Microsoft Activision Blizzard, the making of a Metaverse Empire

The deal to purchase Activision Blizzard for $69 Billion is Microsoft’s biggest acquisition yet in the gaming industry. With this acquisition, Microsoft will become the world’s third-largest games company after Tencent and Sony. But the deal goes beyond gaming and aligns Microsoft with their long-term vision for the Metaverse. Microsoft said about the acquisition:

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.” 

Satya Nadella – Microsoft Chief Executive

Activision Blizzard traces its roots to the 1979 Atari console but, in recent years, grew in success through massively multiplayer online role-playing games (MMORPGs). MMORPGs may be one of the key elements that brought Microsoft to the table, with multiplayer technology being a key criterion for Metaverse gaming. The deal also brings a mobile gaming platform, with 95% of gamers using mobile and Activision Blizzard games such as “Candy Crush”, known worldwide. Microsoft will need to change Activision Blizzard’s company culture, though. Last year Activision Blizzard faced a lawsuit from the state of California after a two-year investigation into working conditions at the company. Given the controversial management at Activision Blizzard, employees at the company will likely embrace the deal with Microsoft.

The acquisition strengthens Microsoft’s growing presence in the Metaverse. With titles including the Metaverse game “World of Warcraft”. WoW is one of the oldest virtual worlds and remains popular today. The deal also brings Microsoft a 100 million subscription base for Activision Blizzard’s game franchise “Call of Duty” alone. Together with Microsoft Mesh, AltspaceVR, Minecraft, and its own 25 million subscribers to Xbox Game Pass, the Tech Giant are well placed to capitalise on both the social and gaming Metaverse as it evolves.

Microsoft is quietly creating a Metaverse empire with a potential base of over 125 million subscribers. The deal for Activision Blizard places Microsoft at the forefront of Metaverse gaming and gives them a back catalogue of viral gaming titles such as “Spyro” and “Crash Bandicoot”. Activision Blizzard’s annual gaming revenue is over $2 Billion a year, and if Microsoft can attract that audience to Metaverse, then the acquisition will be seen as a decisive strategic move. The deal impacts the broader question as to how Metaverses will make money. Microsoft may be developing a subscription-based platform, a pay to play Metaverse, whilst Meta may support their platform through advertising. Decentralised Metaverses raise revenue by selling plots of virtual Land and Metaverse Crypto Tokens.

The gaming industry now eclipses Holywood and the Music Industry combined by a considerable margin in the entertainment sector. Whilst Holywood’s revenues are around $92 billion, and the global music market is worth $26 billion a year, the gaming industry is now worth $300 Billion a year. The Metaverse may propel that figure higher. With the effects of the lockdowns damaging revenue in many entertainment sectors, gaming has been one industry that has boomed during the Covid era. Microsoft acquiring Activision Blizzard may be a wise move. It gives Microsoft a huge subscription base to market their Metaverse platforms and could see them become market leaders in the Metaverse gaming.