Microsoft’s acquisition of Activision Blizzard is a big deal for gamers and the video game industry as a whole. Here’s what you need to know.
- What is Activision Blizzard? Activision Blizzard is one of the world’s largest video game publishers, with brands like Call of Duty, Destiny, and World of Warcraft. The company has more than 800 million active players worldwide.
- What does this acquisition mean for Microsoft? Microsoft now has a major player in the video game market, with a wide range of brands and games to choose from. The company will be able to compete more effectively with rivals like Sony and Nintendo. Additionally, Microsoft will be able to use Activision Blizzard’s resources to develop new games and platforms. ..
More Games Are Coming to Game Pass
Microsoft is betting big on Game Pass for the future. The service, where gamers can pay a flat fee each month and have access to a huge catalog of games on-demand, hit 25 million subscribers in January 2022. The company has doubled down on the model with the addition of Xbox Cloud Gaming, which means you don’t even need a console to use Game Pass anymore.
Acquisitions like Activision Blizzard should be viewed through the lens of the company’s subscription-based business model. When Microsoft acquired ZeniMax Media (including Bethesda), a huge number of titles were added to Game Pass. This included older Fallout and Elder Scrolls games but also newer titles like Dishonored 2 and a revamped re-release of Quake II as soon as it launched.
The Activision deal will bring a huge number Activision titles to Game Pass for Xbox and PC. This could include titles made for older platforms like the Xbox 360 and Xbox One, something Microsoft has already done with other franchises that were brought under its umbrella, like Psychonauts (Xbox) and RAGE (Xbox 360).
This also goes for new Activision releases. Microsoft has heavily marketed the idea that all new first-party titles will be coming to Game Pass on the day of release. So that makes it very likely that future Call of Duty and Diablo releases will be available to Game Pass subscribers as part of their subscription, as soon as they’re ready.
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Will Game Pass Become More Expensive?
At $14.99 per month, Game Pass Ultimate is a fantastic deal for gamers right now. For the price of three full-priced titles per year you can have access to hundreds, including big AAA releases like Halo and Forza, but also smaller indie gems and casual experiences too. The more games that are added, the better the value proposition.
So when will Game Pass have its “Netflix moment” and creep up to $18 or $20 per month? It could be a while yet. Microsoft is still in full-on competition mode. With rumors swirling that Sony is getting ready to enter the all-you-can-eat subscription model too, now seems like a bad time to pull the rug.
The other thing to remember is that, unlike Netflix, Microsoft has other avenues for making money. While subscription fees bankroll much of what Microsoft is trying to do, the company also runs storefronts on both PC and Xbox. There are micro-transactions for games like Halo and soon-to-be-acquired battle royale titles like Call of Duty: Warzone. There are DLC packages and early-access gates for games like Forza.
And then Microsoft also makes the hardware. While consoles are traditionally seen as loss leaders, eventually economies of scale catch up and hardware turns a small profit. So while it’s likely that Game Pass will increase in price eventually (as is the case with just about every service and commodity), we may see a few more acquisitions before that happens.
Activision Blizzard Titles Will Probably Go Xbox Exclusive
Microsoft has already made a statement that existing Activision contracts will be honored. This is the obvious choice, since breaking such contracts could result in lawsuits and foster ill-will among the community. Ever since the disastrous launch of the Xbox One during the Don Matrick era, Microsoft has been in “good guy mode” and such a move would not be popular.
The same thing happened when Microsoft acquired Bethesda in the ZeniMax Media deal. Deathloop was released as promised in 2021 for PlayStation 5 exclusively since that deal was signed long before the acquisition was made. In 2022, GhostWire: Tokyo (another Bethesda title) will be released for the PlayStation 5 in a similar deal.
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Despite nebulously-worded assurances to the gaming community at the time of the deal, Microsoft has said that future titles from developers like Bethesda Softworks won’t be released on Sony hardware. This means that the long-awaited upcoming “Skyrim in space” sci-fi RPG Starfield will be an Xbox console exclusive.
So will Call of Duty eventually only release on Xbox and PC? It’s hard to say for sure, but the next three titles in the CoD franchise will release on PlayStation. There have been no assurances from Microsoft that the franchise will survive on PlayStation beyond current contractual agreements.
— Phil Spencer (@XboxP3) January 20, 2022
Microsoft hasn’t always limited its intellectual property (IP) to Xbox in the past though. Minecraft is famously available on everything, including Sony and Nintendo systems. It’s also highly likely that free-to-play battle royale Warzone will stay cross-platform since that’s Microsoft’s best route for making money.
More IP Could Mean More Games
You’re not alone in thinking that Activision has stagnated over the past decade. The company has always gone all-in on what works, which is why we saw so many Guitar Hero and Tony Hawk games back in the day. It’s also the reason they’ve lately become known as “the Call of Duty company” in many circles.
Despite this reputation, Activision Blizzard sat on a massive amount of IP. Many of these games were unduly shelved because they never hit the dizzy heights of a Call of Duty title, but Microsoft’s acquisition allows the new owners to draw from a huge pool of shelved franchises.
This includes classics like Pitfall and King’s Quest, throwbacks like Crash Bandicoot and Prototype, older PC games like HeXen and Interstate ’76, and strategy favorites Caesar and StarCraft. Some titles like Tony Hawk’s Pro Skater and Guitar Hero or DJ Hero would fit the Game Pass mold perfectly.
Microsoft didn’t spend nearly $69 billion just to make a new Call of Duty game once a year, but it remains to be seen how much of this catalog will see the light of day again. At the very least, we should see a generous helping of legacy titles added to Game Pass. As for Call of Duty? That’s one area we might see fewer games, since the only Microsoft franchise that gets anywhere near an annual release is Forza.
This Deal Could Change the World (of Warcraft)
Activision may be best known for shooters and plastic guitars, but Blizzard serves a different demographic. Despite its success in bringing huge franchises to market, the company hasn’t done much for a few years now aside from finding itself embroiled in similar scandals to its parent company.
Microsoft’s acquisition has sparked discussions of what will happen to Blizzard and its existing services. Microsoft could include a World of Warcraft subscription with Game Pass Ultimate, which could give the massively multiplayer online RPG (MMORPG) that launched way back in 2004 a new lease of life.
Blizzard also produces other smash hits like Diablo and Overwatch, both of which have sequels in development, and both of which are now likely to hit Game Pass on day one of release. Then there’s Battle.net, Blizzard’s proprietary launcher, required for titles like World of Warcraft.
Rolling Battle.net into existing Microsoft Store or Xbox Live infrastructure is a bigger task than it first may seem. Blizzard is a company that has managed to foster a real community around its games, and changing the infrastructure that supports that community might not go well for Microsoft.
Blueprints for a Metaverse
There was another concept mentioned in Microsoft’s statements, picked up by outlets like Bloomberg. The company’s press release claimed that the deal would “provide building blocks for the metaverse” in the opening paragraph. So what does this mean to the average user?
If you put your skeptical hat on, mentions of the as-yet-undefined “metaverse” could be seen as purely lip service to investors and shareholders. Put it this way: when a company you have a financial stake in buys out a company trading at around $65 per share for a whopping $95 per share, you may question the vision behind such a deal. One easy fix? Talk up what the deal could mean for the future of gaming.
The word “metaverse” is really in right now. It’s a buzzword, and it could be argued that the concept of a blurred line between the digital and real world has existed for as long as persistent online worlds (like World of Warcraft and Second Life) have graced the internet. Microsoft probably wants to be seen as if they too are on-trend as companies like Facebook (now Meta) rebrand to embrace this concept head-on.
Gamers are already well acquainted with what is now termed the metaverse, and though technology will further blur the lines between the world we live in and the world we play in, I think Microsoft’s acquisition probably has little to do with this concept. It’s far more likely a play for more IP, to control a bigger portion of the mainstream console space, and grow Game Pass into the one place you should play your games.
It’s also a pre-emptive move in a space that continues to grow, and a market that continues to be worth more year on year. If you pay $69 billion today, you won’t have to pay $169 billion in five or ten years to own a similar slice of the market.
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PC Gamers Might Be the Biggest Winners
Microsoft has been taking PC gaming very seriously for several years now. Previously Xbox-exclusive titles like Halo and Forza now launch day one on PC, with PC Game Pass offering a serious value proposition if you play your games on Windows.
While it could be argued that Sony is the biggest loser, PC gamers may be the biggest winners. If you don’t want to pay for a Game Pass subscription on PC, you don’t have to if you’re happy to buy your games instead. After all, Microsoft has started putting games on Steam again, including Halo.
Activision titles that were previously exclusive to Battle.net could end up on Steam again. This includes Call of Duty or even World of Warcraft. With Microsoft’s commitment to the PC as a platform, future Activision titles could release on Steam on day one, just as they do on Xbox and Game Pass.
This is all down to the fact that Microsoft doesn’t necessarily need you to buy an Xbox, but rather subscribe to its services. The knock-on effect of a greater commitment to the PC is good for anyone who considers themselves a PC gamer, and the games space as a whole.
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Consolidation Is Ultimately a Bad Thing, Right?
A narrower gaming horizon means less competition, and less competition usually means a worse deal for the customer. The “Disneyfication” of franchises like Star Wars and Marvel is often lauded as one example of this. Companies like Activision and EA have been called out for swallowing beloved developers like Maxis and Bullfrog only to shutter them. This usually results in fewer games being made.
But in this case, Activision hasn’t really been competing outside of new Call of Duty games. The company has sat on a huge amount of IP, with unrealistic expectations of success set by the number-one-selling annual franchise. Blizzard has also been falling apart, with staff leaving and “do you guys not have phones?” moments demonstrating that those making the decisions at the top were largely out of touch with the loyal fanbase.
Both companies have been in the news for the wrong reasons, including abuse allegations at the highest levels of management. If you care about the people making your games, you know that something had to change.
— Phil Spencer (@XboxP3) January 18, 2022
By comparison, Microsoft has been doing everything to bolster its reputation and Game Pass offering. Phil Spencer’s “leaked” email comments about re-evaluating Microsoft’s relationship with the company in the wake of the latest scandal give reason to be cautiously optimistic. The head of Microsoft Gaming has already expressed a fondness for franchises like HeXen and Guitar Hero and though these are far from official announcements, it’s a positive sign.
Thanks to the growing mainstream appeal of games as a medium and the democratization of tools, more games are being made today than ever before. A huge portion of the gaming community doesn’t play AAA titles, and many more prefer to play games on their phones.
This deal touches one corner of the gaming industry, but there are so many other spaces that won’t flinch. It’s a big deal if your favorite game is Call of Duty, but if you’re more likely to have your nose in the latest early access title on Steam or some weird game jam creation on itch.io, you might not care.
