And Microsoft swallowed Activision | When the very big beast eats the big

Ludovic Clement
6 min readFeb 13, 2022


At the end of 2021, at the height of the turmoil in which Activision Blizzard was caught and under the impetus of a few high-ranking executives, Phil Spencer, boss of the Xbox division, called Bobby Kotick and his entourage to express his support in these difficult times and to remind them that Microsoft and Xbox were concerned about the way their partner treated female employees. This is, at least, the official version.

Unofficially, the goal was mainly to make sure that Microsoft would be in a good position to buy Activision if the opportunity arose, well aware that the moment was ideal: between accusations of harassment and widespread sexist behavior, scandals regarding the working conditions of exploited employees, threats of fines and sanctions (let’s remember that Riot, also accused of having maintained a “bro culture” making life unbearable for women in the company, recently paid no less than 100 million dollars in compensation to its employees following an intervention by the California Department of Fair Employment and Housing), and strikes, which are rare in the North American video game industry, Kotick’s company seemed unable to get out of a downward spiral that had caused its share price to lose nearly 40% of its value in one year.

So Microsoft offered Activision Blizzard a way out on January 18, when it bought the company for a record $68.7 billion, and also offered Bobby Kotick a guarantee that he would not be forced to sell the company, who was guaranteed to remain at the head of the company until the final closing of the acquisition (scheduled for June 2023) and could therefore leave with his head held high* by presenting a market capitalization inflated like a big soufflé, the mere announcement of the acquisition having been enough to increase the share price by 25%, instantly making up for months of erosion.

Of course, the opportunity was there and acquiring a company of this size at a time when its value is historically weakened is without a doubt a good deal for Microsoft. But this is not just a matter of circumstances. Beyond the astonishment at the amount of this particular acquisition — $68.7 billion, by far the largest in the history of video games — which seems to give it an exceptional character, it is worth remembering the context in which it took place. Industry context, generally speaking. Acquisitions of studios and publishers, increasingly huge, are multiplying, and not only because of Tencent’s greed. The second biggest acquisition in history was announced only a few weeks before Microsoft’s: in early January, Take Two acquired Zynga for $12.7 billion. And it’s not over yet: the industry is buzzing with rumors that when it comes to mega-acquisitions, the year has just begun. In short, here as elsewhere, hyper-concentration is in fashion.

* This, despite the almost pathological stubbornness of the man, was not a foregone conclusion when he was accused of gorging himself on the backs of employees (his $77,000 per hour salary was not well received at a time when Blizzard employees were admitting to skipping meals because of a lack of time and money) and of having been perfectly aware of his company’s discriminatory practices.

You have nothing to lose but your production lines. Also not to be forgotten is the context specific to Microsoft and its new policy. Since the acquisition of Minecraft in 2014 for 2.5 billion — the first of the current CEO Satya Nadella, made very shortly after his arrival in office — through of course that of Zenimax/Bethesda in 2021 (8.1 billion), Microsoft’s desire to build up, whatever the cost, a monstrous portfolio of licenses is a secret to no one.

Speaking about the acquisition of Activision, Phil Spencer made no secret of the fact: with this acquisition, more than just a brand (who does the name Activision make dream?), the company is looking to build a portfolio of licenses. As for Blizzard’s, it is well demonetized) or talented studios, Microsoft is looking to acquire a portfolio of intellectual properties. Sure, the behemoths Call of Duty, World of Warcraft, Starcraft, Diablo and Candy Crush (let’s not forget that Activision acquired King for nearly $6 billion in late 2015) come to mind, but they’re not the only ones. “I was looking at the list of licenses,” an excited Phil Spencer explained to the Washington Post, “they’ve got King’s Quest, they’ve got Guitar Hero, I think they even have Hexen!” (see “Never Say Never” sidebar).

With so much IP in its pocket, Microsoft has become in the space of two years one of the biggest software players in video games. A player that, moreover, has the ability to integrate the entire production and distribution chain, from the studios that produce the most profitable AAA games to the consoles on the Xbox side and the distribution platforms (Microsoft Store) on the PC. And, above all, to Game Pass.

Because this is where the war will be fought. Although, as Phil Spencer reminded us at the time of the Zenimax acquisition, the games of the acquired publishers will obviously continue to be released on PlayStation — which is not surprising, since Microsoft has no interest in depriving itself of such a sales pool or in arousing the ire of gamers -, the possibility for Microsoft to easily add to its monthly pass catalog such behemoths as Elder Scroll, Call of Duty or Doom, and especially to make sure they won’t be included in competing offers, is a huge advantage in the battlefield of bundles that will probably be one of the big issues of the 2020s. Not to mention the speculations of futurologists who are probing the long-term evolution of the market and for whom the integration of games with large communities in a future metaverse into their catalog is a very important asset for Microsoft, next to VR and AI, other areas in which they are seriously investing. But we are still in very hypothetical considerations.

In the short term, there is another question: can Activision Blizzard’s hard-pressed employees hope to benefit from this buyout? By all accounts, the answer is yes. First of all, even if Kotick will be kept on for at least another year, he will now be under the supervision of Spencer and should not have much decision-making power anymore. On the other hand, since Microsoft has a pretty good reputation when it comes to working conditions and respect for gender equality, the company has everything to gain by making sure that it does everything it can to remove the nasty layer of poop that covers the beautiful cake it just bought. The mood, in any case, seems to be one of optimism among the main (and especially the main) people involved. The next few months will tell us if it was justified.