Bobby Kotick may be on the way out after Microsoft’s Activision deal

Update 1.18.22, 1 p.m.: Activision Blizzard CEO Bobby Kotick is expected to leave his role after the deal with Microsoft closes, a source tells The Wall Street Journal. All Activision employees will reportedly fall under the watch of Xbox head Phil Spencer after the deal is done.

Microsoft today announced its intentions to buy much-maligned gaming studio Activision Blizzard for a staggering $68.7 billion. Just when you thought Xbox’s library of intellectual property couldn’t get any bigger.

“Today is a historic moment,” the company wrote on its official Twitter account. “We are excited to announce that the world-renowned franchises and talented people at @ATV_AB will be joining Team Xbox!”

Microsoft Gaming and Activision Blizzard will continue to run independently while the deal goes through the regulatory process. Then the entire Activision team will report to Xbox head Phil Spencer — including current Activision CEO Bobby Kotick. No wonder Spencer has been so cagey about condemning Activision’s long-standing sexual harassment issues.

Um, wow — Activision Blizzard is one of the most successful gaming studios of all time. The weight of this acquisition is difficult to overstate. In just 13 years, the company has managed to change the entire gaming landscape.

Here’s just a small sampling of the franchises Microsoft will now own: Call of Duty, Spyro, Crash Bandicoot, Starcraft, World of Warcraft, Tony Hawk, Overwatch, Diablo, and, of course, Candy Crush. And that’s only the largest of them. Microsoft will now own 30 internal game development studios.

Controlling all that intellectual property gives Microsoft an immense amount of power. Phil Spencer already notes that Xbox Game Pass will incorporate as many Activision Blizzard titles as possible, making the already-popular service (25 million subscribers!) even more attractive to those on the fence.

Cleaning the gutters…somewhat — Bobby Kotick will remain Activision Blizzard’s CEO only until the two companies become one. The move isn’t all that surprising, really; Activision Blizzard’s executives have been fighting to keep Kotick even as he completely bombed his response to far-reaching sexual harassment allegations at the company.

Notably, keeping Kotick in his position is not what many Activision Blizzard employees want. In fact, a significant number of them completed a walk-out in November demanding Kotick’s resignation. Former employees have explicitly named Kotick as aiding harassers in keeping their jobs, as well as partaking in harassment himself.

As a source now tells WSJ, Kotick is only expected to stay on as CEO until the deal is complete. That likely means he’ll be on board until the end of the year, at least.

Kotick aside, Activision Blizzard does seem to have been cleaning house somewhat in the months leading up to this announcement. More than three dozen employees have been “fired or pushed out” since allegations first surfaced last July. Nearly 50 others have been disciplined as part of the ongoing investigations.

Anti-trust incoming? — It will be very, erm, interesting to watch how this acquisition shapes up. There are many questions remaining about Microsoft’s purchase. Perhaps most important is whether or not it will actually come to fruition.

The FTC has been increasingly skeptical of similar consolidations of power as of late; just last month it blocked Nvidia’s acquisition of Arm Limited for its anticompetitive edge. Microsoft already owns a significant number of gaming studios, including Bethesda Games. It’s easy to see how the FTC might consider that Xbox’s IP prowess might be too extreme with Activision Blizzard under its belt.

It’s not all roses for Microsoft, though. The ongoing investigations into Activision Blizzard’s handling of harassment cases is now Xbox’s business, too. Navigating that minefield will not be easy.

And, of course, we have to wonder whether or not future Activision Blizzard titles will be Xbox exclusives. Xbox is hedging its bets for now and hasn’t explicitly said as much, though the company does mention in its announcement that it has “plans to launch Activision Blizzard games into Game Pass.”