Your biggest questions about the Microsoft-Activision deal, answered
From unionization to exclusivity to the employment status of a CEO, a lot of questions remain following Microsoft’s $68.7 billion acquisition of troubled Call of Duty and World of Warcraft maker Activision Blizzard. It’s by far the most significant acquisition we’ve ever seen in the video game space, and analysts agree that the industry will feel the effects of this deal for years to come.
“Undoubtedly, this acquisition strengthens Microsoft’s position in gaming on all fronts globally, including console, mobile, and PC, as well as cloud gaming and subscriptions,” Omdia Principal Analyst George Jijiashvili tells Pro Well Tech. “It underlines Microsoft’s commitment to gaming, and it will no doubt impact the dynamics of the broader games industry.”
To get a better idea of how exactly this could all play out, I reached out to Jessica Gonzalez, founder and community organizer of the ABetterABK workers’ alliance, as well as analysts, to get an accurate picture of what’s next for the employees at Activision Blizzard, as well as its future games.
Will the Microsoft/Activision deal affect union efforts?
The Activision Blizzard acquisition comes after a brutal year in which a July 2021 lawsuit from the California Department of Fair Employment and Housing revealed several harassment allegations at the company. Since then, there have been multiple bombshell reports about mismanagement, employee walkouts, and a strike.
In fact, some strikes within the company have yet to be recognized by Activision Blizzard management. That includes one by Call of Duty: Warzone dev team Raven, which is currently striking to negotiate better deals for its QA team. These issues put Activision Blizzard’s board in a position where it was willing to sell, but it also kick-started developer unionization movements.
“The news doesn’t change unionizing efforts. We are still pushing forward.”
Many developers at Activision Blizzard are organizing under the ABetterABK workers’ alliance and eventually plan to unionize. While this deal means Activision Blizzard’s management may change in 2023, Gonzalez makes it very clear that this deal won’t stop the effort.
“The news doesn’t change unionizing efforts,” Gonzalez tells Pro Well Tech. “We are still pushing forward. I’m always going to be worried that employees are stonewalled because Activision refuses to acknowledge the strike happening right now.”
Gonzalez says that Microsoft is “a mixed bag regarding unionization,” and Microsoft Gaming CEO Phil Spencer even admitted in an interview with The Washington Post that he doesn’t have a lot of experience with them.
“We’ll be having conversations about what empowers them to do their best work, which as you can imagine in a creative industry, is the most important thing for us,” Spencer said.
To Gonzalez and many others, unionization is the way to empowerment. “I won’t be fully rested until employees unionize and have that bargaining power,” Gonzalez said. “It’s long overdue in the industry.”
Will Activision Blizzard CEO Bobby Kotick resign?
While there is a lot of speculation and varying reports about Kotick’s role going forward, the truth is that we don’t know what will happen just yet. The Wall Street Journal says the controversial CEO will step down once the acquisition is complete, but we know that his current contract ends for sure in March 2023.
ABetterABK has called for his resignation for months as several reports indicate that he was aware of Activision Blizzard’s issues long before the 2021 lawsuits. This acquisition will eventually allow him to step away from the company — possibly with a big payday — but he is not leaving just yet and likely won’t until next year.
Will Activision Blizzard games become exclusive to Xbox?
When it comes to Microsoft’s acquisitions, the exclusivity question is always a big one. So far, it appears that Call of Duty won’t leave PlayStation platforms for the interim, according to a Tweet from Microsoft Gaming CEO Phil Spencer.
Had good calls this week with leaders at Sony. I confirmed our intent to honor all existing agreements upon acquisition of Activision Blizzard and our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry, and we value our relationship.
— Phil Spencer (@XboxP3) January 20, 2022
Prior to this revelation, Kantan Games CEO Serkan Toto told Pro Well Tech that there’s no way that Microsoft would spend this much money to not make games exclusive.
“These brands will go exclusive on console, all of them,” Toto said. “There might be a few games that fall through the cracks, i.e. serviced titles like Call Of Duty: Warzone that are already up and running. But Microsoft didn’t spend all these billions to supply competing platforms with software.”
While it looks like the Call of Duty series (or at least Warzone) will stay multiplatform for the foreseeable future, Activision Blizzard still has plenty of other franchises like Overwatch and Diablo that could become exclusive. Regardless of what’s only on Microsoft platforms, Jijiashvilli points out that having Activision Blizzard’s new games on Xbox Game Pass on the day they are released “could be a major benefit for Xbox when these consumers decide between Xbox Series or PS5.”
“Microsoft didn’t spend all these billions to supply competing platforms with software.”
As Pro Well Tech’ own breakdown explains, Microsoft doesn’t defy previous deals or stop updating live service games on certain platforms. Don’t expect Microsoft to remove games from PlayStation and Nintendo storefronts or for games like Overwatch to drop PlayStation support suddenly. And per Spencer, it looks like Call of Duty games will still come to PlayStation for the time being.
Xbox Game Pass spans PC, Xbox consoles, phones, and web browsers, so there won’t be a shortage of places to play Activision Blizzard games that become exclusives. They’ll make Xbox Game Pass more appealing, and there’s a good chance that all past and future Activision Blizzard titles still supported on modern platforms come to Xbox Game Pass. Activision games after June 2023 that aren’t Call of Duty will likely be Xbox exclusives, though we don’t know if that applies to Overwatch 2 and Diablo IV yet.
How will Sony respond to the Activision Blizzard acquisition?
This acquisition may be the biggest blow Microsoft had dealt Sony yet. Sony’s market value dropped by over $20 billion following the acquisition announcement. While that might not mean much to the average gamer, it demonstrates that Sony may need to respond to this acquisition.
“We may see Sony including some day-one releases as part of its rumored subscriptions revamp, in its bid to better compete with Game Pass.”
So far, these are Sony’s only comments to The Wall Street Journal: “We expect that Microsoft will abide by contractual agreements and continue to ensure Activision games are multiplatform.”
While Sony should be OK in the short term, it could lose famous series associated with its platforms like Crash Bandicoot and Spyro the Dragon once contractual deals expire. Toto tells Pro Well Tech to expect a more rounded response from Sony at its next earnings call.
Jijiashvili speculates that Sony’s options are more limited as it doesn’t have as much money at its disposal as Microsoft. It’s made a lot of smaller, safer acquisitions over the past year, but Jijiashvili thinks Sony might do something bold in addition to doubling down on its critically acclaimed franchises.
“The Activision Blizzard acquisition may force Sony’s hand into making a bold move in relation to its subscriptions offering,” Jijiashvili says. “Specifically, we may see Sony including some day-one releases as part of its rumored subscriptions revamp, in its bid to better compete with Game Pass. I also expect Sony to double down on its unique strengths, such as stronger back catalog, PlayStation VR, and Sony’s other entertainment assets.”
What’s next?
The acquisition still needs to be fully approved and isn’t expected to be complete until June 2023. The unionization movement will continue in the meantime, though Microsoft, Activision Blizzard, and Sony won’t truly answer many of the other questions for about 18 months. But what will Microsoft do after that?
“It will no doubt impact the dynamics of the broader games industry.”
“In terms of megadeals, I think this is probably it for Microsoft for the time being,” Toto asserts. “If they feel crazy, they might have some fuel in the tank to make a big deal or two in other territories, though.”
Jijiashvili believes that this is just another step in Microsoft’s grand plan to create a large gaming ecosystem over lots of devices. “This is more of a short-term uplift for Xbox — its long-term aim is to create an all-encompassing, cross-device games ecosystem that goes beyond ownership of an Xbox console,” he says.
“While Xbox will remain committed to its console business as its main focus for at least the first half of this decade, we will likely see higher prioritization of cloud and subscriptions toward the second half,” Jijiashvili continues. “It underlines Microsoft’s commitment to gaming, and it will no doubt impact the dynamics of the broader games industry.”
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