"The Biggest Takeaways of the Microsoft/Activision Deal"

More than a week ago, the gaming industry was shaken by the massive news of Microsoft entering an agreement to acquire beleaguered publisher Activision/Blizzard (who for those who've been in the know, has been embroiled in a massive lawsuit over sexual harrassment and other horrid things happening within the company and at a top level) in an all cash transaction of $68.7 billion dollars. Considering Activision Blizzard owns some of gaming IP's most lucrative franchises (mainly above all else, the "Call of Duty" franchise whose two most recent entries "Black Ops Cold War" and "Vanguard" where the top 2 best selling games of 2021), Microsoft buying this kind of publisher is the kind of thing that absolutely, definitively changes the gaming landscape forever. It absolutely removes a big third party vertical from the equation (in an even bigger way than when Microsoft acquired Zenimax and took with them Bethesda and all the studios they owned). When this deal passes after any regulatory checks, there will be no denying how much Microsoft's first party studio vertical has grown since they started their acquisition sprees in 2018.

Obviously industry shaking news like this comes with A LOT to unpack. After close to two weeks from the initial shock of such a huge acquisition, it's clear there's so many positive and negative things to take from a deal like this. 

NOTE: Here's the X Button episodes reacting to the initial news and the aftershocks:

So, let's see what are some of these takeaways:

Microsoft Inherits Damaged Goods

While it is easy to immediately jump into the content Microsoft acquired with this deal, it is important to think the kind of publisher/company Microsoft is acquiring. Most of 2021 came and went with massive reports and revelations about the horrid culture that had festered over many of Activision Blizzard's studios, from a culture of sexual harassment, gender pay discrepancies plus other things. It not a surprise the State of California filed an ongoing lawsuit against the massive publisher, which is still an ongoing endeavor as of today. Further reports from outlets like the Wall Street Journal paint Activision Blizzard CEO Bobby Kotick in the worst possible light, where he initially denied any knowledge about the company's culture problems, yet the report said otherwise. With Microsoft pretty much telegraphing they're basically parting ways with Kotick when the deal closes at the end of their 2022/2023 Fiscal Year (and basically sending him with the equivalent of a $680 million dollar golden parachute, which sucks but business is business), Microsoft will have a tall order to fill to come in and change top to bottom the culture festered over many years in many studios. 

Microsoft certainly looks like the white knights coming to the rescue at this moment, but after such a public destruction of public opinion in many of the Activision studios (with many protest walkabouts happening in less than a year, and with one studio in Raven Software seeing members of its QA team attempting to unionize), time will tell if Microsoft does the work to improve on the studios' working conditions, because once they own them, anything that does and doesn't happen will be on them. All the passionate developers remaining at these studios deserve the kind of workplace worthy of their talents, and it's up to Microsoft to fully provide that to them. 

Liberation of Activision IP and Studios

Did you know there was a time and place where Activision was a studio known by things other than just "Call of Duty"? This was the studio that had big, varied franchises like "Tony Hawk" and "Guitar/DJ Hero", a long stint doing licensed titles from Marvel and the "Transformers" franchise, as well as being the current house of classic original PlayStation mascots "Crash Bandicoot" and "Spyro the Dragon" (which gave us "Skylanders") and more obscure franchises like "Prototype", "Singularity" and even "Hexen". In short, the amount of IP they have basically vaulted over the last few years is really massive. Activision's eternal obsession in only making the insurmountable amounts of money "Call of Duty" brings them in turn leading them to vault these IP's because of lack of annualization/lack of millions in sale (despite being big sellers) has always been the grossest/nastiest thing about Activision as a company over the past decade. The massive, consistent success that has been the "Call of Duty" franchise warped the C-Suite and the top execs expectations of what success should be from any given game, and led Activision to become the most creatively bankrupt company that gutted every studio they owned to just become cogs in the assembly line that was the yearly "Call of Duty" game. Activision stopped letting the studios flex any creative muscle they could have had, instead just needing to be in the churn over that successful shooter franchise. 

With Microsoft now as the masterminds over Activision's litany of IP, and their ownership of the studios currently on the "Call of Duty" churn, if you were a fan of any of Activision's IP from the past two decades prior to them becoming the "Call of Duty" assembly line, this is a potentially good time to celebrate. Microsoft goals have been clear this generation: they want Xbox Gamepass to be THE center of gravity around its business. They want everyone who signs to Gamepass to keep subscribed. If streaming services like Netflix, HBO Max, Disney+ and Amazon Prime have shown us something, is that new content drops is what keeps people subscribed month to month. Sometimes it's an expensive undertaking having a perpetual content pipeline delivering content month to month (if not week to week). In the case of games, development takes time. If Microsoft wants to have the new content from their own and not licensed from third parties be the thing people subscribe to, they need as many things they make as much as humanly possible. With the amount of studios they will now own, and the amount of IP sitting in Activision's vaults begging to be revived, this is the perfect time to take so many of the Activision supporting studios and give them the chance to make something new and provide new content to their service. And with the variety of things they just acquired, combined with all they acquired from the Zenimax acquisition and the studios they purchased in 2018-2019, they now have the pipeline of multiple studios to develop something they can put into their service. And for fans of Activision's vaulted IP, this is sadly the only way some of these can be potentially revived, because if things had been like they were, Activision would just keep pumping out more entries of their constant moneymaker forever, creativity be damned. And all of this, without even mentioning the Blizzard side of it all.

Blizzard's Chance at Redemption

Blizzard used to be, bar none, a name synonimous with words like respect and quality. The legendary developer known for giving the gaming world classic, genre-defining experiences like Starcraft, Warcraft/World of Warcraft, Hearthstone, Diablo and most recently (in relative terms) Overwatch was always one that demanded respect with the gaming community. They were the huge proponents of taking forever until their games were ready. They were the kind of company worth championing (prior to everything we then learned from the culture). 

That is, until Activision started exerting more control over that side of the company. 

Despite the combined name "Activision Blizzard" since Activision acquired Blizzard from Vivendi in 2008, for close to a decade Blizzard was able to act independently from its money hungry parent company. Despite some early stumbles happening in the decade since the acquisition like the "Diablo 3" Auction House, the death of the MOBA "Heroes of the Storm" and the cancellation of their MMO "Titan" (whose themes and assets where rescued/repurposed to become "Overwatch"), every success or failure could be put squarely at Blizzard. However, once Blizzard co-founder/former president Michael "Mike" Morhaime announced he was stepping down in 2018 and fully left in 2019, that's the moment the wheels started coming off for Blizzard and Activision started exherting more influence over the oncely independent company (including specifically Activision's demand for more games done quicker). For one, with the lack of any meaningful game announcement after the release and success of "Overwatch" in 2016, Blizzard suffered the fan ridicule of their announcement of "Diablo: Immortal" during Blizzcon 2018 (the legendary "Is this an out of season April Fool's joke/Don't you guys all have phones" moment) when people thought they'd hear about "Diablo 4". Then in 2019, they came under massive fire for clearly cowtowing to the Chinese goverment (one Activision has gleefully cowtowed to) when they banned "Hearthstone" e-sport player "Blitzchung" after showing support on-stream for the 2019-2020 Hong Kong protests (all this happening in the eve of Blizzcon 2019, where they then had to give the worse apology imaginable and try to gaslight the whole fiasco by hiding behind the reveal of "Diablo 4" and the unnecessary "Overwatch 2"). Add to that the disastrous launch of "Warcraft 3: Reforged" and the complete stop of support for the original "Overwatch" due to the existence of the unnecessary sequel, and becoming the actual center of attention for the worse of the sexual harrassment/fratboy culture claims of the State of California lawsuit, and Blizzard's reputation couldn't be further than rock bottom. 

Once they are under Microsoft's umbrella, the big question remains: will Microsoft allow Blizzard to operate the same way it used to (in the time they were more beloved) before Activision started exherting control over them and demanding more/quicker games made? Considering Microsoft is one that doesn't necessarily rush its developers currently into rushing their games to market regardless of quality (look for example, how they took the L and delayed "Halo Infinite" out of the promised Xbox Series X/S launch), and that there has been an actual culling at the top of Blizzard (after the reports named some of those people and now they are done), there is potential for Blizzard to have a clean start after all of this is done. I mean, they just recently announced via job listings the development of a new IP that's gonna be a new survival game. Considering how they used to be company that entered a genre and doing a game that became a cornerstone of that genre (look at all their big franchises to see what I mean), if Microsoft allows them to get in touch with their quality roots on top of rooting out all the nasty sides that plagued their in-house studios (and no more executives who would reunite during Blizzcons to do henious stuff in a Bill Cosby suite), there may be a chance of redemption for Blizzard once again.

Call of Duty's Unpredictable Future

There was a time I was enamored with the "Call of Duty" franchise. As a big fan of World War II shooters in the early 2000's that was noticing the big guy at the time, "Medal of Honor" slip in quality with each subsequent title, "Call of Duty" came at the perfect moment to show the next level of chaotic warfare with a level of polish not seen in some shooters at the time. Launching with its original PC release in 2003 and its United Offensive expansion in 2004, the series truly started becoming the big thing with "Call of Duty 2" being the defacto launch game to play at the Xbox 360's launch. Not to mention the stratospheric success of the first two "Modern Warfare" games in 2007 and 2009 that cemented the series as one of the biggest things in all of entertainment. For close to 16 years in a row, Activision has ensured there is always a new "Call of Duty" game every year in the market no matter what, which led to a yearly saturation of the series that schewed evolution and would become a hollow shell of its former self. Successful enough to always be the best selling thing year on year, but also becoming the true face of the cynical yearly cash grab year in and year out. 

With Microsoft in charge of the biggest selling game of the year once the deal goes through, the future of "Call of Duty" enters an interesting impasse. Activision strained what was humanly possible to keep the yearly "Call of Duty" assembly line going, leading to the hollowing out of every studio they owned to become a support studio that could ensure a game would come out every year, damn creativity. Considering that Activision's entire existence was reworked to just rely on endless "Call of Duty" revenue, now that they're gonna be a cog in Microsoft's machine, theoretically there shouldn't be an overreliance of it from that point on. Since Microsoft is not the kind of studio that really annualizes something other than the bi-annual release swap of the "Forza Motorsport/Forza Horizon" franchise (with "Forza Motorsport" in particular taking a particularly long hiatus compared to its cadence 'til 2017), maybe this is the time we no longer see "Call of Duty" as the obligatory yearly fixture that needs all manpower imaginable to get it out yearly. Specially with the existence of the ever popular Warzone, if the "Call of Duty" franchise needs its yearly presence, that ever popular free-to-play game can shoulder the load, and most of the studios that came with this Activision purchase get the chance to finally break off and potentially work on new games again. Considering that "Call of Duty" used to be done by only one studio at a time (before development became more complex and required more support studios to keep the yearly cadence), maybe this will allow the main three studios (Infinity Ward, Treyarch, Sledgehammer Games), some extra time of development so that they don't have to hit their respective year. 

Like mentioned above, Microsoft is in the business to feed the beast that is Gamepass to keep subscribers engaged month to month. That only happens with new content coming. Spending this much money just to make "Call of Duty" a Gamepass fixture is just professional malpractice. With the litany of dead IP just waiting to be revived as clear Gamepass fodder, the manpower they acquired can develop those new games needed to keep the service alive without them having to spend extra for third party stuff. 

PlayStation's Reliance on Call of Duty is Over

I'm someone who loves playing on all consoles. I don't like to particularly say I have a main allegiance as I believe that just closes you off to potential great experiences everywhere. With that said, most of my time has been spent on the PlayStation ecosystem. I just love the kinds of rich, single player games Sony puts out for the kind of gamer I am. But as someone who's also been entrenched in that ecosystem a lot, I do miss the days where Sony was willing to experiment and try to make games in different genres. When they became the lead console with the PlayStation 4 this past generation, it meant that they leveraged getting the "Call of Duty" franchise and associate themselves with it as the console to really play that game with. While a financially sound move, I believe that created a net negative on Sony when it came to variety. Having the "Call of Duty" association made Sony a little too lax during important places like the fall season, where they instead would retreat and just let "Call of Duty" carry them even when their competitors would compete sometimes with big marquee titles around that time. Again, considering they still sold a lot, it was a financially sound decision, but certainly a boring one if you were on PlayStation around that important time of the year. And ironically, it was a move that wasn't paying off as much anymore when looking at 2021, where Sony basically "closed shop" after their last September release "Kena: Bridge of Spirits" and let "Call of Duty" carry them through the fall just when Microsoft saved some big releases in "Forza Horizon 5" and "Halo: Infinite" for that exact time. The results speak for themselves, where Microsoft made significant strides by providing enticing content at the right time, and let them close a gap with PlayStation in a way they haven't since they led during the Xbox 360 era. 

Now with Microsoft acquiring the big game Sony's been putting their weight for close to a decade now, and us knowing that PlayStation just gets a contractual commitment to the next couple "Call of Duty" game 'til 2023 (just the year where Microsoft expects to close its purchase) and the future of the franchise basically influx on Sony's platform (and based on the Bethesda acquisition, one that doesn't guarantee the series will remain multiplatform), Sony's now in their backfoot now. Even if Microsoft plays ball and actually lets the series stay there like they did "Minecraft", they no longer get the marketing association of the "best place to play Call of Duty" anymore. Sony will be forced to act now. They will be forced to find a way to make their platform and ecosystem one that stands out during the important holiday period. While they did try to put stuff out during 2018, 2019 and 2020 respectively when they put out "Marvel's Spider-Man" (their biggest exclusive success ever), "Death Stranding" (something not as successful but unique in the landscape) and their PS5 launch lineup, they will now have to take that holiday period seriously from here on out unlike in 2021 and many of the PS4's years. They face a competitor who (unlike with their past console) is in massive fighting shape and willing to win. And when Sony's put in the backfoot, some of their best ideas and content shows up. That's how they turned around their PS3 misfortunes, and while they're still riding the PS4's success on momentum alone with the PS5, they are now in a position where they may not be the "winners" by doing what they've been doing, and may need to get into that PS3 mentality again.

Begun, the Consolidation Wars Have

If there is one massive net negative about the impact this Activision deal does to the gaming industry, is by becoming the domino that truly begins a consolidation war where everyone will swallow what's left in the free market. We are entering a moment that plagued the movie industry, where many chips will be owned by the select few megacorporations. It's the kind of consolidation that can potentially lead to less variety, less risk taking by lack of competition, and a more boring ecosystem. One of the coolest things about being part of the gaming ecosystem is the fact we had a third party market supplying content while the exclusive content of a select party would get time to get cooked and come out when its ready. This consolidation happening will then lead for everything to be an exclusive, and while that is enticing for the big guys enticing people to own more than one console, the truth is some people just have a preference and don't have the money to acquire everything.

Obviously from a Microsoft perspective, they have a couple trump cards in place to slightly counter that notion, as they are less about entrenching people into the walled up gardens of one console and instead have many entry points to experience their content. Whether it's through the normal console in the Xbox Series X/S, or through PC or through mobile/tablets with something like XCloud, they make the case everyone can game because it's all about the Gamepass subscription. It's a PR-friendly way to mask the fact they just want to be a corporation that owns everything just because they can, and the consumer friendly nature of Gamepass helps them evade the ire usually reserved for the big corporations. 

And the irony is, with EVERYTHING that Microsoft has acquired since 2018, we're still at a point where a lot of what they acquired is still to be determined to bare fruit. The "Forza Horizon 5/Halo Infinite" two-punch is certainly a start, but look at it deeply and that's still just the latest in the "Halo/Gears/Forza" usual suspects that have carried Microsoft for a while. They gotta prove that they'll properly manage this many studios without any of them collapsing, or undermining their vision because Gamepass allows them to release with a low cost of entry leading to less backlash. And if they just keep acquiring because they can, other players in the industry will also start acquiring everything because they have to and not because they want to, and don't want anyone to lock them out.

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So those are my thought about this industry shaking news. Obviously this is just the beginning of how the gaming landscape is going to change by brute force over the next couple months. Interesting fodder for the console warriors, but a fascinating/terrifying time for the industry.

EDIT: And it keeps on: Sony Interactive Entertainment just bought Bungie! Like I said, this is just the beginning! Here's our The X Button episode talking about it:

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