Inside the history of Activision Blizzard, the video game maker Microsoft bought for $69 billion

• Microsoft acquired Activision Blizzard for $69 billion, making it the third-largest gaming company.
• Activision Blizzard had some 10,000 employees as of 2022, but Microsoft has enacted mass layoffs.
• Here's the history of the company behind iconic games like Call of Duty and World of Warcraft.

Activision Blizzard is one of the most well known publishers in the video game industry.

Headquartered in Santa Monica, California, the company is best recognized for its popular franchises, including Call of Duty, Diablo, Overwatch, World of Warcraft, and Candy Crush Saga.

Activision Blizzard made major international headlines following complaints about working conditions and its Microsoft's $69 billion acquisition in 2023. The all-cash deal saw shareholders of Activision receive a buyout of $95 per share. Following the purchase, Microsoft reported revenue from its Xbox division increased 61% by January 2024.

Here's everything to know about the creation of Activision Blizzard, its successes, and the many controversies that have dogged the company over the years.

The merger that created Activision Blizzard

Activision Blizzard was formed in 2008 through the merger of Activision and Vivdeni Games. The Activision name dates back to 1979 when the previous company became the first independent, third-party console video game developer. The "Blizzard" portion of the company's name comes from Vivendi Games' subsidiary, Blizzard Entertainment.

Following the merger, most of Vivendi Games' subsidiaries were shuttered, except for Blizzard Entertainment. Their games were either discontinued, published by other studios, or retrained and published by Activision Blizzard.

In 2010, the studio Bungie entered into a 10-year, $500 million publishing deal with Activision Blizzard with the main goal of turning the "Destiny" franchise into a major franchise. The deal ended a year early in 2019, and Bungie split from Activision Blizzard on what appeared to be amicable terms that allowed Bungie to retain the publishing rights for the "Destiny" franchise.

In 2022, the state of California filed a lawsuit against Activision Blizzard, alleging widespread harassment of female employees and a "pervasive frat boy" culture. More than 1,000 Activision Blizzard employees signed a petition calling for CEO Bobby Kotick to resign. Even PlayStation head Jim Ryan and Xbox head Phil Spencer criticized Activision when reports emerged that Kotick personally intervened to save the job of a senior staff member the company's human resources department wanted to fire over sexual harassment allegations.

The Microsoft acquisition

When Microsoft declared its intent to buy Activision Blizzard, it said Activision was key to providing the "building blocks for the metaverse." Microsoft CEO Satya Nadella later said in an investor conference call that the company sees the metaverse as "a collection of communities and individual identities anchored in strong content franchises accessible on every device."

In an effort to assuage regulator concerns, Microsoft and Sony struck a binding 10-year deal in the summer of 2023 to keep the Call of Duty franchise available on PlayStation consoles. Microsoft vice chair Brad Smith declared that the company "remains focused on ensuring that Call of Duty remains available on more platforms and for more consumers than ever before."

The lawsuit brought by the state of California was settled for $54 million in 2023, and the settlement found the sexual harassment claims unfounded and cleared Kotick of any wrongdoing. Initially, it was reported that following the closure of Microsoft's acquisition of Activision Blizzard, Kotick would stay on as CEO of the soon-to-be subsidiary. However, he ultimately ended up leaving the company upon the deal's completion.

Microsoft's acquisition faced legal challenges from the FTC and European regulators but was ultimately allowed to proceed, making Microsoft the third-largest video game company and bolstering the company's Xbox division, providing access to Activision Blizzard's extensive catalog of games and franchises.

As part of the deal, Activision's estimated 10,000 employees joined Microsoft under its Xbox division. Microsoft's purchase of Activision Blizzard is its third purchase of a video game developer, following its previous acquisitions of Mojang, the maker of Minecraft, in 2014 for $2.5 billion, and ZeniMax Media, the parent company of Bethesda Softworks, in 2021 for $7.5 billion.

Layoffs in the post-pandemic landscape

Despite Microsoft's market cap hitting a record-high $3 trillion in January 2024, the company laid off 1,900 workers across Activision, Xbox, and holding company ZeniMax. Activision Blizzard was reportedly the most affected by the layoffs, despite Microsoft earnings calls showing that Activision Blizzard generated billions of dollars in revenue throughout 2024.

These Microsoft layoffs came after after the company enacted 10,000 job cuts in January 2022 and a further 1,000 that July. In September 2024, Microsoft laid off another 650 employees from its Xbox division, with the job cuts predominantly across its corporate and support roles.

These job cuts come as the tech and gaming industries face significant challenges: plummeting sales, shrinking player bases, and rising competition. Companies across the sector are adjusting to the post-pandemic landscape, where the explosive growth in gaming seen during the lockdowns has returned to more pre-pandemic levels.