Microsoft is set to pay $68.7 billion to acquire Activision Blizzard.

Microsoft is set to pay $68.7 billion for Activision Blizzard, the world’s largest video game publisher. The Wall Street Journal reported this today, and Microsoft confirmed it on Tuesday. While the deal isn’t yet finalised and is still subject to a regulatory process that could derail it, it could mark a seismic shift in the way competition between gaming’s three biggest hardware makers: Microsoft, Nintendo, and PlayStation plays out.

Activision is perhaps best known for overseeing the Call of Duty franchise, a blockbuster first-person shooter series that consistently leads the year’s top sellers with its annual November releases. Consider the following example: According to NPD Group’s retail and digital sales data, the two best-selling games in 2021 were Call of Duty: Vanguard, the series’ 2021 entry, and its 2020 predecessor, Call of Duty: Black Ops: Cold War.

Tony Hawk, Skylanders, Spyro, and Crash Bandicoot are among the well-known franchises in Activision’s library. But keep in mind that this isn’t just a deal for Activision. World of Warcraft, Overwatch, Starcraft 2, and the Diablo series are all available from Blizzard. And King, the Swedish mobile games publisher acquired by Activision in 2015, has Candy Crush. This is a huge deal, dwarfing Microsoft’s 2020 acquisition of Bethesda Softworks, the publisher of the Elder Scrolls and Fallout.

If the deal goes through — which, according to a leaked internal Activision Blizzard email announcing the news, won’t happen until mid-2023 — these top franchises will all be able to join the Xbox Game Pass library, the centrepiece of Microsoft’s Netflix-like subscription service. That’s exactly what Microsoft said in a blog post announcing the pending deal.

“Upon completion, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalogue,” according to the post. “In addition, we announced today that Game Pass now has over 25 million subscribers. As always, we look forward to adding more value and great games to Game Pass.”

Importantly, the agreement could herald positive change at Activision Blizzard, which has been embroiled in controversy since the summer of 2021, when a lawsuit filed by California’s Department of Fair Employment and Housing shed light on what many insiders described as a toxic workplace. Even as more details emerged in the months that followed, and workers began to band together in support of a more organised push for change, little seemed to come for the publisher.

Longtime CEO Bobby Kotick has remained in his position since the 1990s, despite a November report alleging that he was aware of sexual misconduct allegations within the company and failed to notify key stakeholders for years. It is unclear what the transaction means for Kotick’s long-term prospects. I believe it’s safe to predict that he’ll be fired within a year of the deal’s completion. However, Microsoft has stated that he will remain in place for the time being.

“Bobby will continue to lead Activision Blizzard as CEO, as he has for the past 30 years,” a Microsoft representative told IGN. “Bobby and Phil will collaborate to ensure the smooth transition to this exciting new joint venture. After the close, the Activision Blizzard business will report to Phil.”

In the long run, this is likely to be a positive development for Activision Blizzard employees. According to its own employees, the Microsoft of the 2020s is a happy place to work. While some may disagree, this deal is expected to bring about the type of leadership change that Activision Blizzard’s workforce has been demanding.

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