Microsoft announced Tuesday a landmark $69 billion deal to purchase US gaming giant Activision Blizzard, grabbing the sex harassment scandal-hit firm as the tech colossus seeks to boost its power in video games.
Merging with troubled Activision will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony, it said, a major shift in the booming world of games.
“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,” Microsoft said in a statement.
Activision, the California-based maker of “Candy Crush” has been hit by employee protests, departures, and a state lawsuit alleging it enabled toxic workplace conditions and sexual harassment against women.
Over the past seven months the company has received about 700 reports of employee concerns over sexual assault or harassment or other misconduct, in some cases separate reports about the same incident, The Wall Street Journal has reported.
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Nearly 20 percent of Activision Blizzard’s 9,500 employees have signed a petition calling for CEO Bobby Kotick to resign.
“Acquiring Activision will help jump start Microsoft’s broader gaming endeavors and ultimately its move into the metaverse with gaming the first monetization piece of the metaverse in our opinion,” Wedbush analysts said after the news broke.
Under heavy pressure
“With Activision’s stock under heavy pressure (CEO related issues/overhang) over the last few months, Microsoft viewed this as the window of opportunity to acquire a unique asset that can propel its consumer strategy forward,” Wedbush added.
Microsoft has just marked 20 years of the “Halo” video game franchise that turned its Xbox console into a hit.
Microsoft launched a host of initiatives to mark two decades of both Halo and the Xbox, including a virtual museum exploring key moments in the console’s history.
Xbox remains a key player in a video game industry now thought to be larger than the movie sector, with market research firm Mordor Intelligence valuing it at $173.7 billion in 2020.
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Troubles, meanwhile, have stacked up for Activision over its sex harassment and discrimination scandal.
In July, California state regulators accused the company of condoning a culture of harassment, a toxic work environment, and inequality.
In September the Securities and Exchange Commission launched a probe into the company over “disclosures regarding employment matters and related issues.”
And two months later the Journal reported that Kotick, accused of mishandling the harassment complaints, had signaled he would consider stepping down if he failed to quicky fix the company culture. He has led the company for more than three decades.
Late last year chief operating officer Daniel Alegre pledged a 50 percent increase in female and non-binary staff over the next five years so that they will account for more than a third of Activision’s workers.