From Call of Duty to D.I.A... Is MS Dreaming of an Empire in Gaming Too?

[Asia Economy Reporter Kang Nahum] Microsoft (MS) is acquiring game developer Activision Blizzard (Blizzard). This is the largest merger and acquisition (M&A) in the ICT industry. As MS's gaming business growth is expected to accelerate across mobile, PC, console, and cloud platforms, it is also anticipated to have a significant impact on the domestic gaming industry, which is pursuing platform diversification.

◆ Acquisition amount of 82 trillion won, a ‘deal of the century’ = On the 18th (local time), local media such as The Wall Street Journal (WSJ) reported that MS will acquire Blizzard for approximately $68.7 billion (about 82 trillion won) in an all-cash deal. This mega M&A far surpasses Nvidia’s ARM acquisition ($40 billion), which was also hailed as a ‘deal of the century.’ It is the largest deal in MS’s history. Previously, MS acquired LinkedIn in 2016 for $26.2 billion, which was the largest deal at that time.

An MS official stated, "Gaming is the largest and fastest-growing entertainment sector, and Blizzard is a leader in game development and interactive entertainment content," adding, "Upon completion of the acquisition, MS will become the third-largest gaming company by revenue, following Tencent and Sony."

MS plans to accelerate growth in its gaming business across mobile, PC, console, and cloud, while also advancing its ‘metaverse’ business, which has rapidly emerged amid the pandemic. In particular, it is expected to focus heavily on developing a metaverse platform linked to gaming, similar to Facebook, which changed its name to Meta. It is reported that the two parties began acquisition negotiations at the end of last year.

Satya Nadella, MS Chairman and CEO, emphasized, "Gaming is today’s most dynamic and exciting entertainment field," and said, "(This acquisition) will play a key role in developing the metaverse platform."

◆ Wave of platform diversification among domestic game companies = MS’s acquisition of Blizzard is expected to have direct and indirect effects on the domestic market as well. Especially, with MS securing Blizzard’s IP, competition between MS’s Xbox console games and Sony’s PlayStation is expected to intensify, which is anticipated to bring waves of change to the domestic market, where mobile and online games have been dominant.

Domestic major game companies, including the 3N (NCSoft, Nexon, Netmarble), have recently announced plans to develop and release console games one after another, focusing on platform diversification.

Netmarble plans to release the console version of the third-person shooter stronghold conquest game ‘Overprime’ after the PC version is launched, and NCSoft is also scheduled to release the console version of ‘Lineage W’ and the latest Lineage IP console game ‘Project TL’ in the second half of this year. Nexon has also announced plans to release the console version of the KartRider IP, ‘KartRider: Drift,’ within this year.

The diversification of platforms by domestic game companies aligns with MS’s M&A strategy to grow its gaming business across mobile, PC, console, and cloud. The industry’s view is that to attract global users, it is necessary to expand beyond the saturated mobile game market to various platforms.