Professor: Microsoft's Gaming Restructuring Represents a "Reverse Acquisition"
Joost van Dreunen, a professor at New York University, argues that Microsoft's major gaming acquisitions have functioned as a "reverse acquisition." Instead of strengthening Xbox's internal studios, the acquired entities like Activision Blizzard and ZeniMax appear to be taking greater control over Microsoft's own established IPs.
Microsoft's significant restructuring of its gaming division, following its substantial acquisitions, has led New York University professor Joost van Dreunen to characterize the situation as a "reverse acquisition." Professor van Dreunen, also the founder of SuperData Research, outlined his theory in his SuperJoost Playlist newsletter. He suggests that Microsoft's approximately $76.5 billion investment in companies like Activision Blizzard and ZeniMax Media has resulted in these acquired entities taking on a more dominant role in managing and developing Microsoft's own pre-existing studios and intellectual properties.
The outcome suggests that the Xbox brand has not become the primary driver for the acquired companies. Instead, the acquired publishers, such as Activision Blizzard, seem to be consolidating control over Xbox's internal studios and IP management. Reports indicate that Activision has taken charge of development and publishing for World's Edge, Rare, and the upcoming "Halo" title. ZeniMax, meanwhile, is reportedly integrating with Obsidian Entertainment, which is currently developing a new "Fallout" game.
These adjustments extend to other areas of Microsoft's gaming operations. King, a prominent mobile game developer, has assumed oversight of Microsoft Casual Games, which includes titles like "Solitaire" and "Minesweeper." Additionally, Playground Games and Turn 10 Studios have been merged into a single entity. Mojang Studios and Blizzard Entertainment appear to be unaffected by these specific organizational changes at present.
This reorganization reportedly aligns with shifts in Microsoft's revenue structure within the gaming sector. First-party software revenue for Xbox now accounts for 61% of total gaming software revenue, more than double Sony's 29%. Projections indicate that Microsoft's first-party software revenue will reach $13.7 billion by 2025, surpassing third-party revenue. This trend underscores the strategic importance of acquisitions in reshaping the core of Microsoft's gaming business.