Housing (DFEH) in July 2021. The lawsuit accused Activision Blizzard of fostering a \”frat boy\” culture that discriminated against women and other marginalized groups, resulting in widespread harassment, abuse, and retaliation. The lawsuit sparked a wave of backlash from employees, customers, partners, regulators, and investors, leading to several resignations and firings of senior executives, including former CEO Bobby Kotick. The deal with Microsoft could signal a fresh start for Activision Blizzard and its employees. Microsoft has a reputation for being one of the most progressive and inclusive companies in the tech industry. Microsoft has also pledged to work with Activision Blizzard to ensure a safe and respectful work environment for everyone. By aligning with Microsoft\’s values and standards, Activision Blizzard could rebuild trust and confidence among its stakeholders and restore its image as a leader in the gaming industry.

Microsoft Activision Blizzard deal – The Implications for the Gaming Industry: A Shift in the Balance of Power

The gaming industry has witnessed a series of blockbuster deals in the past year, with Microsoft\’s $69 billion acquisition of Activision Blizzard being the largest and most recent one. The deal, which has received approval from the EU but faces opposition from the UK and the US regulators, will have a significant impact on the competitive landscape of the gaming industry and create new challenges and opportunities for other players.

One of the main implications of the deal is that it will strengthen Microsoft\’s position in the cloud gaming market, which is seen as a key driver of growth and innovation in the gaming industry. Cloud gaming allows users to stream games from remote servers without downloading or installing them on their devices, reducing hardware costs and increasing accessibility. Microsoft has committed to let cloud rivals offer Activision\’s popular titles such as Call of Duty, Overwatch and World of Warcraft on their own platforms for 10 years, but it will still have an advantage in terms of integration, promotion and pricing of its own cloud gaming service, Xbox Game Pass.

Another implication of the deal is that it will increase the concentration and consolidation of the gaming industry, as more of the fragmented video game market is scooped up by a handful of the largest gaming companies. This could reduce competition and innovation, as well as raise antitrust concerns. On the other hand, it could also create opportunities for smaller and independent developers to fill the gaps left by the big players, especially in niche genres and markets. Moreover, it could spur more investments and partnerships among gaming companies and other tech giants, such as Google, Amazon and Facebook, who are also interested in entering or expanding their presence in the gaming industry and the metaverse.

The deal also has implications for gamers and consumers, who may benefit from more choices, better quality and lower prices of games and services, but may also face some drawbacks. For instance, some gamers may be concerned about losing access to their favorite games or platforms if they are exclusive to Microsoft or its competitors. Some may also worry about the impact of the deal on Activision\’s corporate culture and game development, given the recent allegations of sexual harassment and misconduct at the company. Additionally, some consumers may be wary of the privacy and security risks of cloud gaming, as well as the environmental impact of increased energy consumption.

In conclusion, Microsoft\’s acquisition of Activision Blizzard is a game-changer for the gaming industry, as it will reshape the balance of power among the major players and create new dynamics in the market. The deal will have both positive and negative implications for other gaming companies, gamers and consumers, depending on how they adapt to the changing environment. The deal also raises some regulatory and ethical questions that need to be addressed by policymakers and stakeholders.