Microsoft Sets Off New Content War In Gaming
The Straits Times|January 21, 2022
Its US$75 billion (S$101 billion) bet on Activision Blizzard comes as rivals jostle for position in the metaverse. Control of popular games like Candy Crush gives Microsoft new markets and opportunities to build a Netflix for gaming.
Richard Waters

If the path to the metaverse runs through today’s video games industry, then Microsoft’s agreed US$75 billion (S$101 billion) acquisition of Activision Blizzard could turn out to be one of the defining deals for the next era of consumer technology.

The all-cash purchase, announced on Tuesday, landed like a bomb in the video games world. By bringing about 30 games studios under one roof, “the implications of this deal will send shockwaves throughout the industry”, said Mr Piers Harding-Rolls, a games analyst at Ampere Analysis.

The reverberations echoed through the stock market, with Sony opening almost 10 per cent lower in Tokyo on Wednesday and other games makers bouncing on the prospect of a round of other deals.

At one fell swoop, the huge deal promises to turn Microsoft into one of the biggest creators of interactive entertainment, shake up the existing networks of alliances and competitive rivalries that shape the US$200 billion global industry, and help to lay the foundations for the all-encompassing virtual worlds of the future.

“This is a new content war, Web 3.0 style,” said Mr Neil Campling, an analyst at Mirabaud Securities.

But it is also likely to provoke intense scrutiny from antitrust regulators around the world, for whom any move by the biggest US tech companies to buy their way to the top of important new markets has become a worry.

It is all a long way from what most investors expected when Mr Satya Nadella took over as Microsoft’s chief executive in 2014. At the time, he faced calls to ditch the company’s Xbox console games division to focus all its resources on making up lost ground in cloud computing.

Instead, Mr Nadella clung to the idea of building new audiences for Microsoft out of the communities of people that had formed around gaming, making the purchase of the maker of Minecraft his first deal as chief.

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