Microsoft will acquire Activision Blizzard, the developer behind Call of Duty, World of Warcraft, and Candy Crush, for $68.7 billion. This deal, which is the most expensive acquisition in Microsoft’s history, will make Microsoft the third-largest game company by revenue behind Tencent and Sony. But more importantly, it will kick off Microsoft’s venture into the metaverse.
Admittedly, the term “metaverse” gets thrown around a bit more than it should. Most VR and AR applications have very little to do with the metaverse, a (still non-existent) virtual world that you can access from any device, including your TV or phone.
But Microsoft has already laid the foundation for an early metaverse thanks to its Azure cloud computing platform, which powers Xbox Cloud Gaming and Windows 365. These services are early incarnations of the future metaverse; they work on all platforms and give users on-demand access to data that would usually sit at home or in an office.
As explained by Microsoft CEO Satya Nadella, who championed Azure development within the company, gaming “will play a critical role in the development of metaverse platforms.” Only game developers can build an immersive virtual world on top of the Azure cloud infrastructure, and Activision Blizzard is particularly useful in this sort of development thanks to its knowledge of AI and mobile software.
Here’s how Satya Nadella explains Microsoft’s metaverse in a conference call with Activision Blizzard:
We need to support many metaverse platforms, as well as a robust ecosystem of content, commerce and applications. In gaming, we see the metaverse as a collection of communities and individual identities anchored in strong content franchises, accessible on every device. And bringing fantastic entertainment together with new technologies, communities and business models is exactly what this transaction is about.
Yes, Microsoft’s vision of the metaverse feels a lot less corporate than what Mark Zuckerberg is focusing on. I don’t think you’ll see Microsoft proudly leading the charge for VR office meetings or VR advertisements—well, not for the next few years, at least.
But both Meta and Microsoft share a basic goal here; take existing communities and put them in an always-online universe to strengthen their connection and make them more accessible to corporations. Satya Nadella says as much—Microsoft’s metaverse will remove all barriers between “content, consumption, and commerce” by “intersecting global communities rooted in strong franchises.”
The steps that lead to this metaverse are a bit of a mystery. Microsoft’s acquisition of Activision Blizzard is not a short-term scheme, after all. But we know a few changes that will take place after the deal goes through. Microsoft says that much of Activision Blizzard’s content will arrive on Game Pass, though Microsoft also plans to continue supporting Activision Blizzard content on third-party platforms.
There are a few last-minute things to point out here. First, Microsoft says that Bobby Kotick will continue to serve as Activision Blizzard’s CEO (under supervision from Microsoft Gaming’s new CEO, Phil Spencer). It’s an odd move that reflects poorly on both companies, given recent reports that Bobby Kotick ignored sexual misconduct allegations within Activision Blizzard. Last year, over 2,000 former and current Activision Blizzard employees signed a petition calling for Kotick’s resignation.
Also, there’s no guarantee that Microsoft will successfully purchase Activision Blizzard. Microsoft is already one of the biggest names in gaming and may come under scrutiny from regulators, who are currently fighting over anti-trust bills that may change how big tech companies operate.