Microsoft's acquisition of Activision comes amid a slew of allegations about the company's hostile workplace culture.
On Tuesday, Microsoft announced its largest acquisition to date, agreeing to buy scandal-plagued video gaming behemoth Activision Blizzard in an all-cash deal valued at $68.7 billion. Microsoft will become the world's third-largest video gaming company, with control over some of the most popular games ever created, including the Call of Duty military simulation series and the fantasy behemoth World of Warcraft.
"We have a great potential to invest and innovate together with Activision Blizzard to create the finest content, community, and cloud for gamers," Microsoft CEO Satya Nadella said in a conference call with investors on Tuesday.
The purchase, which is expected to finalize in the next 18 months, was sold by both firms as a way to expand their respective franchises in the highly competitive and profitable video game industry. On the call, Microsoft's gaming chief Phil Spencer remarked, "This is not about short-term performance." "We've seen Activision Blizzard's product plan and are tremendously excited about what the teams are generating as well as the company's pipeline over the next several years."
Despite Activision's reputation for a harsh workplace atmosphere, Microsoft hopes to establish itself as one of the next great entertainment firms with Activision Blizzard. Though Microsoft is best known for its productivity products Windows and Office, the corporation has progressively increased its efforts to lead the video game market with its Xbox brand. And it sees Activision as a critical component of its gaming future.
Microsoft touted its forthcoming acquisition of Activision, as well as other acquisitions such as Bethesda, the maker of Fallout and Doom, as key to its attempt to become a Netflix-like corporation by investing extensively in content that entices customers to pay for monthly subscriptions. "As our platform grows in popularity, the flywheel of content makers and players accelerates, expanding our creative spectrum."The number of people using our platform keeps growing," Spencer remarked.
Activision games are expected to be used in a variety of ways by the corporation. Microsoft sees puzzle games like Candy Crush Saga from Activision as a method to help it expand into mobile gaming. Meanwhile, it may enhance its $15 per month Game Pass Ultimate subscription service and cloud gaming initiatives with hits like Diablo and Call of Duty, as well as the fantasy shooting series Overwatch.
The transaction presents a significant opportunity for Microsoft, but it comes at a time when Activision is embroiled in a scandal, with allegations of discrimination against female employees and the promotion of a "frat boy" corporate culture. This July, the California Department of Fair Employment and Housing filed a lawsuit against the corporation for claimed discrimination and harassment. The US Equal Employment Opportunity Commission charged the corporation in September with breaching employees' civil rights by subjecting them to sexual harassment, pregnancy discrimination, and retaliation. The EEOC and Activision Blizzard immediately reached an agreement for $18 million. In the wake of probes and employee protests, Activision CEO Bobby Kotick has been accused of both ignoring and exacerbating the problems, prompting calls for his resignation.
Microsoft aims to keep Kotick in charge of Activision Blizzard, reporting to Spencer, whom the corporation touts as a cultural change agent. "As CEO of Microsoft, our organization's culture is my No. 1 priority," Nadella added, referring to steps he's made to soften his own company's traditionally competitive tendencies. "We must consistently improve our employees' lived experiences and establish an environment that allows us to continuously develop our culture on a daily basis. This is strenuous work. It necessitates consistency, dedication, and leadership that does more than talk the talk but also walks the walk."
Microsoft's stock on Wall Street, which was already valued at more than 32 times Activision's purchase price before the news, dipped marginally to $306.80, down 1% from the day's opening price.