8 Major Questions Regarding the Microsoft/Activision Announcement

I had more thoughts on today’s news than I could consolidate into one or several forum posts. I’m hoping the moderators may let me air my thoughts via this topic. While perhaps better suited for the Opinion section, @OneBadMutha recommended that I post my article here. If the mods want to add this to a pinned post in an existing thread, I certainly understand, but otherwise I’m hopeful it will help inspire a healthy conversation about where we and Microsoft may go from here. Without further ado:

Less than one year ago Microsoft finalized its $7.5 billion acquisition of Zenimax/Bethesda. At the time, that was the largest single transaction in gaming history. Only on January 10th of this year, Take-Two announced a $12.7 billion acquisition of FarmVille maker Zynga, topping the Zenimax deal. Far be it for Microsoft to stay out of the headlines for long. (Interestingly, Activation considered an acquisition of Zynga as well.)

Today, Microsoft announced a $68.7 billion acquisition of controversial and beleaguered game published Activision Blizzard King (shortening to just “Activision” for the sake of my sore fingers). That’s right! Xbox will soon be the exclusive home of the long-running Candy Crush franchise (also some other unknown game franchises like Call of Duty, Diablo, World of Warcraft, Tony Hawk’s Pro Skater, Crash Bandicoot, Overwatch, Spyro the Dragon, Guitar Hero and Rock n’ Roll Racing). If approved by regulators (as is a near certainty), Game Pass is about to see an influx of backwards compatible and legacy-PC games as well as undeniably huge exclusives at launch.

It didn’t take long for Twitter and forums to become littered with the speculation of the industry’s greatest armchair market analysts, like that guy who keeps telling you Microsoft and Sega are a done deal. However, fortunately you have me, some guy online with a BS in Economics and not much else, to set the record straight on what to expect from this monumental announcement. I’ve already surveyed all gamers and compiled the top burning questions filling your feeds and swimming around your head today.

1. Exactly how much value will this add to Game Pass for subscribers?

With the addition of Zenimax/Bethesda, Xbox saw their number of first-party studios increase to 23. That doesn’t even include sister studios like Arkane Lyon/Austin and Undead Labs Seattle/Orlando, amongst others. Now that the Activision teams are joining the fold, they’re up to 32 dedicated first-party studios (plus sister studios). At this point, we’re talking 40+ first party games in development at all times (probably many more, to be honest). With Xbox Game Publishing handling exclusives developed by third-party studios, I feel pretty confident in expecting that 50 or more games currently in development will see the light of day. Divide that by a conservative development cycle of 4-6 years per game, it’s reasonable to expect 10+ first-party games launching into Game Pass every year starting in 2023/2024. That’s a game every 1-2 months! We’re talking games on par with Halo, Diablo, Doom, Indiana Jones, Fable, Overwatch… the list goes on.

So, I don’t think anyone needs to be overly concerned about Game Pass’ pipeline of content anytime soon.

2. Is the price of Game Pass going up?

Somewhat unceremoniously snuck into today’s press release was the announcement that Xbox Game Pass has reached 25 million subscribers. We don’t know how many of those folks are paying a full $10-$15 per month, but it’s pretty safe to say Microsoft is not suffering. Even if we estimate an average of maybe $7 per person (presuming some subscribers are still hanging onto that $1 deal), you’re looking at $175 million in revenue per month. That’s $2.1 billion per year for Game Pass alone.

There are two obvious ways to increase revenue for services like Game Pass. Increase the cost of the service or increase the number of subscribers. Microsoft is almost certainly focusing on building the number of subscribers into an astronomical figure. Netflix has over 200 million subscribers worldwide. At that figure they can afford to suffer a little attrition anytime they increase the cost of their service. Microsoft likely won’t be entertaining a major price hike, even with the persistence of increase inflation, until they have the subscriber base to support one.

Is a moderate price increase going to take place anytime soon? Perhaps but Microsoft may look elsewhere for added revenue in the short run (cough microtransactions cough).

3. Will Activision/Blizzard games be on PlayStation (and Nintendo) systems?

This is the topic that will get the fanboys tweeting up a storm until 3 AM. One the one hand, Activision’s market value was propelled by their reach across gaming systems and mobile. On the other hand, Microsoft doesn’t put up $69 billion (nice) without expecting gamers to jump on the Game Pass bandwagon. Call of Duty saw around 100 million active users per month in 2020. Microsoft will do everything they can to convert as many of those users as possible (and more) into consistent Game Pass subscribers and I wouldn’t bet against them. As I said in my response to question 2, total Game Pass subscribers is the long game. It’s reasonable to believe Phil’s philosophy for Bethesda games will apply to Activision as well. Microsoft will deliver exclusive games to platform where Game Pass exists.

Will there be exceptions? Possibly. But for the most part, Microsoft is betting that dedicated fans of these franchises will follow them to Game Pass and the platforms you can subscribe to it on.

4. Will Xbox become a gaming monopoly?

First of all, let’s admit that the mainstream understanding of market consolidation and antitrust is hilariously uniformed. For the most part, regulators don’t step in the way of these types of transactions unless it can be proven that the resulting market consolidation will result in the purchaser’s ability to manipulate market prices unilaterally. Microsoft didn’t buy Sony, Nintendo or Valve here. Consumers will still have access to thousands upon thousands of games at market-driven prices.

Truthfully, studio purchases likely don’t matter much to regulators. Microsoft could purchase as many studios as they could afford without raising many an eyebrow. Publishers are a bit different because there are fewer of them at the top-end. However, after this transaction closes the gaming market will still have a health number of third-party major publishers, including Tencent, Take Two, Electronic Arts, Ubisoft, Square Enix, Epic and Sega. That’s not even taking Sony, Nintendo, Valve and whatever Amazon/Luna ultimately becomes into account. Frankly, I wouldn’t be surprised if Amazon or Tencent were sniffing around Activision before they came to an agreement with Microsoft. Additionally, smaller publishers, including Annapurna Interactive and Devolver Digital, add further potential for competition. This is a massive purchase, but not enough to set off regulatory alarms.

All of that said, an acquisition this size will certainly put a target on Microsoft’s head by public opinion and more staunch regulatory authorities the next time they look into a purchase of this size. However, that’s a problem they don’t really need to worry about right now. If they have the cash on hand for this kind of transaction, they can afford the lawyers they need to ensure it sees minimal resistance.

5. Will Microsoft let Blizzard be Blizzard?

Any World of Warcraft fan will have a lecture prepared for you on what’s gone wrong since Blizzard joined Activision in 2008. While the Don Mattrick days of Xbox didn’t solicit much good will from developers, Phil Spencer’s approach to first-party studio independence has been warmly received by many around the industry and within Xbox Game Studios. Until we see evidence that may change, it’s reasonable to expect that his light touch and Microsoft’s significant resources will allow Blizzard staff to fulfill their visions for existing and future projects, with more flexibility in regard to budgets and timeline.

If Diablo 4 and Overwatch 2 receive the same level of patience as Halo Infinite, under the appropriate management, it should theoretically result in the better possible versions of those games. Fingers crossed that’s where we’re headed!

6. Will Call of Duty still be the same Call of Duty?

The annual release of the Call of Duty games is part of why Activision was worth $68.7 billion. That’s practically guaranteed revenue, year-after-year. Warzone aside, Microsoft is likely going to leverage the continued annual approach to the franchise, though they may be more willing to provide additional time to get the franchise back on track. Out of all the franchises acquired today, this is the one that I suspect more closely resembles the Minecraft model. That’s not to say that future iterations will not become Xbox/Game Pass exclusive (which I expect them to eventually) but, for now at least, I’d expect Call of Duty games to continue as is. When the time is right, Microsoft will likely shift the franchise to the Xbox ecosystem, exclusively.

7. What does this mean for Microsoft’s mobile ambitions?

Somewhat lost in the “gamer” discourse regarding today’s news is the massive acquisition of Candy Crush-makers King. Microsoft has dabbled and will continue to experiment is the world of mobile, with Gears Pop, Alpha Dog Studios, Minecraft and other initiatives. However, Candy Crush is as reliable of mobile revenue as they come. Additionally, their expertise will undoubtedly be leveraged beyond individual games but with the intent of formally exploring and building out Xbox’s presence within the mobile market. For now, Candy Crush will bring in guaranteed revenue but moving forward we shouldn’t sell short Microsoft’s ambitions within the mobile market, beyond cloud gaming.

8. What happens to Activision/Blizzard culture concerns?

In my opinion, this is the most important issue facing Microsoft today. Phil Spencer’s reputation is about as good as it gets amongst gamers. Not many industry leaders get the benefit of the doubt that he’s tried to earn since taking over the Xbox division in 2014, reflected in today’s announcement that he’s been promoted to Microsoft’s Gaming CEO. He’ll have to carefully wield that power as he works to correct many years of toxic behavior within the walls of Activision Blizzard.

While many have been implicated in abhorrent behavior, the buck stops with Activision’s CEO Bobby Kotick. He himself has been reported to have known about sexual misconduct allegations, and I won’t mince words here but specifically rape allegation, taking place under his watch within the company for years. It’s even reported that he threatened to have his assistant killed. I recognize that we’re talking about allegations but that doesn’t make them any less serious of a concern for Spencer and his team.

It’s reported that Kotick will remain on as CEO, at least until the purchase is finalized in Microsoft’s fiscal year 2023. That doesn’t sit well with a lot of people, reportedly including some Activision Blizzard employees that are otherwise enthusiastic about Microsoft’s move, according to Bloomberg’s Jason Schreier. However, it’s worth noting that Microsoft cannot interfere with Activision Blizzard King decision-making while the purchase undergoes regulatory scrutiny. So, for now at least, Kotick remains on as CEO, but seemingly not for long.

It’s beyond frustrating that apparently the only consequence for people like Kotick is a massive cash payout and an early retirement. However, that’s capitalism. Unless consumers and stakeholders demand more of corporate leaders, very little will often change. Spencer and his team will need to find a way to course-correct Activision Blizzard’s leadership and empower disenfranchised employees.

Additionally, Activision was less than enthusiastic and ominously threatening pertaining to any organization of labor within their company. It remains to be seen how Microsoft responds to these ongoing efforts. However, the persistent discussion of gaming unions highlights the need for industry change and better worker representation. Hopefully, Microsoft makes a commitment to becoming a leader in addressing these concerns rather than skirting them entirely.

On the surface, the acquisition is landscape-changing move within the gaming industry. Make no mistake, it has significant ramifications for Game Pass, franchise exclusivity, gaming labor relations and more. However, the market power concerns specifically associated with this deal are certainly oversold. Microsoft has earned some trust amongst many of their fans, but trust cannot be blind.

This deal has the potential to be positive for gamers everywhere. Of course, that doesn’t mean much if it’s not fulfilled by their actions. Microsoft, like Sony and Nintendo, is a corporation and not your best friend. Satya Nadella, Phil Spencer, Sarah Bond, Matt Booty and their teams can’t just say the right words, but it’s vital that they walk the walk as well to build upon and retain that trust. It’s up to all of us to keep them accountable to their word. Consumers, staff and especially the victims of abuse throughout the industry deserve that respect and commitment.

Xbox will be in healthy place for years to come. So, too, should everyone else be in the world of gaming.


Sony will still be the biggest gaming company in the world by revenue even after the acquisition, so it can’t be a monopoly from second place. It will go through but I don’t see them going after a Ubisoft or EA anytime soon.

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And how much of that Sony revenue comes from Activision games? A substantial amount of that revenue won’t be there going forward.


It will be shocking to see Xbox win this generation after falling so far behind last generation. Phil Spencer truly is a magician.

The casuals will join Xbox Gamepass to play COD / other FPS games. The hardcore will join Gamepass to play Bethesda. I think PlayStations only strategy is to embrace nostalgia. Scale down their game budgets and try to increase output. The ratio will be 5 Xbox titles for every 1 PlayStation title. I’m not sure how Sony can hide that.

Isn’t that TenCent?


Phil is a VERY smart man.

Not sure if people heard him talk about the acquisition but he specifically said the acquisition would make “MS the third largest gaming company behind Tencent and Sony

If you could read between the lines he’s basically laying down a pre-emptive argument against those trying to frame this as a Monopoly move. It’s not.

  1. A lot
  2. Eventually
  3. Eventually not
  4. No
  5. Yes
  6. Yes
  7. Lots of money
  8. It gets better

All powered by the Bank of Azure.

It’s a perfect marriage. Xbox gets major IP’s and 9000 odd extra staff.

Activision devs get a committed owner who will turn the business around. Studios will have independence. Employees will have a moral boost.

I wonder can I have a word with Phil about my beloved Ubisoft and it’s demise in my eyes.

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It’s millions, not billions. Activision might put out three games a year. Sony gets 30% of the sale.

It is more complicated than that. Call of Duty is the best selling game. Call of Duty is the 2nd best selling game. People buy PlayStation specifically to play call of duty. Those people will buy Xbox instead. I guess now that I said it like that it’s not very complicated at all, it’s actually pretty simple :laughing:

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From 2020 on PlayStation 4, it would wipe out spots 3, 4, 5, 6, 8, 14. That’s billions of lost revenue.



Yikes, going by those data, it looks like Sony would have to rely heavily on Take 2, EA, and their internal studios. It kinda puts it in perspective how massive these games are relative to their vaunted first-party games (though to be fair GoW and Spider-Man were both 2018).

Since this thread has some smart cookies in it, I’m gonna ask a few questions of my own:

  1. In the event that CoD did indeed become Xbox-family exclusive and Sony allowed Game Pass on PlayStation (even a truncated first-party-only version), would it be reasonable to expect a PS-native version of these formerly multiplatform games, or would they just be streaming the Xbox/PC version? My reasoning is that making a native version would take extra resources, and that such a version of Game Pass miiiiiight be streaming-only anyway (since it’s only first-party and all)
  1. Does this mean that we can expect Activision’s old Spider-Man games to come to Xbox/Game Pass? Because that would be pretty funny honestly.
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I doubt it’d be worth it to Marvel/Disney to waste their time and potentially annoy Sony but it’d be pretty funny if it happened.

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I think Activision owns Simpson’s Hit and Run, the rights would have to be negotiated from Disney. Just because we can’t have Spider-Man doesn’t mean we can’t have fun toys. Xbox needs to exploit Disney’s love of money more to their advantage.

I am 1000% on board with this.

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Sony only gets 30% of the game price.

Don’t forget about additional content. They make more money from that than game sales.

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Plus MTX. Will still not be in the billions, tho.