Microsoft Acquires Activision Blizzard: Beating Sony in Gaming and the Metaverse

In January 2022, Microsoft Corporation (Microsoft) announced the acquisition of Activision Blizzard, Inc. (Activision) for US$68.7 billion. With a growing franchise of games, and with Microsoft’s apparent ambitions for the games console market, Activision was an attractive acquisition target. Activision owned some of the most popular games in the world and had a $54 billion market value in 2020. The acquisition would also take Microsoft a step closer to expansion into the metaverse, where—along with the cloud gaming and video game software industries—it hoped to gain an edge. However, gaming was a small part of Microsoft’s business. So why had Microsoft pursued the acquisition? What advantages did Microsoft see in it? And what would the move mean for Sony Interactive Entertainment (Sony), the market leader in the video games industry? Finally, how should Microsoft address the allegations of harassment and other employee complaints that had arisen at Activision and set right the environmental, social, and governance (ESG) issues that had arisen at Activision?

This case can be used in corporate strategy for mergers and acquisitions courses in master of business administration/executive programs. The case can also be used in human resources courses for discussing employee engagement. The case is also suitable for use in the ESG modules of any strategy course.<br><br>The case looks into the reasons why Microsoft pursued the acquisition of Activision and explores the competitive position of the gaming industry, specifically the competition from Sony. It also looks at the metaverse, cloud gaming, and games console industries. It considers the ESG issues Microsoft will have to address in acquiring Activision if Activision is to reach the bar set by Microsoft. By working through this case, students will be able to do the following:<ul><li>Describe the video game industry and analyze the competitive forces acting therein.</li><li>Explain acquisitions and the motivations and causes behind them. </li><li>Outline the role of employees in determining company culture.</li><li>Identify the challenges of ESG compliance in an acquisition.</li></ul>

• video games
• acquisition
• gaming
• metaverse
• cloud gaming
• regulators
• tech industry