Thoughts on the Xbox + Activision Blizzard Acquisition

Xbox acquires Activision Blizzard

By Paul Hunter

Well, today was a huge day in the gaming industry. First thing in the morning as we were all logging online, head of Xbox Phil Spencer announced that Microsoft intends to acquire Activision Blizzard for $68.7 billion dollars. Assuming the transaction gets cleared by regulators, this will catapult Microsoft into becoming the third largest game publisher in the world, only behind China's Tencent and Japan's Sony.

To put the acquisition in perspective, it's the largest ever in gaming and dwarfs the second-largest acquisition, Take-Two buying Zynga for $12.7 billion, over five fold. And it's over nine times what Microsoft paid for Bethesda ($7.5 billion) just last year. To say that seismic changes are happening in the global games industry is a massive understatement.

I'm still processing this huge bombshell announcement, but I do have some initial thoughts (and will probably have a lot more to write about once this news fully sinks in!). I'll say right from the top that I'm not a fan of this widespread industry consolidation, mainly because it inevitably blocks content from reaching a wider audience across platforms, however, at the same time acquisitions like these are inevitable for the games industry. We've already seen this type of consolidation happening in the music industry (e.g. Sony's acquisition of EMI) and in the film/TV industry with Disney buying Marvel, Star Wars and 20th Century Fox. Given how huge (and lucrative) the games industry is, it's actually surprising that major acquisitions like Bethesda or Activision didn't happen years ago.

Thinking about how the Activision Blizzard acquisition will impact Xbox and PC gamers, there's really only good things to say. Game Pass subscribers will see legacy AB games come to the streaming service, adding even more value beyond the 400+ titles already available. Plus, all future AB games will hit Game Pass on day one, so we're likely talking about a few games every year, and that's on top of all Xbox Studios and Bethesda titles. The value proposition for Game Pass has reached the 'unreal' stage and it's hard to come up with solid reasons why Xbox fans wouldn't want to subscribe. With future Call of Duty, Crash Bandicoot, Tony Hawk and Spyro games coming day one to Game Pass, the value is just too good to pass up.

I've seen gamers concerned the Activision Blizzard acquisition will only accelerate Microsoft's push for services and cloud gaming, which could eventually put physical media and digital ownership at risk, but I genuinely think that future is far off. Microsoft is fully aware millions of gamers like to purchase and own their gaming content, so I foresee that being an option for at least a couple more gens to come, if not longer.

Looking at the acquisition through a PlayStation gamer's lens, naturally the outcome doesn't look great. Microsoft will surely make most future Activision Blizzard games exclusive to their ecosystem, even with the news today that some content might still hit PlayStation consoles. If I had to guess, I'd say Call of Duty Warzone will continue getting updates on PlayStation, but I have to imagine the annual Call of Duty games will either be fully exclusive (most likely scenario) or be timed exclusive. There's a slim chance CoD games will hit day and date with PlayStation, but if that happens you can bet the Xbox version will have exclusive modes or content to make it the most desirable version available.

What's truly bizarre about this acquisition is it could mean former PlayStation mascots Crash Bandicoot and Spyro the Dragon could become Xbox exclusives. [Side note: It's ironic that Xbox took Nintendo's Rare character icons like Banjo-Kazooie and is now doing a similar purchase of a few Sony legacy icons!]. Having those franchises exclusive to Xbox's ecosystem is definitely a blow to PlayStation fans.

The saving grace though, and I know Sony diehards probably don't want to hear it, is that Xbox really is making Game Pass cheap and accessible (on PCs, mobile phones, and likely soon TVs), so PlayStation gamers could sub to Game Pass for a month for $15 if they really wanted to play a future Crash Bandicoot or Spyro game. I did exactly that with HBO and Game of Thrones—I subscribed for a few months when the seasons were running, and then cancelled during the off season. It's not ideal by any means, but it got me the content I wanted at a reasonable price.

As far as impacting Sony themselves, the Activision Blizzard deal really hinges on what happens with Call of Duty. According to NPD's 2021 data, Call of Duty Vanguard was the No. 1 selling game on PlayStation last year, and Call of Duty: Black Ops Cold War was no. 3. If Microsoft decides to make CoD games exclusive to Xbox, they've effectively taken away Sony's top annual game revenue driver. And you have to imagine that a certain percentage of PlayStation CoD fans would flock to Xbox to play the next annual release, another blow to Sony. If Microsoft decides to continue publishing CoD games on PlayStation, and that's a big if, then the AB acquisition would surely have little impact on Sony's bottom line.

Few people seem to care about what the Activision Blizzard acquisition (and Bethesda) means for Nintendo, but I do feel they make a meaningful negative mark. Bethesda was just warming up to Nintendo fans this gen, having released Doom Eternal, Wolfenstein II and The Elder Scrolls V: Skyrim on Nintendo Switch. But it sadly does feel like that's the end of Bethesda games on Nintendo. Looking at Activision, they released Crash Bandicoot N. Sane Trilogy, Spyro Reignited Trilogy, Crash Bandicoot 4, and Tony Hawk's Pro Skater 1 + 2 on Nintendo Switch. It's not hard to imagine future titles in these franchises not hitting Switch, and that's a shame. Much like PlayStation fans, Nintendo gamers will likely need to sub to Game Pass if they want to continue playing these franchises.

All things considered, the Activision Blizzard news is big but unlikely to shake up the gaming industry in major ways. Nintendo and Sony will keep on pumping out great first-party games like they've always done, and Xbox fans get a major boost of new content in Game Pass. The biggest potential impact is clearly Call of Duty, and PlayStation fans may be forced to migrate to Xbox or PC (or abandon the series altogether). At least in that scenario Xbox has the cheaper Xbox Series S model available, plus xCloud using devices you already own, so the cost barrier isn't outrageous (in comparison to having to buy an expensive PC or Series X).

I'll continue to post my thoughts on the acquisition whenever I have meaningful things to say, so be sure to check out my Twitter @NextGenPlayer and let's continue to the conversation! Like all of you, I'm really interested to see how all of this unfolds. Thanks for reading!