Microsoft Corp. has announced it will acquire the major publisher Activision Blizzard Inc., a $26 billion deal that represents Microsoft’s biggest acquisition in its history and could lay out what is to come for both companies, who are already at least partly integrated into one another via Xbox Live. The move may also signal how wider blockchain technology might impact other industries moving forward as gaming becomes more immersive with digital assets such as video game items being traded on decentralized marketplaces like OpenSea, which recently partnered with Kyber Network.
What does the Metaverse have to do with Microsoft’s Deal for Activision? Well, not a lot. But it is an interesting side note that people should know about.
Microsoft and Activision officials used the phrase “metaverse” more than ten times during an approximately 15-minute investor and media call soon after the Tuesday announcement.
On the call, Microsoft CEO Satya Nadella stated, “When we think about our vision for what a metaverse may be, we believe there won’t be a single centralized metaverse.” “We need to be able to support a wide range of metaverse systems.”
Microsoft was positioning its booming game business as the on-ramp to the metaverse, a future vision of the internet that has been the subject of growing hype—especially since Facebook announced a new focus and the new name Meta Platforms Inc. in October, according to analysts who follow the company.
People will join together in digital form in the metaverse to work, play, shop, and interact in immersive virtual environments where they view each other as avatars, according to tech industry thought.
Many gamers are engulfed for hours in virtual worlds where they spend money on digital items and bring their avatars together to socialize, and videogames are an example of how such a world may appear and work.
Some firms who are placing early investments on metaverse-related technology have seen their stock prices surge, and many metaverse-themed exchange-traded funds have been debuted. While Apple Inc. has been tight-lipped about its future ambitions, investor enthusiasm over how it may profit from the metaverse’s ascent helped the firm become the first to hit a $3 trillion value in intraday trade this month.
Before the Covid-19 outbreak, videogame software was already a $100 billion worldwide business, but it became even more popular since moviegoing and other kinds of public entertainment were prohibited. However, gamers are a small minority over the globe, and most people only play for a portion of their leisure time. They are just a tiny component of what proponents of the metaverse believe will one day be a far larger planet.
Users may travel between games, specialized social areas, and concert venues, as well as buy virtual products, in Roblox’s vast virtual world.
The Wall Street Journal/MARIA ALEJANDRA CARDONA photo
The infrastructure and technology required for a metaverse future are currently being created. For example, modern virtual-reality headsets are still clumsy and expensive.
In the meanwhile, Microsoft has plenty of reasons to buy Activision. It’s one of the largest gaming businesses in the world, with some of the most well-known titles, yet Microsoft was able to pay less than Activision was worth a year ago.
“What Microsoft is taking up is a massive community of active gamers, but who knows what that implies for the metaverse in the future,” said Brad Reback of Stifel. “There’s still a lot of work to be done to figure out what the metaverse will end up becoming.”
Microsoft is positioned itself for the metaverse future not just against other tech titans like Meta, but also against other gaming firms.
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Users may teleport between millions of games, specialized social spaces, and concert venues on Roblox Corp.’s self-named platform, and they can buy virtual products to improve their experience. “Fortnite” by Epic Games Inc. and “Second Life” by Linden Research Inc. both have large virtual environments.
Microsoft would get multiple online games with metaverse qualities if it purchased Activision Blizzard, which is still subject to regulatory clearance. In Activision’s “World of Warcraft,” for example, many million users play and interact. They appear as avatars in a virtual world and purchase virtual items like as pets. Nearly 400 million people play the company’s games on a monthly basis.
However, gamers’ support will be required for Microsoft and others to have an influence in the metaverse, according to Adrian Montgomery, CEO of Enthusiast Gaming Holdings Inc., which runs online forums for game aficionados. “Whatever the metaverse becomes is entirely reliant on them.”
Apart from gaming, tech analysts predict that when the metaverse comes to life, there will be a plethora of virtual spaces for people to assemble in, including virtual workplaces, schools, sports stadiums, and retail malls. They believe that many of the core tools and technology for the metaverse will emerge first from gaming. For example, technology that tracks a person’s movement in the real world so that their game avatar can match it in the metaverse might enhance virtual workplace meetings.
“Virtual meetings will be much more immersive and participatory than they are now,” said Derek Belch, founder and CEO of Strivr Labs Inc., a Palo Alto, Calif.-based company that develops virtual-reality training software for businesses.
The number of real-estate transactions in the metaverse is at an all-time high. We talked with firms that invest in digital real estate to learn more about the business model and why investors are willing to spend millions on virtual real estate. Republic Realm (photo)
Graphics, cloud computing, artificial intelligence, and virtual markets are all influenced by videogames. Analysts believe Microsoft might use Activision’s skills and experience in its other gaming studios and even products geared at businesses.
Even without the metaverse, the gaming industry has been through a period of consolidation and expansion in recent years, fueled in part by the pandemic’s social-distancing constraints.
According to Newzoo BV’s projections, consumer expenditure on game software increased by around 23% in 2020 compared to the previous year. Despite the fact that growth slowed to about 1.4 percent last year, overall expenditure reached around $180 billion, according to the analytics group. Meanwhile, according to PitchBook statistics, mergers and acquisitions in the gaming sector almost quadrupled from $8.9 billion in 2020 to $26.2 billion in 2021.
Microsoft’s major investment this week has not been penalized or rewarded by investors. Microsoft’s stock has dropped around 2% since the purchase intentions were publicized. Activision’s stock has risen by more than 25%.
The Blizzard Agreement Between Microsoft and Activision
Sarah E. Needleman can be reached at [email protected]
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The “Facebook metaverse” is a term that has been used to describe the virtual world of Facebook. The company has been looking at ways to expand their product into other platforms and one way they have done this is by acquiring a game developer, Activision. This acquisition will allow them to enter the gaming market in a more competitive way. Reference: facebook metaverse.
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