Microsoft Acquires Activision: An Outlook for 2022

On Tuesday 18th January Microsoft Corporation announced a bid worth an estimated 68.7 billion USD for gaming giant Activision Blizzard. This catalyses an interesting year for the technology conglomerate as innovation proves to be at the forefront of organisational success in sector projections for 2022. Following Meta’s (formerly Facebook) rebrand and public announcement dating from October, essentially outlining its intentions on driving the development of the metaverse, Microsoft’s acquisition becomes of particular significance. Moreover, fierce gaming competitors Sony have reportedly been outselling Microsoft’s latest release of consoles with the PlayStation 5. Activision being under the Microsoft umbrella would indeed prove useful to rectify this with an exclusivity advantage on technology the subsidiary develops.

In a press release to investors, Microsoft explained its motives and intentions with respect to purchasing Activision. “This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse”. At the current transactional value, Activision becomes Microsoft Corporation’s largest addition to the group by a significant margin, overtaking the 26.2 billion USD purchase of job-oriented, social media platform LinkedIn in 2016. One could extrapolate that this substantial commitment to the gaming industry, valued at approximately 300 billion USD in 2021 (, sends as a strong statement of intent for Microsoft to participate actively in the creation of the internet’s newest metaverse rendition – a virtual world expected to host the future of gaming in abundance.

Completion of the acquisition at the proposed premium price of 95.00 USD per share would make Microsoft the third largest gaming company worldwide behind Tencent and Sony only. In a statement made to Wall Street Journal post-announcement, a Sony spokesman emphasised the corporation’s expectations that “Microsoft will abide by contractual agreements and continue to ensure Activision games are multiplatform”. This would naturally concern Sony as competition due to their current reliance on games developed by Activision for its gaming platforms, namely the Call of Duty franchise being compatible with Sony PlayStation devices. Of current uncertainty is whether Sony’s response regarding contractual obligation refers to specific contracts currently in place ensuring software is multiplatform, or in general as a future expectation. An expectation that Activision games will remain multiplatform would seem ironic given Sony’s recent push to create content exclusively compatible with its devices such as, for instance, Marvel’s Spider-Man franchise.

A scenario whereby Microsoft precludes Activision-developed technology from being functional on alternative gaming platforms could potentially trigger competition concerns with regulatory authorities. However, it should be noted that Microsoft’s 7.5 billion USD acquisition of Bethesda last year led to an exclusivity arrangement with Microsoft Xbox and PC devices as Sony fears will occur with Activision. It would appear as though Microsoft, though currently being outsold by Sony with respect to consoles, is setting up a monopoly within the gaming industry – of irony given the general objectives of making the metaverse accessible for all users. Observably, there is a technological and economic contradiction between the parties involved in developing the metaverse for the future. Sony’s approach to the metaverse’s development would seem to be one of scepticism. “Being in the real world is very important, but the metaverse is about making quasi-real in the virtual world. I can’t see the point in doing it” PlayStation inventor Ken Kutaragi told Bloomberg News.

From a strategic management perspective, Microsoft’s published announcement states 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”. This may have been a shock across the sector given the accusations Kotick has faced, allegedly knowing about sexual-misconduct and assault cases prominent in the firm for several years. It is rumoured, however, that the current CEO will resign post-acquisition, contradicting Microsoft’s declaration.

Overall, the markets expectedly reacted positively to the announcement of the proposition, the share price of Activision Blizzard closing at 82.15 USD compared to Monday 17th January’s closing price of 65.39 USD. In spite of this spike, the new price remains 13.5% short of the offer bid Microsoft are willing to offer – alluding to a 57% probability that the deal will indeed close (Reuters). Meanwhile, Sony’s share price opened at 10% lower on the morning of Wednesday 19th January than the previous closing price ( The outlook of analysts for Microsoft shares in 2022 remains positive with share price growth estimates of approximately 14.5% by the year end ( Listed on the NASDAQ Stock Exchange, the market consensus remains that MSFT remains a bullish stock with an aggressive development and innovation strategy, certainly assisted by further penetration into the gaming industry in an attempt to achieve near-monopolistic status.

By Maxime Bailey

Sector Head: Dylan Buckley