With the announcement that Microsoft has secured the green light from the UK regulator to finalize its acquisition of its latest target, Activision Blizzard, speculation, optimism, and concerns, abound. The $68.7 billion purchase spent close to two years under close scrutiny by regulatory bodies, gamers, and industry experts since its initial announcement back in January 2022. Now that the UK’s Competition and Markets Authority has given its approval, thanks in part to some strategic concessions by Microsoft, the path is paved for the deal to officially close.
However, this marks the beginning of a new set of challenges and questions for Microsoft.
Firstly, there’s the issue of the Activision Blizzard leadership. With Bobby Kotick at the helm of the gaming giant, a lot of concerns have been raised regarding his leadership style and the culture he promoted. It’s essential for Microsoft to be careful of its next steps.
We’ve cleared the new deal for Microsoft to buy Activision without cloud gaming rights.
In August, Microsoft made a concession that would see Ubisoft, instead of Microsoft, buy Activision’s cloud gaming rights.
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— Competition & Markets Authority (@CMAgovUK) October 13, 2023
We’re grateful for the CMA’s thorough review and decision today. We have now crossed the final regulatory hurdle to close this acquisition, which we believe will benefit players and the gaming industry worldwide.
— Brad Smith (@BradSmi) October 13, 2023
While Kotick has been a formidable figure in the gaming industry, serving as the guiding light for Activision Blizzard for years, Microsoft will undoubtedly feel the pressure to bring in fresh leadership that can reshape the public image of the newest company to join the fold and navigate it to align with Microsoft’s broader, cloud-based vision. Sarah Bond is a potential candidate after proving her mettle with her impressive work within Xbox. Another name that springs to mind is Mark Ybarra, with his deep understanding of the gaming industry.
Overall, the overarching sentiment is clear: Microsoft needs to cleanse the leadership ranks and bring in individuals who resonate with a more modern, inclusive, and progressive ethos.
Another dimension to consider is the pressure on Microsoft’s CEO, Satya Nadella. The scrutiny and delays brought on by the acquisition, especially with regulators raising eyebrows, might have been more than Nadella bargained for. With the Xbox group of companies under the larger Microsoft umbrella, it’s apparent that the tech giant will expect a significant return on this massive investment. The Xbox division, now bolstered by some of the industry’s most significant IPs, will need to deliver results that justify the investment and the regulatory hoops the company had to jump through.
Phil Spencer, the face of Xbox for many, has garnered trust from the community, but what of the future? While Spencer has been instrumental in fostering a sense of community and placing gamers at the heart of Xbox’s decisions, there’s no certainty that his successor, whenever that transition might occur, will share the same ethos. The company’s direction, while seemingly community-centric now, could shift depending on the objectives and vision of future leadership.
The acquisition’s implications go beyond leadership and corporate strategy. The gaming landscape itself might undergo a shift. While the immediate fear was around the potential monopoly Microsoft could command in the console space, it appears that the real concerns lie in the evolving worlds of streaming and subscriptions.
The EU and UK regulators’ reservations around this were evident, and Microsoft’s decision to make concessions around streaming rights suggests a possible pivot in their long-term strategy.
Moreover, the integration of Activision Blizzard into the Microsoft ecosystem raises questions about game development and distribution. While Microsoft’s past approach has often tethered on the conservative side, the sheer size and scope of Activision Blizzard might necessitate a different approach.
With IPs like Diablo, Fallout, Elder Scrolls, and a slew of shooting games now under Microsoft’s belt, the strategy around game development, distribution, and subscription models like Game Pass will be critical.
Furthermore, the mobile gaming arena presents its own set of challenges. With titles like Candy Crush and Call of Duty, Microsoft has made a notable foray into the mobile space. But is this enough to challenge giants like the App Store or Google Play?
With the regulatory challenges now firmly behind them, Microsoft now faces the inevitable task of integrating, leading, and capitalizing on one of the most significant acquisitions in gaming history. Only time will tell if the risks taken will lead to the rewards envisioned.
