Microsoft Overpays to Bring “Call of Duty” to Game Pass

Microsoft Overpays to Bring “Call of Duty” to Game Pass

Gamers rejoice (or not). For a ridiculously overpriced $95 per share, Microsoft (MSFT) has agreed to buy Activision (ATVI), publishers of the classic “Call of Duty” game franchise. They’ll also get “World of Warcraft” and “Candy Crush.” All three should be on Game Pass later this year. I asked my grandson about it. He was too busy playing “Halo” to answer me. 

Microsoft is absorbing 10,000 employees and CEO Bobby Kotick, not to mention a culture ripe with sexual harassment and rape allegations. Kotick will now report to Xbox chief Phil Spencer. Don’t expect him to last long. The value here is in the technology and the subscription base, not the people. Activision is another Metaverse building block for Microsoft.  

Add this to the Minecraft and Bethesda Softworks acquisitions and Microsoft is now the #3 gaming company in the world. Only Tencent and Sony are larger. MSFT also has Microsoft Mesh, a Microsoft Teams metaverse for meetings. Personally, I’m not keen on showing my clients a cartoon me, but Mesh is a good proving ground for new metaverse tech.

Metaverse Control will be Decided by Gamers   

Microsoft knows that the battle for metaverse control will be fought in the gaming world. “Gaming is the most dynamic and exciting category in entertainment across all platforms today,” CEO Satya Nadella said after the Activision deal. “They will play a key role in the development of metaverse platforms.” Sounds like a challenge to me.  

In the world formerly known as Facebook, aka Meta (FB), Mark Zuckerberg is expounding about a metaverse “where digital avatars connect through work, travel or entertainment using VR headsets.” He’s not focused on gaming. That’s why he’ll lose the battle for the metaverse. Call your company whatever you want. It doesn’t make you a player. 

Sony (SONY) is a real player, but PS Now can’t compete with Game Pass after the recent Microsoft acquisitions. Tencent Holdings (HKG:0700) had the resources to crush the field when it’s market cap hit $950 billion last year. They’re worth significantly less than that now. As for Facebook Gaming, is that even a real thing? It’s not on anyone’s radar.   

3D Metaverses Coming for Xbox Games

When I was a child, we had Atari games like “Asteroids” and “Space Invaders.” They were simple, fun, and didn’t hold any real interest when we entered adulthood. Atari was liquidated in 1984. Today’s game developers learned a valuable lesson from them. Games need to appeal to adults, not just kids. Millennials are still playing in their thirties and forties.

This is where Mark Zuckerberg is missing the mark. Microsoft has games like “Halo” and “Flight Sim” that are already metaverse capable. Facebook is asking you who your spirit animal is. That’s not a game. It’s an algorithm. Your Xbox supports VR headsets that can immerse you in an alternate reality. What adult doesn’t want that?   

You may have read recently that Microsoft has discontinued production of the Xbox One. Holiday shoppers couldn’t find those or PS5’s anywhere this year. Sony ran into a materials shortage. Microsoft is building the Xbox Series S/X. More power. Better graphics. Your key to enter the metaverse now, not in five years. Prepare for battle.  


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About the Author

Microsoft Overpays to Bring “Call of Duty” to Game Pass

Kevin Flynn

A former financial professional and founder of AdvisorScale Financial Writing, Kevin lives in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.