Can Microsoft’s deal heal Activision Blizzard’s tumultuous year? – Orange County Register

From children’s laptops to mobile phones and the e-sports arena, computer gaming has become ubiquitous, a multi-billion dollar global industry with some deep roots. furthest in Southern California.

Two of the biggest players in the industry, Activision Blizzard in Santa Monica and its Blizzard Entertainment division in Irvine, which are being acquired by Microsoft Corp. acquired for $69 billion as the Washington tech giant makes a bigger claim on gaming in the so-called metaverse.

The deal comes after months of wrangling with local game companies, which publish some of the world’s biggest titles, including “Call of Duty,” “Candy Crush” and “World of Warcraft.” .” Last summer, California sued Activision, alleging its workplace was filled with a toxic culture of “brothers” sexually harassing female employees and denying them promotions and raises. .

Microsoft, which hosts “Call of Duty” on Xbox consoles and has been considering buying Activision since late 2021, acknowledges that change is ahead.

“We’ll have a lot of important work to do to continue to build a culture where everyone can do their best work,” CEO Satya Nadella said on a call with investors. “The culture of our organization is my number one priority.”

Microsoft said it would keep Bobby Kotick, Activision’s controversial chief executive, in his role. The deal faces regulatory hurdles with Democrats and Republicans pushing to limit the tech giants’ power.

History is rooted in the male plot

The roots of both game companies, though separated by decades, are woven by common themes of passion for creativity – and a lack of diversity.

Activision was founded in the late 1970s by four disgruntled Atari software engineers who saw their wages stagnate as console maker Sunnyvale’s profits skyrocketed. Their new company would be the first third-party game developer in the US at the time. Activision’s 1982 game Pitfall!, made for Atari, would be one of the best-selling games on the console.

About 20 years later, three UCLA graduates in 1991 created Silicon & Synapses and taught themselves how to code joystick software in one of the founder’s garages. The company would change its name to Blizzard in 1994. Ten years later, “World of Warcraft” would launch worldwide to huge fanbases. The game publisher was acquired twice before it was sold in 2008 to Activision in a $19 billion blockbuster deal.

Like most tech companies of the time, both companies were founded by men with mostly male employees, who created storylines aimed at male buyers who wanted to play the war game. . That trend will continue for years and is highlighted in stories such as an NPR story titled “Gaming While Men: Privileges Few Men Realize.”

“This issue is often framed as a women’s issue, but sexual harassment, sexism, and promiscuity in gaming isn’t a women’s problem – it’s a gamer community’s problem. ,” Jonathan McIntosh, producer of the Tropes vs. web series. Women in Video Games, told NPR in 2014.

Today, 45% of video game players are women, according to Statista.com, while 24% of the industry’s workforce is female.

A summer of accusations

Summer 2021 will be a season to be reckoned with for Activision Blizzard.

Company in July was sued by the California Department of Fair Employment and Housing on allegations of sexual harassment, unfair pay and retaliation. That same month staff organized the walk and petitions signed the request Kotick resigns. The company is committed to making the workplace more inclusive and welcoming to its 10,000 employees.

In late September, Activision agreed to pay $18 million in a settlement with the federal employment agency that filed a civil rights complaint against the company, alleging sexual harassment and discrimination. for female employees.

Another sledgehammer will fall in November when the Wall Street Journal reports that Kotick has been aware of years of misconduct by male employees towards female co-workers. The Journal’s story covers rape allegations at one of Activision’s studios and says Kotick was informed of the alleged incidents, which occurred in 2016 and 2017, as well as an outside settlement. courts and do not report them to the company’s board of directors. of the directors.

Despite the slump in Wall Street stocks and employee outings, Kotick refused to step down. In an employee video, he said, “Anyone who doubts my belief as the most welcoming and friendly place to work doesn’t really appreciate how important this is to me.”

Bloomberg reports Kotick took a 50% pay cut in 2021, but he will see $375.3 million in revenue if the deal with Microsoft goes through. He owns nearly 4 million shares of Activision, the most of any officer or director, Bloomberg reported on Tuesday.

Activision stock made up most of its losses for the past quarter on Tuesday, up 26% to close at $82.31.

In December, as the deal with Microsoft was in the works, Activision released a diversity report that found women make up less than a quarter of full-time employees, on par with industry.

“While the company-wide representation is similar to our peer-to-peer gaming companies in the United States, this is completely unsatisfactory in my mind,” Activision CEO Daniel Alegre said. write to the employee at the time. “We will do better.”

Nearly half of the businesses that left the company last year were women, the report said.

Stronger winds ahead

On Tuesday, Microsoft said the deal and its $7.5 billion acquisition of ZeniMax Media will help the tech giant strengthen its Xbox product line and accelerate its goals for the metaverse, or the Virtual world is considered the next generation Internet.

That prospect has raised questions about whether the company will be able to restrict Activision games to competitor consoles. CEO Nadella promised that the deal would help people play the game “wherever, whenever and however they want.”

Immediate outcry from consumer advocacy groups.

“There is no way for the Federal Trade Commission and the US Department of Justice to authorize this merger to proceed,” said Alex Harman, competition policy advocate for Public Citizen. “If Microsoft wants to bet on the ‘metaverse,’ it should invest in new technology, not swallow the competition.”

White House press secretary Jen Psaki had no comment on Microsoft’s announcement at Tuesday’s press conference but highlighted recent moves by the Biden administration to strengthen enforcement against illegal mergers. legal and anticompetitive.

Staff writer Samantha Gowen, Associated Press, and Bloomberg contributed to this report.