In a recent development this Friday, the gaming community is closely monitoring Microsoft (NASDAQ:MSFT)'s handling of key franchises following its $69 billion acquisition of Activision Blizzard (NASDAQ:ATVI). The deal has been a significant turning point in the console industry, stirring concerns about game exclusivity among gamers and competitors alike.
Microsoft, with its impressive market cap of 2450.0B USD as reported by InvestingPro, has been a prominent player in the software industry. The company has been profitable over the last twelve months, and analysts predict it will continue to be profitable this year, according to InvestingPro Tips.
Millions of video game enthusiasts worldwide have been actively participating in regulatory proceedings and scrutinizing the legal analysis of the antitrust lawsuit associated with the deal. Many are hoping that Microsoft's ownership will not only improve Activicon's game development but also provide cheaper access to premium games through Xbox Game Pass.
Earlier, Sony (NYSE:SONY) had expressed opposition to the deal due to concerns about game exclusivity. After the Federal Trade Commission (FTC) failed to block the deal, Sony agreed to a 10-year contract with Microsoft to keep Call of Duty on PlayStation. This decision follows Microsoft's 2020 acquisition of Bethesda, which had previously raised similar concerns among PlayStation gamers.
Microsoft maintains that it will increase access to Activision’s games rather than monopolize them for Xbox users. The company has also indicated its commitment to addressing Activision's sexist workplace culture issues that were raised in 2021. Microsoft operates with a moderate level of debt and its cash flows can sufficiently cover interest payments, as per InvestingPro Tips, indicating financial stability to carry out its commitments.
Phil Spencer, the CEO of Microsoft Gaming, has expressed optimism about the acquisition's potential benefits for gamers. He stated that the deal would "unlock a world of possibilities for more ways to play." Microsoft's P/E ratio stands at 33.84, suggesting that investors are willing to pay a higher price for its earnings, reflecting this optimism in the market.
Notably, Justin Katz, a former professional gamer and Twitch streamer known as FearItSelf, who initially feared that Microsoft would monopolize popular Activision games like Call of Duty for Xbox users, has shown cautious optimism following Microsoft's plans to keep Call of Duty available on multiple platforms after a global regulatory battle.
The gaming community is now eagerly awaiting how Microsoft will handle future iterations of key franchises like Call of Duty. With Microsoft's history of raising its dividend for 18 consecutive years and maintaining dividend payments for 21 consecutive years, as highlighted by InvestingPro Tips, investors are also keen to see how this acquisition could influence the company's future dividend strategy.
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