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Microsoft Activision Blizzard Entertainment Marketing: Movies, TV, Music and Gaming

With Activision deal OK’d by judge, Microsoft scores, but ‘Sony won’t fold easily’


By Kendra Barnett, Associate Editor

July 11, 2023 | 9 min read

A federal court has shot down arguments by the Federal Trade Commission (FTC) that Microsoft‘s $69bn bid for Activision Blizzard would unfairly impede competition. The decision clears the path for the purchase – which could bolster Microsoft‘s business in more ways than one.

Xbox controller next to Sony Playstation controller on a wooden table

Microsoft is going head-to-head against Sony / Adobe Stock

After a year and a half of ongoing regulatory scrutiny, Microsoft’s proposed acquisition of gaming giant Activision Blizzard could be finalized this month, following a US federal judge’s decision Tuesday to reject the FTC’s efforts to block the deal. At $69bn, the deal, should it go through, will be the largest in the gaming industry’s history.

In a 53-page decision, the San Francisco judge who issued the ruling, Judge Jacqueline Scott Corley, claimed that the FTC had not proved that the acquisition would substantially hamper marketplace competition in a way that would hurt consumers.

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The crux of the case concerned Microsoft’s power in the market in comparison to its competitors – Sony and Nintendo chief among them. An acquisition of Activision would give Microsoft access to the game-maker’s vast content library and intellectual property. And the FTC argued that Microsoft would likely make the uber-popular Activision game Call of Duty exclusive to its Xbox console, either barring it from Sony’s PlayStation altogether or license out a lower-quality version to Sony.

Licensing is no small matter in gaming. “If there’s one thing that defines [gaming] success in 2023, it’s licensing and intellectual property, as opposed to having a best-selling console system,” says Greg Kahn, the chief executive officer at GK Digital Ventures and an expert in media, entertainment and advertising. “The former is wide open in this increasingly decentralized world; the latter is limited by the constraints and trends associated with a particular hardware product.”

Corley, in her decision, however, said that the FTC had failed to show sufficient proof that Microsoft intends to keep Call of Duty exclusive to Xbox.

As Michael Olaye, senior vice-president, managing director of strategy and innovation at ad agency R/GA puts it, “From the gamer's perspective, cross-platform playable has been and continues to be a massive growth avenue. I am sure Microsoft has no intention of taking advantage of this opportunity.”

Now, Microsoft has been given the green light in the US to proceed with the purchase. A deal could potentially be reached within the coming week, as the two companies previously set a deadline of July 18, with Microsoft agreeing to cough up a $3bn fee if the deal hasn’t gone through by then.

However, the acquisition is still facing additional challenges – in the US, the FTC plans to hold an in-house trial slated for August; across the pond, the companies have appealed a decision by the UK to block the deal.

Still, Microsoft’s leadership signaled its optimism in a tweet shared by the company’s vice-chair and president Brad Smith today: “We’re grateful … for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution. As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns.”

And experts like GK Digital Ventures’ Kahn feel that Microsoft is well on its way to closing the deal. “It’s never over until it’s over, but it’s hard to see a path for the FTC to continue blocking [the acquisition]” after Tuesday’s court ruling, he says.

Others are in agreement. R/GA’s Olaye believes that “it was always going to be hard to stop [Microsoft] from expanding their presence in a category where acquisitions of this sort are plentiful.” Olaye points out that even Microsoft has enjoyed support with a number of major acquisitions in the past, including the 2014 purchase of Minecraft, which, “at that time … ruled the gaming world with the most active players in the world.” (It’s worth noting that the Minecraft deal was priced at $2.5bn – which pales in comparison to the proposed $69bn Activision acquisition).

A finalized agreement is likely to strengthen Microsoft’s gaming capabilities and position it to compete more aggressively with Sony and Nintendo, thanks in large part to Activision’s extensive collection of franchises, which include not only Call of Duty but other popular titles like World of Warcraft and Tony Hawk’s Pro Skater. “By securing these valuable assets, Microsoft immediately is catapulted into the center of gaming with a dedicated player community, which builds on the company’s existing consoles, PC and cloud gaming offerings,” Khan says.

But the deal could also empower Microsoft to do more than simply bolster its own business. “This acquisition … will be a massive dent in Sony's strategy,” Olaye says. “At a minimum, it's estimated that Sony could lose up to $250m a year in revenue, but it's more than just money. Future missed opportunities on game releases, brand and marketing partnerships and reputation decline could be far worse in the long run.”

In particular, some believe that Microsoft could see an influx of marketing and advertising – dollars that could buoy the company’s market share further.

Derek Strickland, an editor at tech and gaming publication TweakTown, suggested in a tweet last month that part of Microsoft’s plans to grow its Xbox business – which includes a goal to double Xbox revenue by 2030 – will likely include a growing focus on advertising.

Now, although it looks as if Microsoft has the upper hand at this moment (especially considering that, even without Activision, the tech titan’s market cap, at around $2tn, dwarfs Sony's), experts warn that the company shouldn’t be counting its chickens quite yet.

For one, the gaming space itself isn’t easily mapped. “The gaming industry is the most dynamic and unpredictable. Media consumption habits are constantly in flux. All media franchises rise and fall as audience tastes change,” says Kahn.

Plus, Microsoft faces another key challenge in the shifting nature of marketing and advertising, with new in-game ad formats, innovative brand partnerships and live activations. “Gaming is having a greater influence on brand’s advertising strategies and their loyalty programs. In this emerging attention economy, it’s anyone’s game to win or lose and being established with popular titles doesn’t offer any guarantees going forward,” Kahn says.

For now, he suggests, “It’s up to Microsoft to continue to innovate and invest in the power of Activision Blizzard’s titles as well as its own technology. While this is a win for Microsoft in the short term, Sony and Nintendo aren’t likely to take the challenge lying down.”

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