Yahoo Finance’s Daniel Howley joins the Live show to discuss why Microsoft wants to acquire Activision Blizzard.

Video Transcript

BRAD SMITH: Let's turn it over to the gaming space. Microsoft now saying regulators ignored its offer to make "Call of Duty" available to rivals as part of its purchase of Activision Blizzard. Yahoo Finance's Dan Howley has the details on this drama. Dan, what do we know?

DAN HOWLEY: This is big drama, high drama in the video game world. Basically, what's going on here is Microsoft wants to buy Activision Blizzard for $69 billion. It would be Microsoft's largest acquisition to date. The gaming side of their company doesn't make up that much revenue.

So you have to figure-- they're going to be trying to push that very heavily. The reason why they seemingly want Activision Blizzard is twofold, one, because of the game, "Call of Duty." Activision Blizzard also has other games. They have "World of Warcraft," "Diablo," big name titles like that. But "Call of Duty" is the only one that made a billion dollars in 10 days. So that's why it's so important.

The second reason is because they're trying to build out their gaming subscription service, Game Pass. They have a cloud element to that. Microsoft obviously has huge capabilities with its Azure cloud. And so they already have the technology to go and allow people to play games on any device.

The key here is mobile devices. Mobile gaming is obviously the fastest growing as far as revenue and players. People around the world generally don't have game consoles. They have smartphones. If you can get them to play Microsoft games via the cloud on their smartphones, boy, you got a really captive audience right there.

Outside of that, Activision Blizzard has King, which makes Candy Crush. So it would really allow them to reach a huge number of gamers around the world that are just untapped. They said that they wanted to go forward with giving PlayStation, Sony, 10 years of guarantee to have the next "Call of Duty." Right now, those are yearly releases. We don't know if they would continue to allow early releases. The thing that I think was kind of standing out was, would they have allowed it to be on Sony's rival cloud network? And they said they would.

So it really comes down to does the FTC think that this would damage competition? Microsoft says, look, they outsell us like crazy. It's not even fair. They have better-- they specifically said that Sony blows away their own in-house game.

So their own developed games, they're basically just dumping on and saying, Sony is way better than us, man. Just give us "Call of Duty." Give us Activision Blizzard. So, you know, it'll be interesting to see how this goes forward. But it's not just the FTC. It's the EU and the UK that this also has to get through. And they are already doing the second tier investigations that they have to.