Microsoft set to purchase Activision Blizzard in $68.7 billion deal [Updated]

Microsoft announced plans on Tuesday morning to purchase gaming mega-publisher Activision Blizzard for a record-setting $68.7 billion. When finalized, the acquisition would bring franchises like Call of Duty, Overwatch, Diablo, World of Warcraft, Starcraft, and many more under the umbrella of the Xbox maker.

Today's announcement follows Microsoft's $7.8 billion acquisition of Bethesda, announced just 15 months ago. After some initial confusion about what that purchase meant for Bethesda's multi-platform titles, it has since become clear that most of Bethesda's biggest franchises, such as The Elder Scrolls, will not appear on competing consoles like the PlayStation 5.

In an encouraging sign for fans of Activision Blizzard's multi-platform games, Microsoft said in its announcement that "Activision Blizzard games are enjoyed on a variety of platforms, and we plan to continue to support those communities moving forward." Bloomberg also cites "a person familiar with the company’s thinking" in reporting that "Microsoft plans to keep making some of Activision’s games for PlayStation consoles but will also keep some content exclusive to Xbox."

But Microsoft and Bethesda executives made similar positive noises about multi-platform titles before the deal was closed, only to shift toward Microsoft exclusivity after it was finalized.

Microsoft notes in its announcement that Activision Blizzard games will become a part of its Game Pass program, which currently enjoys 25 million subscribers. "With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry," the company said. "Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities."

In addition to potential console and subscription exclusives, the acquisition includes Candy Crush maker King, giving Microsoft a new way into the massive mobile gaming market. "Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like Halo and Warcraft, virtually anywhere they want," Microsoft said in a statement.

If that sounds familiar, it's because it's similar to what Take-Two said about its recent $12.7 billion acquisition of mobile gaming powerhouse Zynga. "Take-Two has an extensive catalog of commercially and critically successful console and PC titles with engaged and loyal communities of players, and there is a meaningful opportunity to create mobile games and new cross-platform experiences for many of these properties," the company said.

Buy the dip?

The all-cash transaction values Activision Blizzard at $95 a share, a significant premium on Friday's closing stock price of $65.39. But that stock price is down significantly from its 2021 peak of $103.81, which it hit in February.

The stock decline reflects a fraught time for Activision Blizzard, which has faced months of controversy after the state of California brought a lawsuit against the company alleging widespread sexual discrimination and harassment. CEO Bobby Kotick has come under fire after further reporting suggested he withheld information about some of the allegations within the company from the board of directors.

While Kotick reportedly told colleagues he would consider stepping down in November, Microsoft said in a statement today that "Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth."

That said, Microsoft notes that "once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming," a statement that doesn't directly suggest a continuing role for Kotick after the acquisition.

[Update: Speaking to the New York Times' Karen Weise, Kotick would not confirm whether he would be CEO after the Microsoft acquisition, only saying that "post close, I will be available as needed."]