- Microsoft is seeking regulatory approval for a $68.7 billion acquisition of Activision Blizzard, signifying a significant expansion strategy in the gaming industry.
- Phil Spencer, Microsoft Gaming CEO, reveals at a court hearing that they previously attempted to acquire mobile game developer Zynga.
- Despite various challenges, Microsoft is optimistic about the growth opportunities in the mobile gaming sector, viewing Activision, a major publisher of mobile content, as a potential partner.
In a thrilling turn of events in the world of video games, Microsoft is now courting regulators' approval for their proposed $68.7 billion acquisition of Activision Blizzard. This new strategy highlights Microsoft's keen pursuit to fortify its position in the gaming industry.
Friday's testimony by Phil Spencer, CEO of Microsoft Gaming, at a San Francisco hearing, added a fresh twist. Spencer divulged that Microsoft had previously engaged in acquisition talks with the renowned mobile game developer, Zynga. However, they didn't quite make it to the altar.
The court session, which kicked off on Thursday and will resume next week, followed the Federal Trade Commission's successful bid for a temporary hold on the Microsoft-Activision deal. A nod of agreement from the court has ensured the status quo while the FTC's request for a provisional injunction undergoes thorough examination.
The respect Microsoft harbours for Zynga and its accomplishments was evident in Spencer's statement. He said, "We hold Zynga in high esteem. However, considering our relatively fledgling presence in the mobile gaming scene, we were seeking a bigger fish."
Take Two Interactive, the creator of the Grand Theft Auto series, filled the role by acquiring Zynga for $12.7 billion in May last year. Zynga, originally known for the Facebook sensation, FarmVille, later diversified into mobile games primarily through acquisitions.
The current Microsoft-Activision negotiation came after Activision reportedly sought a financial firm's expertise to top Take-Two's acquisition of Zynga. While Microsoft and Zynga's dalliance's exact timeline remains unclear, Zynga disclosed that it had met potential strategic acquirers, one of whom expressed an acquisition interest.
Interestingly, this isn't Microsoft's first dance with Zynga, as they reportedly tried to buy the company in 2010. Meanwhile, Microsoft argues that its merged entity with Activision would still fall short of Sony's size and Tencent's. Both these companies are fierce competitors to Microsoft's Xbox.
Underscoring the rapid growth potential of mobile games compared to PC games and consoles, Spencer emphasized that Microsoft is not without its challenges. These include smartphone's limited screen size and the absence of controllers. Complicating matters further is Apple's reluctance to include Microsoft's Game Pass library in its App Store.
However, Spencer remains optimistic. Following their meeting with Zynga, he teamed up with Microsoft's finance chief, Amy Hood, to seek potential mobile opportunities. Activision, being the leading publisher of mobile content and a long-standing Microsoft partner, appeared as an appealing choice. After all, Activision significantly expanded its mobile games portfolio with the acquisition of King, publisher of Candy Crush Saga, contributing to about 35% of their $8 billion revenue in 2022.
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