Are You Not Entertained?

When the FTC announced its decision to try to block Microsoft's blockbuster acquisition of Activision Blizzard, Microsoft immediately made clear that it has no intentions of forfeiting the deal without a fight. "We continue to believe that our deal to acquire Activision Blizzard will expand competition and create more opportunities for gamers and game developers," Brad Smith, Microsoft's vice chair and president, tweeted before adding what almost sounds like a threat: "While we believe in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present it in court."

But why is Microsoft so keen to grow its already sizeable slice of the gaming pie? After all, the Activision Blizzard deal would be its third multi-billion dollar acquisition of a video game company after buying Mojang for $2.5 billion in 2014 and ZeniMax Media for $7.5 billion in 2020.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today,” Satya Nadella, CEO of Microsoft, said in the company’s official announcement of the Activision deal in January 2022. As the following chart shows, Nadella is right in his judgement. According to data from Newzoo, players around the world spent more than $190 billion on computer, video and mobile games last year, far exceeding other entertainment categories such as books, filmed entertainment or recorded music as estimated by Statista, the Motion Picture Association and IFPI, respectively.