New Era of the Activision is Already Here.
For the gaming community, the Activision Deal matters! But what is the hoopla all about? Let’s know about it in detail:
What is The Activision Deal?
One of the best-known video game companies, Activision Blizzard, will be bought by Microsoft on Tuesday 18th January 2022 for $68.7 billion, according to Microsoft. Activision Blizzard makes games like Candy Crush and Call of Duty. With this deal, Microsoft, the company that makes the Xbox gaming system, moves up to third place in the video game industry’s revenue list. Microsoft bought the company to show how important video games are in today’s digital world of virtual and augmented reality.
What This Deal Is All About?
In all, Microsoft will pay Activision Blizzard $68.7 billion, which includes the net cash of Activision Blizzard. Among the storied franchises to be bought include “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty,” and “Candy Crush.” Approximately 10,000 people work for the company, which has operations in several regions across the world. Activision Blizzard will report to Microsoft Gaming CEO Phil Spencer after the completion of the deal. The acquisition, which is expected to be completed in fiscal year 2023, will have a positive impact on non-GAAP earnings per share. Activision Blizzard games will be added to the Game Pass library as a consequence of Microsoft’s recent acquisition.
Effects Of Activision Microsoft Deal
- Improved Gaming & Internet.
By signing the arrangement, Microsoft will have a foothold in the lucrative video game market. Some gamers are hoping the deal would help them reclaim ground they’ve lost to Activision in recent years. Microsoft’s capacity to compete in the “metaverse,” a combination of the online and virtual worlds, is also aided by this development.
- Avoiding Scrutiny.
It’s also a bet on whether or not the company will be able to avoid antitrust probes in Washington, D.C. Microsoft could be forced to pay up to $3 billion in breakup costs if the US government doesn’t like the deal. Sony’s shares fell more than 10% when the deal was announced. This would be interesting to see if Microsoft restricts some Activision games, like Call of Duty, only to the Xbox.
- Metaverse Race.
Having a large gaming firm provides Microsoft the chance to join in the metaverse race, which gives the corporation an advantage over its rivals. Roblox (RBLX) is a good illustration of how a gaming company may grow into a significant player in the industry. Thanks to Activision’s infrastructure, Microsoft will be able to participate in the metaverse’s progress as a game developer and publisher (IP, workforce, and so on). As a result, Microsoft will be able to extend and improve its current product and service offerings as well as create new ones.
- Adding Value.
According to Microsoft’s financial disclosures, the business has more than $130 billion in cash and short-term assets, compared to $53 billion in total debt. An estimated $33 billion of the company’s liquid assets were returned to shareholders in the fourth quarter via share buybacks and dividend payments. Due to Microsoft’s ability to generate over $60 billion in free cash flow, the company’s cash reserves have grown in value. Most experts believe that Microsoft’s purchase of Activision may be a good long-term investment for the company and its shareholders.