The success of Microsoft’s plans to acquire of Activision will depend on its ability to clean up someone else’s messes, explains WSJheard WSJWhatsNow
. A subsequent article by The Wall Street Journal reported the company’s toxic internal culture extended beyond the Blizzard unit initially targeted in the California lawsuit., with subpar critic scores at launch and later data indicating poor sales.
In a note Tuesday morning, Jefferies analyst Andrew Uerkwitz predicted a “very rare miss” from Activision for its fourth-quarter results, due Feb. 3. Citing game issues and the company’s internal strife, Mr. Uerkwitz added, “We suspect many gamers have chosen to take a break from Call of Duty.” The combination of issues has had a deleterious effect on Activision’s market value, thus providing a rare opportunity for Microsoft to “propel our new forms of distribution and monetization,” as the company’s gaming chief Phil Spencer put it on a call Tuesday.Microsoft now has a subscription-based game business called Game Pass and is developing a cloud gaming service. The former is doing well, with more than 25 million subscribers to date, while the latter is still a work in progress.
That is assuming the property isn’t permanently damaged. And the deal also assumes Microsoft can oversee fixes to Activision’s culture enough to retain the necessary talent to keep producing blockbuster games with blockbuster budgets.more than three dozen employees as part of its internal cleanup effort, The Wall Street Journal reported over the weekend. But more work remains, even with embattled Activision CEO Bobby Kotick expected to depart after the deal closes, according to the Journal.
With nearly $84 billion in net cash, Microsoft is one of the few with the means to make such a major bet and still maintain its share buyback and other cash-return goals. But it will still take some deft handling to keep Activision’s self-inflicted wounds from festering on its soon-to-be owner.Ms. Wu, a target of the GamerGate scandal, says Activision Blizzard’s CEO led a culture of non-accountability, during an interview at WSJ’s Women In: The Tech Industry event.
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