Just to put a perspective on how big that is.

Microsoft bought LinkedIn in 2016 for 26 billion. GitHub in 2018 for 7.5 billion.
ZeniMax in 2020 for 8.1 billion.
Nokia in 2013 for 7.2 billion.
Skype in 2011 for 8.5 billion.

Those buyouts they’ve done in the last decade are combined over 10 billion dollars less than this at 57 billion.

This brings in the big question of was this a smart idea and why they even did it?

2021 revenues haven’t been confirmed yet, but off of 2020.

Activision Blizzard made 8 billion dollars.
Profit margin was strong at 2.2 billion.
27% margin

To figure out if this valuation made sense, the best way to determine it is looking at the ZeniMax buyout, which happened in 2020, which is also a gaming company.

For reference, ZeniMax makes the following games and more.

Elder Scrolls
The Fallout Series
Doom
Rage
Prey

They were private when Microsoft bought them, so financials aren’t as clear as Activision/Blizzard, but it’s reported the 2019 revenue was 519 million, with no public record of profits.

Microsoft in 2020 on ZeniMax spent 15.8x revenue.

For Activision Blizzard, Microsoft spent 8.5x revenue and 31.2x profit.

Which that is a lot, but barring ZeniMax having insane margins not reported, probably better deal in terms of multiple.

There’s also what Microsoft is getting in terms of IP.

Activision Blizzard made the following…

Call of Duty
Candy Crush
Guitar Hero
Crash Bandicoot
Spyro the Dragon “childhood favorite”
World of Warcraft
The rights to Tony Hawk games
Skylanders

And many more, which are lesser names.

Big benefit here is now all of these can be moved to X Box exclusives and give Microsoft a huge edge over Sony and other gaming companies.
 
Just to put a perspective on this, Call of Duty.

In 2017, Call of Duty sold 13.4 million units just on the PlayStation 4.

Which is actually a little less than 2x, the 7.4 million units sold in 2017 were for Xbox.

Call of Duty moving exclusive to Xbox, can now be a giant reason to boost sales.

Which gaming is huge for Microsoft, being 9% of total revenue and a high margin piece of it.

All said and done, did Microsoft make the right move?

A lot of people said this was about the metaverse.

That was likely just some buzzword they through around to make stockholders and the media happy.

This was ultimately about buying a strong margin company and giving Microsoft a giant war chest of content, Sony now likely won’t get access to.

Probably a little too large price tag wise, but it’s not like Microsoft can’t afford it.