The reason why Microsoft spent record money to buy Activision Blizzard

The acquisition of Activision Blizzard for $ 68.7 billion is considered to help Microsoft move deeper into the metaverse.

Microsoft's acquisition of Activision Blizzard is today's biggest deal in the gaming segment. Photo: Reuters

This is the largest merger in the technology sector, surpassing the event Dell bought EMC for $ 67 billion in 2016. The amount Microsoft spent also far exceeded the $ 26 billion it spent to buy the social network LinkedIn. According to Bloomberg, there are 5 reasons for the company to do this.

Increase position in the game field

If the transaction between Microsoft and Activision Blizzard is approved by regulators, the US software corporation will become the third-largest game company globally after China's Tencent and Japan's Sony. In fact, both companies also admitted that they want to "go home" to increase their position in the game field.

"Activision cannot compete on its own in the new world of games," said Bobby Kotick, CEO of Activision Blizzard. "You look at companies like Facebook, Google, Amazon, Apple or Tencent and it's easy to see how large they are. We realized we needed a partner to realize our dreams and aspirations." .

Microsoft President Satya Nadella also has big goals in the game segment in the deal with Activision Blizzard. "Our ambition is to bring joy and unity in gaming to everyone on the planet," he told investors at a meeting on Jan. 18.

In fact, the deal will immediately benefit Microsoft. The company has access to Activision's 390 million monthly users and giant game brands like Call of Duty and Warcraft. According to research firm Newzoo, games are a $180 billion global market. According to The Guardian, owning Activision's games and talent will help Microsoft like a "tiger grow more wings" in the battle with Sony's PlayStation as well as the gaming service from Meta's VR platform Oculus.

Control the mobile game segment

According to experts, mobile games are the fastest growing game segment today. Meanwhile, Activision owns the King game studio - behind the game Candy Crush - one of the most popular games of all time. On the other hand, Microsoft has almost no mobile game studio.

"Everybody admits that the number one gaming device right now is the mobile phone," Phil Spencer, Xbox chief and recently appointed Microsoft Gaming CEO, said in an interview with Bloomberg.

Earlier this month, popular game publisher Take-Two, the company behind GTA, Red Dead Redemption (Rockstar), also acquired Zynga for $ 12.7 billion. Zynga mainly focuses on the mobile segment, such as the farming game FarmVille or the city building CityVille. According to experts, the figure of 12.7 billion USD reflects the value of the mobile game company in the new era.

Via Apple, Google app stores

Nadella once admitted to wanting to build a mobile gaming empire big enough for gamers to download and play directly instead of having to go through the App Store or Google Play. Previously, Microsoft also repeatedly "warned with Apple and Google over the policy of charging game developers.

"We face strong competition globally, but from game distributors rather than from the companies that make the games," Nadella said in an investor meeting earlier this month. . "We need to innovate, invest heavily in content creation, and have less constraints on distribution."

Meanwhile, Spencer also emphasized that the distribution of games on mobile devices "is being controlled by two big companies". So Microsoft wants to increase the ability to deploy the game in its own way and "does not want to be controlled".

Metaverse

This may be Microsoft's biggest goal when acquiring Activision. In his statement, Nadella mentioned the metaverse and commented that "games play an important role in the development of these platforms".

Nadella and Spencer said that Microsoft considers the large gaming community around its games like Minecraft and Halo very important, contributing to realizing the concept of the metaverse - the area the company is pursuing. Therefore, the acquisition of Activision will help Microsoft build a larger gaming community, more dedicated to creating its own metaverses.

"When thinking about the vision to realize the metaverse, we believe there won't be a single, centralized metaverse and in fact there shouldn't be." Nadella said. "We need multiple metaverse platforms, as well as a strong ecosystem of content, commerce, and apps."

Meanwhile, The Guardian assesses Microsoft's move that gaming will be the company's development center in the future virtual universe, instead of equipment or software like other competitors.

Strategy 'three C's'

Nadella set a "three C's" goal for Microsoft, including Cloud (Cloud), Content (Content) and Creator (Creation). With the acquisition of Activision, the company wants to put even more content in the cloud to drive sales and earn a steady stream of revenue.

In addition, the new agreement also allows Microsoft to tap into a group of players who love to create their own content and game worlds. After mastering Minecraft, LinkedIn, and GitHub, Nadella needed to shop for larger properties so she could forge another community of creators.

"Nadella failed to access the social video service TikTok, while negotiations with Pinterest and Discord also went nowhere. But Activision was the latest attempt and he succeeded," Bloomberg commented.

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