In the News

Forward Vertical Integration: Microsoft - Activision Blizzard Acquisition

Graham Watson

23rd January 2022

Microsoft is going to buy Activision Blizzard, the company responsible for such hits as Call of Duty, World of Warcraft and Candy Crush.

The deal is reputed to be worth $70bn and represents a sizeable shock to the sector.

This is an example of vertical forward integration, with Microsoft looking to bolster the popularity of their Game Pass subscription service. However, some gamers will be worried that Microsoft might try to limit the availability of Activision Blizzard games on other consoles such as the PS5; their next big launch Starfield is going to be a Microsoft exclusive.

The proposed Microsoft - Activision Blizzard tie-up is now up for scrutiny and it is clear that any merger is going to be problematic.

Sector analysts are less than convinced that the move will accelerate moves towards augmented reality gaming, and the move of gaming toward the metaverse, and regulators are also twitchy about the capacity of Microsoft to shut off other platforms accessing Activision games.

Add in concerns about the organisational culture at Activision, and even if the merger is approved it isn't going to be straightforward.

Largest video game industry acquisitions worldwide as of January 2022, by deal value (in million U.S. dollars)

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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