Microsoft has acquired Activision Blizzard for $95 per share in an all-cash transaction valued at $68.7 billion. The move is part of Microsoft’s move to launch Activision Blizzard games in Xbox Game Pass.
Blizzard has 400 million monthly active players in 190 countries, with franchises worth three billion dollars. After the shutdown, Microsoft will have 30 in-house game development studios, along with additional esports publishing and production capabilities.
Adding Activision Blizzard’s extensive roster of popular games like Call of Duty, World of Warcraft, and Overwatch to the Azure cloud is a huge step up for Microsoft’s Metaverse push.
Video games are considered an open door to the metaverse, the virtual world where people can play, work and shop on different platforms using digital avatars.
“Gaming is the hottest and most exciting segment of entertainment across all platforms. This will drive the development of metaverse platforms,” said Satya Nadella, President and CEO of Microsoft. We invest deeply in content, community and cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to everyone, he added.
The cloud plays a vital role in powering Metaverse and VR/AR devices. Interestingly, Microsoft’s cloud competitors Google Cloud and Amazon Web Services don’t have a stronghold in gaming. After the acquisition, Microsoft will work on Activision Blizzard’s contract with Google Cloud in 2020.
According to Emergen Research, the Metaverse market is expected to reach $828.95 billion in 2028 with a CAGR of 43.3% from $47.69 billion in 2020.
Metaverse is an immersive virtual world powered by virtual reality, augmented reality, and blockchain technology. Neal Stephenson coined the word Metaverse in his 1992 novel Snow Crash. The Metaverse began to rise after Facebook rebranded Meta.
Today, developments in NFTs (non-fungible tokens), cryptocurrencies, 3D avatars, and immersive gaming experiences have created multiple business opportunities.
Virtual spaces on Metaverse platforms will be transformed into performance halls, art galleries, event venues, games, and more. Internet users can also buy virtual land to build virtual worlds.
The gaming ecosystem should benefit from the Metaverse push. The industry will experience significant revenue growth thanks to advanced technologies and an increasing focus on creating realistic games.
Advances in realistic gaming are on full display in The Matrix Awakens, based on the acclaimed The Matrix movie franchise, developed using the latest Unreal Engine 5.
Businesses around the world are turning to games to build their brand. For example, Epic Games’ Fortnite featured a virtual concert that drew over 12 million people, while Roblox and Gucci collaborated to create a virtual Gucci Garden environment where limited-edition virtual bags were sold.
The Future of Microsoft’s Metaverse
Years ago, Microsoft closed its doors to indie game developers and in the process ceded ground to Sony. The US tech giant couldn’t keep up with the number of exclusives (PlayStation) under Sony’s belt, limiting Microsoft to Triple-A games (games developed by major publishers).
In December 2021, Sony sold around 15 million PS5 units while Microsoft only sold 9.8 million units (including the S and X series), according to VG Chartz.
Microsoft’s latest acquisition puts them in a strong position to make huge inroads into the gaming industry. Microsoft has long supported the VR space on the hardware side with its line of Mixed Reality headsets and partnerships.
The advance in VR and the integration of Activision Blizzard will help Microsoft pursue its Metaverse ambitions. As 5G and other advancements gain momentum in virtual reality and augmented reality, Microsoft’s entertainment portfolio and focus on immersive platforms will give it a definite edge over other Metaverse forerunners.