The timing of Microsoft’s acquisitions of Activision Blizzard felt extremely strange when it was announced in January 2022. The publisher had spent 2021 facing major accusations of harassment, misconduct and bullying that led to public lawsuits and ongoing structural change. This fact, coupled with delays for its highly-anticipated new generation of games, led to a drop in company stock prices, and the less-tangible loss of faith from fans. A later Wall Street Journal report alleging the company’s culture of harassment was covered up by CEO Bobby Kotick sparked further unrest.
It was reportedly during this time – an all-time low for Activision Blizzard – that Microsoft leapt in to offer a buyout.
According to regulatory filings published on Saturday, the first acquisition conversations between Microsoft Gaming CEO Phil Spencer and Kotick took place on November 19, just three days after the WSJ report was released to the public.
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As many have noted, this also came about just a day after Spencer issued a statement claiming Microsoft would be re-evaluating its relationship with Activision Blizzard and making ‘proactive adjustments’.
As it turns out, those ‘adjustments’ were far bigger than anybody realised.
‘On November 19, 2021, in the course of a conversation on a different topic between Mr. Spencer and Mr. Kotick, Mr. Spencer raised that Microsoft was interested in discussing strategic opportunities between Activision Blizzard and Microsoft and asked whether it would be possible to have a call with [Microsoft CEO] Mr. Nadella the following day,’ the filing states of the beginnings of the acquisition process.
It goes on to detail a two month long negotiation period marked by various meetings, revisions and conversations about how business would proceed going forward, until the final details were decided on and announced on 18 January 2022.
The move has been described as highly opportunistic, given Microsoft was distinctly aware of the cultural issues plaguing Activision Blizzard, and the reputational damage it had accrued over the prior year.
By waiting until staff unrest hit the headlines and Kotick’s reported behaviour emerged, Microsoft was able to swoop in at just the right time, and negotiate a lower price with solid ground to stand on.
While Microsoft plans to watch Activision Blizzard leadership closely going forward, the baggage still associated with the Activision Blizzard name will need to be dealt with directly before the acquisition truly pays off.
As it stands, there’s still plenty to fix at the company – and while it appears Microsoft knew exactly what it was in for when negotiations began, there’s not an easy solution waiting in the wings. It may be some time before Activision Blizzard earns back the trust and support of its employees and fans.
