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What Microsoft’s record acquisition of Activision, Blizzard means for developers big and small

News 8 WROC
News 8 WROC
 2022-01-18

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HENRIETTA, N.Y. (WROC) — Microsoft is buying Activision Blizzard for $68.7 billion to gain access to blockbuster games including Call of Duty and Candy Crush. The all-cash deal will let Microsoft accelerate mobile gaming and provide it building blocks for the metaverse, or a virtual environment.

The deal comes as Activision shares have plummeted in the past year as the company faces allegations of misconduct and unequal pay. Activision CEO Bobby Kotick will retain his role, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth.

Microsoft’s acquisition of the embattled company is expected to close by 2023, but comes at the heels of another massive intellectual property purchase. After that deal with Bethesda, and now Activision, Microsoft — which makes games for PCs and Xbox — now has a shockingly long list of iconic franchises it owns the rights to, including Halo, Elder Scrolls, Call of Duty, Overwatch, Diablo, Warcraft and World of Warcraft, Starcraft, Crash Bandicoot, Spyro, Dishonored, Candy Crush and more.

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While the general consensus is that it’s too soon to tell how this acquisition will change the gaming landscape, it’s massive financial scale and possibly impact across the gaming world may have drastic consequences.

News 8 spoke with Robert Mostyn, the coordinator for RIT’s MAGIC Center, which also holds its own gaming developer, MAGIC SPELL Studios, for his early impressions of the move. Here’s his interview.

What was your first reaction to seeing the news?

Yeah, it’s a huge deal. It’s Microsoft’s biggest purchase. And that’s wild. We have close connections to Vicarious Visions, (which is) an Activision on studio.

So yeah, definitely, definitely surprised. We hope nothing but the best for everyone. But definitely big news, and, interested to see how it’ll play out over the year.

Microsoft is really making a lot of big moves and buying all this stuff. It feels like they’re starting to feel more like a monopoly more than anything else. Do you think this is good? Do you think this is bad? It’s unprecedented. What’s your reaction on that?

It makes sense from the standpoint of them building up their catalogue. I’ve always personally viewed PlayStation, their exclusives are what people want, right? People really like those exclusives, the same thing with Nintendo. But to me, Xbox, and Microsoft has always been this weird position where (they have) the Xbox itself, but you also have the PC market. They’d want to build up their catalogue.

Why try and recreate the wheel and instead just purchase the studios who are essentially tastemakers. It does make sense that they want to do that.

But at the same time, I understand this concern: What kind of say are they going to have at the studios? I’ve heard and seen acquisitions of companies where the purchasing company kind of stays out of the way. That’s completely possible. But I imagine that’s where most people’s concern lies, is if they change the look and feel of these games? It’s, again, too early to say, but I imagine that’s where most people’s concern come from.

Most of these we’re discussing are in the AAA game category, but how do you think this might affect the indie game devs and market?

My hope is that it won’t affect them too much, and that’s because I think the indie market is doing it’s doing kind of its own thing. Places like Activision places like Blizzard being tastemakers… But I feel like the same thing is happening in the indie market just maybe more organically: they don’t have the big budgets, they don’t have the big marketing. But there’s games that come out that catch on, and I think AAA takes notice of these games.

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I hope it doesn’t have much impact on indie. I think a lot of indie devs are going to keep doing their own thing, and, hope that their game sticks out and gets noticed. It’s a tough one to say, but I imagine a lot of indie devs are just seems like: “Okay, that’s wild, Microsoft bought,the games I loved growing up… But I’m just going to keep making my game.”

One of the things we can conclusively say right now is that nearly $70 billion is a huge business deal. Do you think that’s going to positively positively affect investment that goes into gaming or development?

I think one of the things we’re starting to see — this definitely exists on the West Coast, and we’re trying to grow it here on the East Coast — is investment in games.

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That’s been a hard topic games is still young industry, and still has the negative stigma (that it’s just_ for kids, right? It’s just not for kids, it’s not. And it’s very clear now, especially after this deal, that this is a big deal.

This is a huge industry now, and there’s investment to be made. And there’s studios that exists, that might not be a household name, but are making games and are making revenue to fund their studios and keep the doors open. My hope is that investors take note, and the general understanding of games is that it’s a big industry, just like movies, just like music.

This is a two-parter. Video games often create new technology that is used in other fields… And we’re saying this as they “plant their flag in the metaverse.” Thoughts on this?

And to be fair, I don’t have a ton of knowledge on the current Metaverse, trends…

I mean who does?

I guess what I can say is if it’s leaning into VR, and AR, and these other explorations of interacting with video games — which is very much so the Wild West right now — a lot of experimentation, which in my opinion, is awesome. You’re seeing a lot of people trying very different things.

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(Exploring) game mechanics at the core of it, and how you’re interacting with it, how you’re talking with it, how you’re engaging with other people with all of it, what peripherals you’re using. That’s all where the experimentation is happening. And I think that stuff’s great, because you’re then seeing bleed over into other industries, medical, simulations, that sort of stuff. That’s wonderful, wonderful stuff.

How might this affect RIT and its students?

In the short term, it’s a great talking point, that one of our good connections, as a hub, you know, is now I guess, “supported by Microsoft,” or owned by Microsoft, also has their backing, has their support. That’s a studio out in Troy, New York, that is part of Activision, which is now part of Microsoft. That’s great news for them and for that local community. And that’s something we would love to see here.

We would love a satellite studio from from a larger studio, here in Rochester, and connected already, we often talk about that pipeline would be easy to have our students feed right into a studio like that.

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Hopefully there’s there’s more talk of the hubs, and how they’ve helped out with some of these efforts and talks about this and, you know, we could maybe one day attract down the road attract a satellite city, you’re here in Rochester, that’d be great.

Background:

Microsoft is paying nearly $70 billion for Activision Blizzard, the maker of “Candy Crush’’ and ‘’Call of Duty,’’ as it seeks an edge in the fiercely competitive businesses of mobile gaming and virtual-reality technology.

The all-cash $68.7 billion deal will turn Microsoft, maker of the Xbox gaming system, into one of the world’s largest video game companies and help it compete with tech rivals such as Meta, formerly Facebook, in creating immersive virtual worlds for both work and play.

If the deal survives scrutiny from U.S. and European regulators in the coming months, it also could be one of the priciest tech acquisitions in history since Dell bought data-storage company EMC in 2016 for around $60 billion.

Activision has been buffeted for months by allegations of misconduct and unequal pay, and that was addressed Tuesday by Microsoft CEO Satya Nadella in a conference call with investors.

“The culture of our organization is my number one priority,” Nadella said, adding that ”it’s critical for Activision Blizzard to drive forward on its” commitments to improve its workplace culture.

Activision disclosed last year it was being investigated by the Securities and Exchange Commission over complaints of workplace discrimination.

Activision CEO Bobby Kotick will retain his role, and he and his team will maintain their focus on driving efforts to further strengthen the Santa Monica, California, company’s culture and accelerate business growth.

Wall Street saw the acquisition as a big win for Activision Blizzard Inc. and shares soared 27% in early trading Tuesday. Shares of Microsoft slipped less than 1%.

Last year, Microsoft spent $7.5 billion to acquire ZeniMax Media, the parent company of video game publisher Bethesda Softworks, which is behind popular video games The Elder Scrolls, Doom and Fallout.

Microsoft, based in Redmond, Washington, said both acquisitions will help beef up its Xbox Game Pass game subscription service.

Started in 1979 by former Atari Inc. employees, Activision has been behind games such as “Guitar Hero” and the “World of Warcraft” franchise. Kotick has been CEO since 1991.

Microsoft said it expects the deal to close in the upcoming 2023 fiscal year, which starts in July. The Activision business unit would then report to Phil Spencer, who has led Microsoft’s Xbox division and will now serve as CEO of Microsoft Gaming.

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