The video games industry is still recovering from the sensational news that was the announcement of Microsoft’s acquisition of games publisher Activision Blizzard last week. Not only did the $75bn deal shock the investor community – driving the share prices of other big publishers higher – but it also heralded a new era for the $200bn global game sector.
 
With this purchase, Microsoft is bringing about 30 games studios under one roof, taking control over blockbuster franchises such as Call of Duty, Candy Crush, World of Warcraft, Diablo, and Starcraft. Although the Xbox producer has been successfully buying development studios to make their intellectual properties available exclusively on its platform, it has become particularly aggressive in its approach.
 
Following other high-profile acquisitions, including Minecraft developer Mojang in 2014 and Elder Scrolls and Doom publisher ZeniMax in 2020, Microsoft’s current video game business strategy has proven to be less about selling game products and more about increasing subscriptions to its Game Pass service. This has led many to assert that Bill Gates’s company is not just changing the rules of the game, but creating an entirely new game that transcends the “console wars” of the past.
 
As Patrick Dane explains in TechRadar, now the focus seems to have moved from a battle of brands – that is, Sony’s PlayStation versus Microsoft’s Xbox – to one of mega-corporations seeking to attract an audience of hundreds of millions of players.
 
Although gaming does not constitute Microsoft’s core business, it does represent a crucial step towards the metaverse – the name given to immersive online worlds that many believe will be the next big iteration of the internet. In this sense, the acquisition of Activision Blizzard would allow Microsoft to provide building blocks for the metaverse, ultimately opening new avenues to collect and use consumer data.
 
This means both privacy and antitrust regulators will be scrutinising the deal for any detail on how it could reshape the gaming industry, any hardware and software exclusivity, and whether the corporation might dominate any emerging markets. Not least because of the acquisition’s sheer size, we can expect a long approval process that could take up to 18 months.
 
Even if the deal is allowed to go ahead, the concentration of market power in the hands of a small number of tech companies raises cause for concern. As some have warned, it risks stifling innovation and opportunity, undermining data privacy, and making life harder for gamers. As is often the case in strategy video games, the path to absolute victory can get brutal.