With its $68.7 billion acquisition of mammoth embattled video game publisher Activision Blizzard, Microsoft will be taking on a lot. It will be absorbing a company criticized by its employees for its workplace culture, one that is embroiled in lawsuits alleging gender-based discrimination and sexual harassment. Microsoft will also be taking on game development studios that have inched closer to unionization over the past several months.
But it will also be adding an element that newly minted CEO of Microsoft Gaming Phil Spencer sees as core to Microsoft’s strategy for consumer acquisition: a slew of video games and long-abandoned franchises.
Asked about the workplace complaints faced by Activision Blizzard in a 10-minute interview with The Washington Post on Wednesday, Spencer said: “I believe the leaders there believe in the opportunity they have in their plan,” noting his confidence the issues will be resolved. In addressing the potential of bringing on unionized workers, he said his company will aim to empower its new employees to “do their best work.”
The games created by Activision Blizzard’s developers provide the centerpiece of Microsoft’s strategic thinking around the acquisition. The titles are some of the most popular in the world. And those Activision Blizzard properties extend well beyond Call of Duty, World of Warcraft and Candy Crush.
In discussing some of the intellectual properties owned by Activision Blizzard, Spencer’s excitement may have mirrored the enthusiasm of a “StarCraft” player noticing the long-dormant franchise’s logo in Microsoft’s acquisition announcement.
“I was looking at the IP list, I mean, let’s go!” Spencer said. “ ‘King’s Quest,’ ‘Guitar Hero,’ … I should know this but I think they got ‘HeXen.’ ”
“HeXen,” indeed an Activision Blizzard property, is a cult hit first-person game about using magic spells. Microsoft’s pending acquisition of Activision Blizzard also means owning the rights to many creations from gaming’s past, including Crash Bandicoot, the original Sony PlayStation mascot. There’s also the influential and popular Tony Hawk skateboard series and beloved characters like Spyro the Dragon.
Toys for Bob, one of the studios working under the Activision Blizzard banner, successfully launched games like “Crash Bandicoot 4: It’s About Time,” but was later folded into supporting Call of Duty games. Spencer said the Xbox team will talk with developers about working on a variety of franchises from the Activision Blizzard vaults.
“We’re hoping that we’ll be able to work with them when the deal closes to make sure we have resources to work on franchises that I love from my childhood, and that the teams really want to get,” Spencer said. “I’m looking forward to these conversations. I really think it’s about adding resources and increasing capability.”
The $68.7 billion acquisition is an attempt to showcase Microsoft as distinguished in the global gaming space, Spencer said. This move is made amid tech giants like Apple, Google, Meta, Netflix and Tencent in China encroaching into the gaming space with various projects and investments.
Spencer said he’s concerned about tech companies unfamiliar with the gaming industry barging in to the space, as opposed to the current, experienced competition against Nintendo and Sony.
“They have a long history in video games,” he said. “Nintendo’s not going to do anything that damages gaming in the long run because that’s the business they’re in. Sony is the same and I trust them. … Valve’s the same way. When we look at the other big tech competitors for Microsoft: Google has search and Chrome, Amazon has shopping, Facebook has social, all these large-scale consumer businesses. … The discussion we’ve had internally, where those things are important to those other tech companies for how many consumers they reach, gaming can be that for us.
“I think we do have a unique point of view, which is not about how everything has to run on a single device or platform. That’s been the real turning point for us looking at gaming as a consumer opportunity that could have similar impact on Microsoft that some of those other scale consumer businesses do for other big tech competitors. And it’s been great to see the support we’ve had from the company and the board.”
Thursday afternoon, Spencer posted on Twitter that he has spoken with leaders at Sony, and Microsoft intends to honor all Activision Blizzard agreements to put those games, like Call of Duty, on PlayStation consoles should the acquisition be approved.
Had good calls this week with leaders at Sony. I confirmed our intent to honor all existing agreements upon acquisition of Activision Blizzard and our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry, and we value our relationship.— Phil Spencer (@XboxP3) January 20, 2022
Spencer has also been key in informing and charting the company’s path toward the metaverse, the still-theoretical evolution of the Internet. The metaverse concept has been explored for decades within the video game industry, but Facebook creator Mark Zuckerberg’s vision of a virtual-reality-driven metaverse has driven conversation since he announced his company’s name change last year to Meta.
Microsoft CEO Satya Nadella publicly invoked the metaverse before even Zuckerberg did, when he spoke of Microsoft’s possible role in creating an “enterprise metaverse” in May 2021. Nadella again mentioned the metaverse in the acquisition announcement Tuesday.
Spencer cautioned against a “workspace-only” vision for the metaverse.
“I’ve really been advocating internally in the company that gaming will be a catalyst for us and I can see how some of that functionality moving into enterprise scenarios and workplace scenarios can be beneficial,” he said. “But I don’t think anybody should pretend that all this stuff isn’t being rewritten. I had a meeting today with the ‘The Elder Scrolls Online’ team and we did our leadership team [meeting] in-game. That’s as much of a Zoom call as anything else!”
Activision Blizzard makes “World of Warcraft,” which has attracted more than 116 million active players who signed up through its Battle.net digital distribution service. The online RPG players are an audience primed for metaverse-like experiences, Spencer believes.
“For us as a platform company, what we’ve been doing with Xbox and Windows for years is ask how do players seamlessly move between these different worlds and they can have different identities and different clans and groups, but they also still feel anchored in an overall platform experience,” Spencer said.
Spencer said the Activision Blizzard acquisition process began toward the end of 2021, and part of that process included Microsoft absorbing the many reported challenges Activision Blizzard has faced over the past year, including the lawsuits alleging charges of gender-based discrimination and sexual harassment, as well as a nascent effort to unionize by the company’s workers.
“We spent time with the Activision team looking at the incidents, looking at employee polls and then had a good discussion with them about their plan, both the progress they’ve been making and what their plan was,” Spencer said, adding that during the lengthy regulatory process Microsoft would have no involvement with Activision’s legal woes. “We had to look at that forward plan and ensure we had a kind of confidence in that.”
Microsoft’s employees, like those at most big tech companies, are not unionized. When asked how his company feels about unions, Spencer said: “I’m going to be honest, I don’t have a lot of personal experience with unions. I’ve been at Microsoft for 33 years. So I’m not going to try to come across as an expert on this, but I’ll say we’ll be having conversations about what empowers them to do their best work, which as you can imagine in a creative industry, is the most important thing for us.”