Well that certainly came out of nowhere! Microsoft has opened its wallet once again, this time buying up massive video games publisher Activision Blizzard for a whopping $69 billion. Nice.
After receiving criticism during the previous console generation for the lack of exclusive games on its Xbox One system, Microsoft has stepped up in a big way in the last few years. Early moves brought on board companies like Obsidian and Rare, and then last year came another shock announcement: the acquisition of ZeniMax – the parent company of Bethesda. All of those laid the groundwork for something big, and Microsoft has now added Activision Blizzard to its lineup, bringing on board hugely popular games and franchises like Call of Duty, Overwatch, World of Warcraft, and even popular mobile game Candy Crush.
At almost ten times the price of its Bethesda purchase, Microsoft clearly has big plans for Activision Blizzard and its games. Even by the standards of other corporate takeovers, $69 billion is a lot of money – an almost unfathomable amount. As Microsoft looks to expand its Xbox and PC gaming platforms, though, it makes a lot of sense to bring on board a company like Activision Blizzard.
Keep in mind that Microsoft is currently pushing hard to take gaming as a whole in a new direction, pioneering a subscription model based on the likes of Netflix – indeed, Game Pass was originally pitched as the video game equivalent of Netflix. Though on the surface the company seems to be taking a two-pronged approach, with its Xbox home console family and PC gaming being separate, in many ways that isn’t really the case any more. Microsoft’s goal is to bring these two platforms as close together as possible, offering most games to players regardless of their chosen platform. One need only look to two of the biggest releases of the past year as an example: both Halo Infinite and Forza Horizon 5 came to both Xbox and PC, despite originally being franchises that were exclusive to consoles.
Let’s step back for a moment. My initial reaction to this news was disbelief! But after double-checking my sources and confirming that this was, in fact, not some kind of elaborate prank, my next thoughts were of the Activision Blizzard scandal, and how from Microsoft’s point of view this may not have been the best time to announce this acquisition.
There’s no denying that Activision Blizzard is a tainted brand in the eyes of many players, with the severity of the sexual abuse scandal cutting through to make the news in mainstream outlets when it broke last year. Perhaps somewhat counter-intuitively, the scandal is part of the reason why Microsoft may have felt that the timing was right – Activision Blizzard shares had lost basically a third of their value over the last few months (down from almost $100 per share to below $65 prior to the acquisition announcement). Microsoft arguably made a savvy deal in some respects.
There also seems to be a sense from at least some quarters of the gaming press and gaming community that Microsoft is “swooping in” to save Activision Blizzard from the scandal, perhaps even preserving the jobs of some employees or protecting games and franchises from cancellation. I didn’t really expect this reaction, and while it’s safe to say there’s been plenty of criticism to balance out some of the positivity, overall the mood of players seems to be more in favour of this acquisition than opposed to it.
We should talk about exclusivity before we go any further. Despite the hopeful – almost desperate – claims being made in some quarters, Microsoft isn’t going to publish Activision Blizzard titles on PlayStation forever. Once the deal has gone through and existing contracts have been fulfilled, expect to see all of Activision Blizzard’s new titles and big franchises become Xbox, PC, and Game Pass exclusives.
This is exactly what happened with Bethesda. Some players clung to the argument that Microsoft somehow wouldn’t want to limit the sales of some of these games to Xbox and PC players only, with some even going so far as to claim that we were witnessing the “death of console exclusives.” That hasn’t happened (to put it mildly) and we’re now expecting massive games like Starfield to become Xbox, PC, and Game Pass exclusives.
When Microsoft first jumped into the home console market in 2001 with the original Xbox, a lot of games industry critics and commentators argued that the company would open its wallet and spend, spend, spend in order to compete with the likes of Sega, Nintendo, and Sony. Microsoft certainly made some sound investments in games early on, but it’s really taken almost twenty years for some of those concerns to be borne out – and by now, the gaming landscape has so thoroughly shifted that it doesn’t feel like a bad thing any more.
When Microsoft announced the acquisitions of the likes of Oblivion, Rare, and even Bethesda, there was still a sense that the games industry was pursuing its longstanding business model: develop games, release them, sell them, turn a profit, repeat. But now I believe we’re actually in the midst of a major realignment in the way the entire games industry operates – a realignment that’s shaping up to be as disruptive as Netflix’s emergence as a streaming powerhouse in the early 2010s.
Microsoft isn’t making all of these big purchases just to make games and sell them individually. That approach will remain for the foreseeable future, of course, but it isn’t the company’s primary objective. In my view, this is all about Game Pass – Microsoft’s subscription service. Microsoft has seen how successful the subscription model has been for the likes of Netflix – but more importantly for the likes of Disney with Disney+.
As streaming has become bigger and bigger in the film and television sphere, more companies have tried to set up their own competing platforms. In doing so, they pulled their titles from Netflix – something we saw very recently with Star Trek: Discovery, for example, which will now be exclusively available on Paramount+. Microsoft is not content to simply license titles from other companies – like Activision Blizzard – because they fear that a day is coming soon when other companies try to become direct competitors with their own platforms – muscling in on what Microsoft sees as its turf. If Sony gets its act together and finally manages to launch a Game Pass competitor on its PlayStation consoles, Microsoft will be in an out-and-out scrap, and pre-empting that fight is what acquisitions like this one are all about.
If Netflix had had the foresight to use a portion of the money it had been making in the early 2010s to buy up film studios or television production companies, it would have lost far fewer titles over the last few years, and wouldn’t have needed to pivot so heavily into creating its own content from scratch. I think that the Activision Blizzard deal is one way for Microsoft to shore up its own subscription service ahead of a potential repeat of the “streaming wars” in the video game realm.
So it isn’t just about “more games for Game Pass” – this deal is about Microsoft’s vision for the future of gaming as a medium, and also their concerns about other companies trying to elbow their way in and become serious competitors. Spending $69 billion may be a huge financial hit up front, but if it pays off it will mean that Game Pass will remain competitive and profitable for years – or even decades – to come. That’s the attitude that I see through this move.
And I don’t believe for a moment that Microsoft is done. Activision Blizzard may be the company’s biggest acquisition to date, but it won’t be the last. When the deal is done and has officially gone through – something that most likely won’t happen for at least twelve months – expect to see Microsoft lining up its next big purchase, and it could be yet another games industry heavyweight. There have been rumours in the past that Microsoft had considered making a move for Electronic Arts, for example… so watch this space!
As a player, these are exciting times – but also turbulent times. I increasingly feel that it’s hardly worth purchasing brand-new games, because several massive titles that I’ve spent money on have ended up coming to Game Pass. In the last few days the Hitman trilogy has arrived on the platform, Doom Eternal landed on Game Pass last year, and even Mass Effect: Legendary Edition is now on the platform less than a year after its release. What’s the point in buying any new games any more? Let’s just wait and it seems Microsoft will eventually bring them to Game Pass!
This is, of course, an attitude Microsoft wants to foster. If Game Pass is an appealing prospect, players will stop buying games. Once they’re “locked in” to the Game Pass ecosystem, Microsoft thinks it’s got them for the long haul. This is how Netflix, Disney+, and other streaming platforms view their audiences, too: once someone has been hooked in, they tend to stay hooked in. That’s why they put the majority of their time and energy into recruiting new subscribers rather than ensuring current subscribers stay signed up.
So it’s an interesting moment in gaming, and one that has the potential to herald an entirely new chapter in the medium’s history. People who decry the death of buying individual titles increasingly feel like they’re on the losing side; relics of an era that’s rapidly drawing to a close. Subscriptions have basically become the norm in film and television, with sales of DVDs, Blu-rays, and the like in what seems to be terminal decline. Television viewership, along with cable and satellite subscriptions, are likewise declining.
And who really feels that the death of broadcast television is something to mourn? Subscription platforms offered viewers a better deal – so they snapped it up. If Game Pass can do the same for gaming, more and more players will jump on board.
Speaking for myself, I’ve been a subscriber to the PC version of Game Pass for almost a year-and-a-half. In that time, my subscription has cost me £8 per month ($10 in the US, I think). Call it eighteen months, and that’s £144 – or roughly the same amount of money as three brand-new full-price video games. In that time I’ve played more than three games, meaning Game Pass feels like a pretty good deal. If Microsoft continues to splash its cash on the likes of Activision Blizzard, bringing even more titles to the platform without asking me to pay substantially more for my subscription, then as a consumer I gotta say it’s worth it.
One corporate acquisition on its own does not irreversibly shift the gaming landscape. But we’re on a trajectory now that I believe will see gaming move away from the old way of doing business into a new era where subscriptions will be a dominant force. There will be advantages and disadvantages to this, but I don’t see it slowing down. As the likes of Sony and even Nintendo try to compete with Game Pass, if anything we’re likely to see this trend speed up.
Watch this space – because this certainly won’t be Microsoft’s last big move.
All titles mentioned above are the copyright of their respective studio, developer, and/or publisher. Some promotional screenshots courtesy of IGDB. This article contains the thoughts and opinions of one person only and is not intended to cause any offence.