Last October, Microsoft completed the acquisition of video game developer Activision Blizzard for sixty nine billion dollars. Activision Blizzard is the home of World of Warcraft, Diablo, and Candy Crush, and the deal was a record purchase price for the video game industry. It was also the largest single acquisition
by Microsoft in the company's history. At the time of the deal, Microsoft became the third largest gaming company by revenue in the world and touted its growth potential, particularly in mobile gaming. Activision Blizzard CEO Bobby Kotik echoed these sentiments on Bloomberg TV.
I think there were a lot of great reasons for this merger. Mobile is an important part, and so building this much larger audience of players is something that I think Microsoft will continue to develop and enhance, and we're really excited about the future of game as a result.
Fast forward to last week, when Microsoft announced it was laying off nineteen hundred employees in its gaming division, mostly from Activision Blizzard. Yesterday, it announced that Blizzard Entertainment, a subsidiary of Activision Blizzard, would have a new president, Joanna Ferries. She's a former NFL executive who had led the call of Duty Esports division of Activision from twenty eighteen to twenty twenty one, and then became GM of the franchise.
These changes reflect a remarkable transformation in a short period of time. So what happened today on the show? We called Jason Schreyer, a Bloomberg News reporter and creator of Game on Bloomberg's Gaming newsletter to find out. This is the big take from Bloomberg News. I'm Sarah Holder.
It all deflated last week essentially when this started hitting, and so what happened was I leave It was Thursday morning. News got out, and the news didn't get out through people finding out whether or not they lost their jobs. It got out through a company wide email, first from Xbox boss Phil Spencer and then also from kind of
the division heads within each company. And it was just chaos and confusion because people knew there were cuts happening, but they didn't know if they were going to be hit. A lot of people were asking me, hey, Jason, have you heard anything like do you know which teams have been impacted, which people are getting cut? Which was really just kind of devastating.
This is the company that Microsoft just acquired this fall, right, Yes.
So the history here is that Activision Blizzard was a big publicly traded company and Microsoft purchased them for sixty nine billion dollars and it was a long slow process for them actually closing the deal, but it closed in October.
And you've been there to follow sort of the optimism at the beginning of this acquisition all the way to the disappointing news last week. What happened.
So Blizzard is the maker of Warcraft and overwatching Diablo, and they are kind of a subsidiary of Activision Blizzard, and they have a long and storied history, have been through a lot of corporate owners over the years, and a lot of people there were really unhappy under Activision and Activision CEO Bobby Kotik and his c suite for a variety of reasons. There was a lot of kind of corporate interference from them. A lot of policies came
down the pipe that they were not happy with. And this is just a few weeks after the Microsoft acquisition. Microsoft is coming in, they're saying the right things. Phil Spencer, the boss of Xbox Microsoft's gaming unit, comes out and he says, hey, we want to retain what makes Blizzard great. We want to keep that magic going. We want to let you guys have your independence. So people really were thrilled. They were like, Wow, this is exactly what we want
to hear. Finally we have a new owner who gets it. One important part of this whole equation is that as part of Activision, Blizzard the publicly traded company, if Blizzard delayed a game, which often does it is known to do quite a lot, that would affect the stock price. That would need to be explained to the board of directors. Whereas now under a much bigger company in Microsoft, if Blizzard delays a game, I mean, that's not impacting Microsoft stock.
That is not having a material impact on that. So it gave Blizzard a lot of people a lot of hope that they would be able to kind of maintain that autonomy, be able to delay games, be able to focus on creativity over the kind of predictable schedules that Activision was pushing for.
Right one of the most disappointing things to people was that Blizzard announced it was canceling this project called Odyssey that was six years in the making. Can you say more about the fate of that game?
I think that game had been kind of in a little bit of danger recently, with or without the Microsoft acquisition, and this is kind of ripping a band aid off, And yeah, it's It's especially disappointing because Blizzard has largely focused on a few of its biggest franchises, Diablo and Overwatch and Warcraft, and this was it's stab at making a brand new franchise for the first time in a while, and so I think people were really excited about that,
and now they're a little bit worried that it'll be like, oh, Okay, now you just have to focus on the big billion dollar franchises we already have without leaving as much room for creativity.
After the break, Jason shares his twenty twenty four predictions for the gaming industry, including another fight ahead and a potentially surprising new player. We're back. We've been talking to Jason Schreyer, who writes Bloomberg's newsletter game On, which dives deep into the video game industry. This month, he wrote about another industry trend to watch out for this year,
unionization efforts. Given all this turmoil in the industry, you mentioned looking ahead to twenty twenty four that the U muonization effort in the video game industry could begin for real, And you pointed specifically to Microsoft as a flashpoint for building worker power. Do these recent layoffs help accelerate that labor movement.
As part of this acquisition process, they actually came out and they said, hey, we have signed a deal and arrangement with the with labor unions, saying that we are going to agree to a neutrality agreement where we promise we will not interfere with any potential unionization efforts, in direct contrast to Activision Blizzard, which before the acquisition had
been really clamping down on unit efforts. And so yes, Microsoft has said that, and that I think gave some people some hope that like, hey, if we try to do this here, maybe we won't to have as much resistance as we might have at other companies.
That's interesting. Microsoft presented itself as perhaps more labor friendly than Activision Blizzard, But who knows how that will play out after these layoffs.
Yeah, we don't know. I mean, Microsoft has a long history of not being late were friendly, so we'll see how that goes. But yes, they certainly agreed to and it is a legally binding agreement that they said that they signed and are going to be held to as far as neutrality.
You also predicted that this year will bring more consolidation of the industry. It's something you're watching out for. Can you help us understand what that consolidation could look like.
I think the video game industry has followed the pattern where there are some indie companies that have found success and found big hits, and then there are some big companies that have found success and found big hits, and then in the middle it's just getting carved out for consolidation. And so I wouldn't be shocked to see a company like Uvisoft or EA, which are kind of big, publicly traded companies but aren't quite hitting that at the same
level as some of their peers. I could see those guys getting swallowed up by other companies, perhaps some of the tech giants, the Amazons and Googles of the world, or even companies in China or Saudi Arabia. Saudi Arabia especially is going to be a buyer out there. And so yeah, we're watching a lot of that stuff and watching for more consolidation as the middle kind of gets carved out.
You mentioned Saudi Arabia. I was so fascinated by their potential entrance or expansion in the video game market. Can you say more about why they'd be interested in that space and what that might look like.
Saudi Arabia's twenty thirty vision plan that they've been talking about, which involves a variety of industries. They are trying to do two things. They're trying to move away from oil, and they're trying to boost their public reputation in the world's eyes. And to do that, they are entering a bunch of industries. We've seen them make big plays in the sports world, and we've seen them dive into esports, to competitive gaming, and we're seeing them in the video
game industry. They recently bought a big company called Scopely, which is a mobile games company that made a popular game called Monopoly Go that has been a big hit on mobile platforms, and I think they're out there looking for other potential deals as well.
So I want to close on other sort of big picture predictions you might have for the video game industry in twenty twenty four. Looking ahead, What else do you see coming?
Yeah, I mean one of this year's biggest trends is going to be new hardware from Nintendo, and I think a lot of people have their eyes on that are curious to see what the successor to the Nintendo's Switch looks like. Because the Switch was such a popular console, sold so many units and is just beloved by players, and so to see what Nintendo has in the pipe to kind of follow up on that, it has a lot of people really curious because if it's a hit,
that'll be really good news all around. If game developers can get their products on there and be just as successful as with the original Switch, I think that'll be good news. And if this thing is kind of underwhelming over price, whatever it is, I think that could be a catastrophe for the industry at large.
Thank you so much for joining us, Jason, Thanks for having me. Sir, thanks for listening to the Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Alex Uguiera. It was edited by Caitlin Kenney and Felix Jillette. It was mixed by Blake Maples. It was fact checked by Tiffany Choi. Our senior producers are Naomi Shaven and Jilda de Carly. We get editorial direction from Elizabeth Ponso. Our executive producer is Nicole Biemsterbower. Sage Bouman
is Bloomberg's head of Podcasts. Special thanks to Jason Schreier for his reporting. Thanks for tuning in. We'll be back tomorrow