Microsoft's $75 billion Activision Blizzard strategy is in 'full force,' CEO Satya Nadella says

Microsoft CEO Satya Nadella reiterates Xbox's cross-platform strategy with investors and shareholders.

3

In a recent annual shareholders meeting, Microsoft chief Satya Nadella shared his thoughts on the current state of Xbox, and how the definition of the brand has changed so broadly that it's sparked a memorable marketing campaign.

"I'm feeling very, very good about where we are in gaming," Nadella told Microsoft stakeholders.

"In fact, right now, this is the peak season for gaming, obviously with Black Ops, and it's just been fantastic to see the launch and the marketing around it--the buzz around it and the love for gaming.

"If I think about it...we chose the secular growth category in entertainment, which we think is gaming, and said 'let's double down on it,' and it's been a passion for Microsoft ever since.

"And so we said, 'let's take that joy of gaming everywhere.' And that's why even these ads with Xbox now, where we are redefining what it means to be an Xbox fan.

"It's about being able to enjoy Xbox on all your devices."

3

Based on FY24's earnings results, which saw Xbox raking in a record-breaking $21.5 billion, Nadella has no real reason to be disappointed with Xbox.

That being said, there's been reports that Xbox's senior leadership team is being pressured to consistently meet "challenging" revenue targets.

In October 2023, Microsoft closed the largest-ever tech merger in history, having paid $75.4 billion for Activision-Blizzard in a sweeping deal that saw 8x billion-dollar game franchises being incorporated into Xbox.

The purchase figure was confirmed in Microsoft's latest 2024 annual report:

On October 13, 2023, we completed our acquisition of Activision Blizzard for a total purchase price of $75.4 billion, consisting primarily of cash. The financial results of Activision Blizzard have been included in our consolidated financial statements since the date of the acquisition.

You may have also seen that Microsoft spent $68.7 billion to buy Activision. So why are two numbers reported?

Activision had $6.7 billion of cash in its treasure chest. Microsoft would technically pay $75.4 billion to buy Activision, but once it bought Activision, Microsoft would also get the $6.7 billion from Activision's treasure chest.

That means that Microsoft really only spent $68.7 billion to acquire Activision, which is the total share buyout sum ($75.4 billion) minus Activision's cash on hand ($6.7 billion).

Nadella goes on to say that Microsoft's Activision Blizzard King strategy is in full force.

"Since then, Microsoft has rolled out a number of Activision games onto Xbox Game Pass including Diablo IV, a number of Spyro and Crash Bandicoot games, and launched the biggest-ever Call of Duty game into the subscription service in October with Black Ops 6.

"So our strategy with Activision content now is in full force. We feel fantastic about the progress we've made."

Despite Call of Duty Black Ops 6's reportedly strong launch on Xbox, Microsoft still has yet to officially update Xbox Game Pass subscriber figures in reflection of the game's launch.