In 1979, a group of disenchanted Atari employees decided to quit and start their own company. Activision was the world’s first third-party game development company, which produced and published titles for other companies’ platforms.
The company that is now Activision Blizzard was purchased by one of the most significant platform owners in the industry, Microsoft, for 68.7 billion dollars – the largest sale in the history of the video game industry.
This sale is also tremendous in relation to the game franchises for which Microsoft now has control. It now owns franchises like Call of Duty, Diablo, Starcraft, Candy Crush, and World of Warcraft.
Large amounts of money are not new in the video game industry. Activision Blizzard itself became one of the largest video game companies in 2008, when Activision merged with Blizzard in a deal worth 18.9 billion dollars. Microsoft and Sony regularly purchase successful pre-existing studios to take over their IP and exclusively distribute them on their platforms.
However, Microsoft has become particularly aggressive in its approach. Over the past decade, it has made a series of purchases, including the developer of Minecraft in 2014 for 2.5 billion dollars and the publisher of Elder Scrolls and Doom in 2020 for 7.5 billion dollars. With the acquisition of Activision Blizzard, Microsoft is now the third largest company in the industry, behind TenCent and Sony.
All of this is part of Microsoft’s business strategy for video games, which is less about selling game products and more about increasing subscriptions to the Game Pass service. Similar to services like Netflix and Spotify, Game Pass provides subscribers with access to a massive digital catalogue of games in exchange for a monthly charge.
In its announcement about the purchase of Activision Blizzard, Microsoft also boasted that Game Pass has exceeded 25 million users. With each user paying $16 per month, this is roughly $400 million in monthly revenue. With Activision Blizzard, Microsoft now owns a massive new range of franchises that it can distribute via Game Pass, attracting even more users.
