Microsoft Says It Won't Block Activision PS5 Title Support Post-Buy
One of the looming questions Tuesday from Microsoft's announced plans to buy Activision Blizzard was what would become of Sony's access to Activision Blizzard's third-party content support for the PlayStation 5 after the game publisher comes under the control of the owner of the rival Xbox platform. The preliminary signals Microsoft put out for public consumption suggested Sony would experience business as usual.
Activision Blizzard’s games "exist on a variety of platforms today, and we plan to continue supporting those communities moving forward," emailed a Microsoft spokesperson. "The acquisition is about increasing the availability of Activision Blizzard content across more platforms, including mobile. This is consistent with Microsoft’s commitment to giving players more choice to play the games they want, anywhere."
Microsoft’s $68.7 billion Activision Blizzard buy in an all-cash transaction, the largest in Microsoft’s history, will “create a thriving gaming ecosystem” in which content “can more easily reach every gamer across every platform,” said Microsoft CEO Satya Nadella on a conference call Tuesday with investors. The proposed $95-per-share purchase price is a 45% premium over Activision Blizzard’s Friday close of $65.39, said Microsoft Chief Financial Officer Amy Hood. Activision Blizzard shares closed nearly 26% higher Tuesday at $82.31, while Microsoft’s stock finished the day 2.4% lower at $302.65.
When the Activision Blizzard transaction closes during the fiscal year ending June 2023, Microsoft will become "the world’s No. 3 gaming company by revenue, behind Tencent and Sony,” said Microsoft Gaming CEO Phil Spencer. Microsoft executives took no questions on the call but are scheduled to discuss fiscal Q2 results Jan. 25.
Sony didn’t respond to questions about the announced transaction and what it would mean for Activision Blizzard title support for the PS5. Revenue in Sony's game division increased 27% in fiscal Q2 ended Sept. 30 partly from the significant sales rise in third-party software titles for the PS5, reported the company Oct. 28. Sony also said then it will "continue to aggressively invest" in its content development capability, having already quadrupled, through acquisitions, the number of PlayStation studios in its arsenal since the April 2021 start of the fiscal year.
The transaction will make Microsoft’s offering “to the consumer metaverse even stronger” than before, said Spencer. “A big part of that is the fact that mobile is the biggest category of gaming, and it’s an area where we have not had a major presence before. This transaction adds one of the most successful mobile publishers to Microsoft Gaming.”
Gaming is “the largest and fastest-growing category in entertainment,” said Nadella. “The last two years in particular have shown how critical games are to helping people maintain a sense of community and belonging, even when they’re apart.” Microsoft estimates 3 billion consumers globally play games, “and we expect this number will reach 4.5 billion by 2030 as new generations turn to gaming for entertainment, community and a sense of achievement,” he said.
Populating the gaming ecosystem are “more players, more streamers, more titles and more new game publishers than ever before,” said Nadella. “But too much friction still exists today between content, consumption and commerce. We need to make it easier for people to connect and play great games, wherever, whenever and however they want. Today, we face strong global competition from companies that generate more revenue from game distribution than we do from our share of game sales and subscriptions. We need more innovation and investment in content creation and fewer constraints on distribution.”
Activision Blizzard has nearly 400 million "monthly active players across 190 countries," said Nadella, adding to "the strength of our own gaming community." Microsoft's Game Pass service now exceeds 25 million subscribers, "and we’re creating new opportunities for creators across our ecosystem," he said. "Together with Activision Blizzard, we will have one of the largest and most engaged communities in all of entertainment."