Software giant Microsoft is planning to dominate the metaverse with its move to acquire Activision Blizzard, a game development and interactive entertainment content publisher, in a mega deal.
This is according to market analyst firm GlobalData, after the US-headquartered software firm yesterday announced it will acquire Activision Blizzard for $95 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash.
This transaction has become the biggest tech merger and acquisition deal in history.
In making the announcement, Microsoft said the acquisition “will provide building blocks for the metaverse”.
Rupantar Guha, principal analyst at GlobalData’s thematic team, says taking part in what is the biggest tech merger and acquisition to date reflects Microsoft’s desire to dominate the metaverse.
“The company is focused on acquiring both Activision’s communities and content – two essential parameters for success in the metaverse. Activision’s popular games franchises Call of Duty and Overwatch, and the communities it commands, will position Microsoft as a leader in the metaverse.”
The metaverse is a virtual reality (VR) space in which users can interact with a computer-generated environment and other users.
According to Statista, as of October 2021, the total market capitalisation of Web 2.0 metaverse companies was $14.8 trillion.
It notes that for gaming and eSports and also Facebook (now known as Meta after an October 2021 restructuring and pivot to VR), this figure sits much lower at $1.98 trillion and $0.90 trillion, respectively.
Guha notes Microsoft is formidable competition for Meta, Epic Games, Tencent and Roblox, all of which are scrambling for dominance in this emerging mataverse theme.
“While the metaverse is still largely conceptual, Microsoft’s strength in underlying themes such as artificial intelligence, augmented reality, virtual reality and cloud computing give it a leadership position in this theme.”
He believes Activision’s games will help Microsoft create metaverse experiences and provide an established global consumer base to test and market them.
“Microsoft ranks second out of 44 companies in GlobalData’s gaming thematic sector scorecard, which ranks companies based on their leadership in the 10 themes that matter most to the gaming industry – generating a leading indicator of future performance. Microsoft is second only to Tencent, while Activision Blizzard ranks 13th on the scorecard.
“Following the acquisition, Microsoft will gain a dominant position in eSports, a growing theme where it has struggled to make a mark in the past. Additionally, Activision is a mobile gaming leader with plans to launch more mobile titles in the future. The takeover will strengthen Microsoft’s position in the mobile gaming market, which will be worth $272 billion by 2030, according to GlobalData forecasts.”
When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony, says the software firm.
Meanwhile, Reuters reports that shares in Japan's Sony Group fell 9% today after gaming rival Microsoft announced its Activision Blizzard acquisition.
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