Three days ago Microsoft announced plans to buy the powerhouse video game company Activision Blizzard for a staggering $69 billion dollars. Through the acquisition Microsoft will become the world’s third-largest gaming company, behind Tencent and Sony.
It’s the largest deal in gaming ever and just to put things into perspective, Microsoft paid $26 billion for LinkedIn in 2016.
From the Microsoft press release:
With three billion people actively playing games today, and fueled by a new generation steeped in the joys of interactive entertainment, gaming is now the largest and fastest-growing form of entertainment.
Microsoft CEO Satya Nadella elaborated further:
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.
So there we have that metaverse thing again, the nascent and hard-to-define world of virtual and augmented reality, which ignited further debate around what the metaverse exactly is and what it will mean for all of us in the future.
Apparently the accusations of a toxic workplace culture, in which women were routinely sexually harassed and discriminated against, didn’t weigh much when Microsoft decided to move forward with the deal.
I think Ben Thompson from Dithering got it right when he concluded that in the end this deal just makes perfect business sense for Microsoft. Gaming is a huge and profitable industry, in which Microsoft is already deeply involved in through Xbox, and they’re sitting on top of a $140 billion cash pile. Why not use half of that to buy a growing business that will generate lots of revenues and opportunities for many years to come?
Also, bear in mind that the market cap of Microsoft is currently 2.25 trillion dollars. Of all the companies in the world, regardless of industry, only Apple has a larger market cap.
When you think about it like that, $69 billion doesn’t seem like such a big amount after all.