Activision Blizzard CEO Says Cloud Gaming Is "Inconsequential," CMA Decision Makes No Sense
"Cloud gaming is an inconsequential part of the business."
Activision Blizzard CEO Bobby Kotick has reacted to the CMA's recent announcement that it wants to block the sale of Activision Blizzard to Microsoft. Speaking to Bloomberg TV, the controversial executive said the CMA reached an "irrational conclusion."
Kotick said Activision Blizzard and Microsoft are now working together to prepare an appeal, and the companies believe they will prevail, the executive said.
The CMA's main concern came down to cloud gaming, but Kotick, along with Microsoft president Brad Smith, believe the CMA got it wrong. Cloud gaming is a tiny part of the video game industry right now, Kotick said, adding that the mobile market is where the real action is. Microsoft has basically no presence in mobile gaming, which is why it wants to buy Activision Blizzard and take ownership of Candy Crush and other Activision Blizzard mobile franchises.
"Cloud gaming is an inconsequential part of the business," Kotick said. "It is my view that over the course of the next decade, what you're going to see is phones having greater power, greater capability, better graphics; faster ability to broadcast to a large screen. The idea that you need processing in a cloud and that would somehow be more efficient than the local processing capability that exists on phones or other dedicated devices like computers, it actually is almost the opposite of the conclusion that the CMA reached. Their belief was that somehow cloud gaming was going to be the biggest growth area in the industry."
Kotick went on to point out that Microsoft offered the CMA remedies to help get the deal done with respect to cloud gaming. It has signed a handful of deals with companies to guarantee cloud gaming access. That would've seen Call of Duty games come to GeForce Now, among other services, for at least 10 years.
"Microsoft really went out on a limb to provide remedies that would ensure that anyone that had an aspiration to participate in cloud gaming would be able to do so," Kotick said.
Activision Blizzard selling to Microsoft would help the Xbox giant get into the mobile business, Kotick said. The executive added that he was perplexed by the CMA's decision also because Candy Crush studio King is headquartered in the UK, and he thought the CMA would see this as a positive.
Also in the interview, Kotick was asked why Activision Blizzard wants to sell in the first place. After all, business is booming for the company right now. Kotick said selling to Microsoft would help Activision Blizzard get access to Microsoft's vast network of developers and engineers who work in the growing fields of artificial intelligence and data analytics.
Top talent is hard to come by these days, Kotick said, and selling to Microsoft would help Activision Blizzard better compete and grow its revenue even more than it could on its own.
As mentioned, Microsoft and Activision Blizzard will appeal the CMA's decision. The EU, meanwhile, will hand down its decision by May 22. In the US, the FTC is set to kick off its first evidentiary hearing in August, so it seems this case won't wrap up anytime soon.
Activision Blizzard itself has been mixed up in controversy before. In June 2022, the company released the results of a third-party investigation it commissioned. While the report did acknowledge individual instances of harassment, it claimed there was "no evidence" that senior executives ignored harassment or concealed information from the Board.
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