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To bolster their stance in the video game industry across all platforms, Microsoft (MSFT) acquired Activision Blizzard (ATVI) for $68.7 billion dollars back in January. Activision Blizzard is a leader in video game development and an interactive entertainment content publisher.
Activision and Blizzard merged in 2008 and currently operate five business units: Activision Publishing, Blizzard Entertainment, Major League Gaming, King, and Activision Blizzard Studios. Activision and Blizzard merged in 2008.
The deal was the biggest acquisition ever within the gaming industry and is expected to accelerate growth in Microsoft’s gaming business. Let’s take a closer look into how MSFT’s acquisition of Activision Blizzard can bolster its position within the gaming industry.
Pre-Acquisition
MSFT had a long-standing business relationship throughout the years with Activision Blizzard prior to the acquisition. MSFT published ATVI’s products on the Xbox gaming platform and had commercial arrangements relating to the licensing of Activision Blizzard’s products.
Throughout the years in the gaming community, many speculated on Activision Blizzard’s future. Some believed that ATVI’s leading franchises had declined significantly and needed a revamp.
Mobile Gaming
Mobile gaming has seen extreme growth within the last few years and quickly became the biggest segment in gaming. It is estimated that more than 90% of all active video game players download and play mobile games. Microsoft wants to significantly expand its footprint in this aspect of the gaming business.
Activision has been in the mobile gaming arena for years now ever since their acquisition of King Digital Entertainment, or King, in February 2016.
King is a leading developer for the mobile gaming industry with a library that includes over 200 games. The most recognizable names in this library include Candy Crush, Pet Rescue, Bubble Witch, and others. King was responsible for $2.58 billion in net-revenue, or roughly 30% of ATVI’s revenue, in fiscal 2021. Net-revenue for King has increased each year since 2019.
ATVI’s established mobile gaming business brings enormous opportunity and upside for Microsoft’s future mobile gaming plans. Paired with the rate at which mobile gaming is growing, it is easy to see how Microsoft stands to benefit in this area.
Console Gaming
Microsoft has been extremely successful in console gaming, but wants to expand much more on this platform. Two of the biggest console titles that they currently own are Halo and Minecraft. Halo is MSFT’s flagship title and Minecraft is the best-selling game of all time.