There is a new twist in the endless saga: “Microsoft wants to buy Activision Blizzard” – the UK is opposed. The British competition authority fears it could harm the gaming market if the two giants join forces. One option that could make the deal possible: Activision could sell Blizzard (WoW, Overwatch, Diablo). For many old fans of Blizzard, a dream – for Activision CEO Kotick, a nightmare. He predicts economic decline for the UK.
What is this endless saga about?
- Microsoft made an acquisition offer for Activision Blizzard in January 2022, after they were hit by a sexism scandal. Activision Blizzard accepted it. Microsoft wants to pay 69 billion US dollars for Activision Blizzard.
- But because both companies are so huge, they need the okay from various regulatory authorities worldwide. The approval process is dragging on. However, the companies expect the deal to go through by mid-2023.
- Now the UK has signaled that they have a problem with the merger.
Call of Duty is the main issue:
UK believes merger could worsen gaming market
What does the authority in the UK say? In a statement from the competition authority of the UK, it says they fear that such a merger could disrupt the competitive situation in gaming.
At the moment, Microsoft (Xbox) and Sony (PlayStation) are competing against each other: Both have access to key brands, such as Call of Duty. If this access is removed for one party, it could lead to
- price increases
- less choice and quality
- overall worse console gaming
They fear the possibility that Microsoft could come in and take away Sony’s ability to publish Call of Duty, or could worsen Sony’s access to the shooter series.
Microsoft has issued a statement saying they will not do that and will allow Sony access to Call of Duty, but nevertheless, Sony has also warned of this danger.
Authority mentions possibility of breaking up Activision Blizzard
This is the authority’s proposal: The authority presents 4 options for how to behave now. One option is to split Activision Blizzard and only give a part to Sony:
- Activision could sell everything related to Call of Duty
- Activision Blizzard could spin off “Activision” (thus including Call of Duty)
- Activision could sell Blizzard
- Or they could simply oppose the merger
The authority says: The assessment is currently provisional. They are waiting for input from both companies and will continue to deal with the issue.
Why is the sale of Blizzard a dream for many gamers? Many gamers blame Activision for Blizzard not focusing on quality as much since the merger with the Call of Duty company, developing until games were “done”.
Activision has negatively changed Blizzard, erasing much that was unique about Blizzard with their focus on finances and driving away good people from the company.
Whether this is true is difficult to say. In insider reports about Blizzard, it sounds more like Activision only started to change Blizzard’s culture when they could no longer bring new games to market.
Kotick says: Regulators have no idea
How did Kotick react? The mastermind behind the sale, Activision Blizzard CEO Bobby Kotick, said in a television interview that the authorities had “no idea about our business.” They do not even know that Japanese and Chinese companies dominate gaming:
- The regulators would focus heavily on expensive consoles and the console market
- In reality, gaming is a mobile market and here companies from Asia dominate – Western companies are at a strong disadvantage, according to Kotick
- Gaming today is a “Free2Play” market
Sony and Nintendo have “great freedoms in intellectual property.” Tencent would exploit the “protected market” in China. And Activision has problems gaining a foothold in Japan.
At the end of the interview, he attacked the UK: after Brexit, the United Kingdom will probably be the first country to fall into a recession.
The merger would bring jobs, instead. Here it’s about the future of the technology location. It would be the chance for “Silicon Valley” to emerge in Europe. If deals like this do not go through, it would not be Silicon Valley, but rather Death Valley. So a hostile desert instead of a technology hub.
Kotick himself has been heavily criticized repeatedly:
If Bobby Kotick does not leave now, Activision Blizzard will lose more talent
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