Video games... so hot right now
Just last week we were discussing how fast the video game industry was growing, exploring why Zynga — the maker of FarmVille — was to be acquired for almost $13bn.
Well this week Microsoft went one further, announcing a deal to acquire gaming giant Activision Blizzard, the studio behind games like Call of Duty and World of Warcraft, for $68.7bn — more than 5x the value of last week's Zynga deal.
Spare change
For most people it would be unusual to have a big pile of cash... and a big pile of debts, but in the corporate world that's quite common — and Microsoft is no exception. Microsoft has long term borrowings of more than $80bn, but over the last decade it's also accrued an enormous $130bn pile of cash.
So the fact that Microsoft is finally breaking its piggy bank and spending a big chunk of that cash for its largest-ever-acquisition is testament to just how badly it wants to get further into the gaming sector, strengthening its portfolio which already includes Xbox and Minecraft.
Escape pod?
For Activision Blizzard this deal comes after a tumultuous six months. The company has been rocked by allegations of sexual harassment, pay inequity for female workers and a toxic work environment, which have resulted in a number of lawsuits against the company. Its CEO, Bobby Kotick, reportedly kept some reports of harassment from the board of director's. Those allegations hit the company's share price, and faith in its leadership, hard at the end of last year. Microsoft's approach may have been long-planned, or more opportunistic.
