On Tuesday, Microsoft announced its biggest acquisition ever: It'll buy the video gaming juggernaut Activision Blizzard for $75 billion. Microsoft's betting the deal will help it build a new way to sell games to consumers, which it calls the "Netflix of games." WSJ's Aaron Tilley explains Microsoft's strategy and the risks it contains.This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Aaron Tilley: Microsoft has had a interesting strategy it's been rolling out for the past few years. It is essentially trying to create the Netflix for gaming. Activision is really the latest iteration of this strategy to build the ultimate gaming subscription platform. Kate Linebaugh: It was a side business until about 2014. That year, Satya Nadella became the new CEO of Microsoft and he got a taste for just how much potential the company's gaming business had.
Kate Linebaugh: But Microsoft was betting it head and edge because of its massive cloud computing business. Kate Linebaugh: And when you started playing Dark Souls again, did you get it off of a streaming service? Kate Linebaugh: And one big way Microsoft gets that exclusive content is by buying up other game studios. Last year, Microsoft bought ZeniMax, the company that owns hit games like Doom and The Elder Scrolls. But that deal would pale in comparison to the one it struck this week. After the break, Activision. While Microsoft was out there acquiring video game studios, it had its eye on one studio in particular, Activision.
Speaker 14: The hot seat's getting hotter for Activision CEO, Bobby Kotick, after allegations that he was aware of sexual misconduct and harassment claims at his company for years and didn't inform the board. Aaron Tilley: It made all the sense in the world in terms of my understanding of what they need to do and what they want to do with Game Pass. I just didn't anticipate the level of commitment, the amount of money that they're willing to put into this, that was just jaw dropping to spend $75 billion. That is triple what their highest acquisition they've ever done.
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