Microsoft Frames $69B Activision Blizzard Deal as ‘Metaverse’ Move

Microsoft shook up the video game industry this morning, announcing that it will acquire publisher Activision Blizzard—the company behind Call of Duty and Warcraft—in a deal valued at $68.7 billion. And Microsoft says that it’s a move made in anticipation of the metaverse.

The metaverse is a term that describes a future vision of the internet, in which users interact with avatars across shared 3D spaces. It’s envisioned as a more immersive way to socialize, play, and even work online, with blockchain technology and crypto assets (including NFTs) expected to play a role as users move across interoperable platforms.

In a release, Microsoft said that the deal will provide “building blocks for the metaverse.” Chairman and CEO Satya Nadella added, “Gaming is the most dynamic and exciting category in entertainment across all platforms today, and will play a key role in the development of metaverse platforms.”

Ethereum-based games like Decentraland and The Sandbox are seen as early examples of the metaverse, letting users purchase, customize, and even monetize digital land plots sold as NFT assets. Facebook has also signaled significant interest in the coming metaverse, revealing its vision last October as it renamed its parent company to Meta.

Activision Blizzard has yet to make any moves in the NFT or metaverse spaces. Microsoft, meanwhile, announced in November that it is building 3D avatar support for its Teams virtual meeting platform, and will create immersive environments for users to interact within.

Microsoft has also been involved in the crypto industry for years, announcing an alliance with Ethereum software technology company ConsenSys—which funds an editorially independent Decrypt—back in 2015. Microsoft’s M12 venture fund also recently invested in Palm NFT Studio, and has released free educational NFTs around its hit game Minecraft, as well as promotional NFTs around last year’s Windows 11 launch.

Virtual and augmented reality (VR and AR) are also expected to play a large role in the future metaverse. While Microsoft has yet to embrace VR, its HoloLens holographic headset is an enterprise-focused AR device that overlays digital content atop users’ real-world surroundings.

Activision Blizzard brings a wealth of major video game franchises to the alliance. In addition to Call of Duty and Warcraft, the publisher also has hits like Overwatch, Candy Crush, Diablo, and Crash Bandicoot. The publisher also has a significant presence in the esports scene thanks to its franchised leagues, the Overwatch League and Call of Duty League.

Microsoft remains a key player in the video game space thanks to its 20-year-old Xbox console business, plus its Windows PC offerings. The publisher’s Xbox Game Pass subscription service now boasts more than 25 million members, and Microsoft will integrate Activision Blizzard games into the premium service.

Recently, major video game publishers have started making moves within the burgeoning metaverse and NFT-powered games space. Assassin’s Creed maker Ubisoft launched NFT in-game items in December, while Final Fantasy publisher Square Enix has announced plans to develop NFT-centric games and Electronic Arts has signaled interest in the space.

Last week, Grand Theft Auto publisher Take-Two Interactive acquired mobile game developer Zynga for $12.7 billion. Zynga recently started developing NFT-powered games, and Take-Two CEO Strauss Zelnick said last week that he believes that there are “Web3 opportunities” that the combined company would be better poised to tackle.