Dynamic Marketing Communiqué

This tech giant’s acquisition of a gaming juggernaut ALMOST failed. Find out why! [Tuesday: Return Driven Strategy]

April 1, 2024

On October 13, 2023, Microsoft Corporation completed its acquisition of gaming giant Activision Blizzard Inc. for USD 69 billion.

This was a historic deal since it was Microsoft’s biggest acquisition to date in its 48-year history. Moreover, the Activision Blizzard sale was also the most expensive in the gaming industry to date.

With Activision Blizzard under its portfolio, Microsoft gained ownership of a slew of popular and critically acclaimed intellectual properties (IPs) such as “Call of Duty,” “World of Warcraft,” “Candy Crush,” and “Overwatch.”

These IPs combined have delivered hundreds of millions of U.S. dollars in income for Activision Blizzard—revenues that Microsoft will now benefit from.

Aside from the additional revenue source, the acquisition enabled Microsoft to make Activision Blizzard’s games available to Xbox Game Pass, a subscription service offered by Microsoft Gaming.

According to industry observers, one of the motivations behind the acquisition was Microsoft’s desire to appeal to a broader audience, since Activision Blizzard has nearly 400 million monthly active players across 190 countries for its IPs.

With the gaming industry projected to be valued at over USD 700 billion by 2028, it’s clear that Microsoft wants to position itself as one of the sector’s market leaders.

However, did you know that the acquisition of Activision Blizzard took more than a year to complete and was at risk of being canceled altogether?

To understand what happened, we need to dive deeper into the world of corporate mergers and acquisitions (M&A).

Regulatory Roadblocks

The M&A process can take six months to several years to complete, since there are a number of steps public companies need to go through before they are combined into a single legal entity.

In the case of Microsoft’s acquisition of Activision Blizzard, the deal took 21 months to complete because in 2023, the blockbuster deal went through a series of inquiries, probes, and lawsuits.

Due to the scale of the deal—considered as one of the biggest in the history of gaming—regulators around the world were concerned that the acquisition may hurt competition because Microsoft owned Xbox, a big name in the gaming industry.

Photo from Pexels

It also didn’t help that for the past several years, Microsoft has acquired gaming developers like Obsidian EntertainmentPlayground Games, and publisher ZeniMax.

Market regulators across the globe were concerned that if the Activision Blizzard acquisition were to push through, market share in the gaming console market would drastically shift towards Microsoft’s favor.

These regulators feared that the tech giant could decide to make Activision Blizzard’s titles and IPs exclusive to Microsoft’s Xbox gaming console, which could significantly hurt competition in the market. The same concerns arose in the growing cloud gaming market as well.

Even though the firms were based in the U.S., the newly-merged entity wouldn’t be able to conduct business in territories where the deal wasn’t approved.

There were speculations that the acquisition wouldn’t go through after the U.S. Federal Trade Commission (FTC) and the U.K. Competition and Markets Authority (CMA) initially attempted to block the deal.

The U.S. FTC withdrew its attempt to block the deal after a federal judge ruled in favor of Microsoft. On the other hand, the U.K. CMA gave the green light for the acquisition once Microsoft conceded Activision Blizzard’s cloud gaming rights to another competitor.

In total, the deal between the tech titan and the gaming juggernaut took 21 months to complete, and during that time, many observers wondered whether the deal would push through because of the regulatory roadblocks.

The Activision Blizzard deal has been approved in key markets around the world including the European Union, Saudi Arabia, Japan, South Korea, New Zealand, and China to name a few.

What happened to Microsoft’s acquisition of Activision Blizzard can be explained through RDS’ second foundation: Vigilance to Forces of Change.

According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven”:

“Other actions of the government such as airline deregulation, utilities deregulation, and anti-trust acts can mean life or death for a particular business strategy.”

Due to the scale of Microsoft’s acquisition, government regulators across the globe had to put the deal under the microscope.

When this happened, the acquisition took longer and Microsoft was forced to give concessions in order for its deal with Activision Blizzard to push through.

What happened to the tech giant is a reminder that government mandates and regulators can significantly impact a firm’s business strategy. Due to this, a company’s leadership must always be aware of existing regulations and other relevant laws.

If you’re looking to gain a better understanding of Return Driven Strategy and Career Driven Strategy, we highly recommend checking out “Driven” by Professor Litman and Dr. Frigo.

Click here to get your copy and learn how this framework can help you in your business strategies and ultimately, in ethically maximizing wealth for your firm.

About The Dynamic Marketing Communiqué’s
“Tuesdays: Return Driven Strategy”

In the book, “Driven,” authors Professor Joel Litman and Dr. Mark L. Frigo said that the goal of every long-term successful business strategy should incorporate the combined necessity of “making the world a better place” and “getting wealthy.”

That is why they created Return Driven Strategy and Career Driven Strategy—frameworks that were built to help leaders and professionals plan and evaluate businesses so they can also help others achieve their organizational goals and career goals.

The frameworks describe the plans and actions that drive returns for anyone in an organization such as independent contractors, marketers, brand managers, communicators, and other people in any field. These actions lead to the creation of wealth and value for customers, employees, shareholders, and the society.

Every Tuesday, we’ll highlight case studies, business strategies, tips, and insights related to Return Driven Strategy and Career Driven Strategy.

In planning, building, or managing brands and businesses, these strategies, case studies, and guidelines will help you choose what specific actions to take and when to take them.

Hope you found this week’s insights interesting and helpful.

Stay tuned for next Tuesday’s “Return Driven Strategy!”


Kyle Yu
Head of Special Projects
Valens Dynamic Marketing Capabilities
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