Mon. May 23rd, 2022

Satya Nadella (CEO - Microsoft)

Satya Nadella (CEO – Microsoft)

Credit: Microsoft

Microsoft’s plan to acquire game developer Activision Blizzard, announced on January 18, is not just about games; it also has implications for the company and CIOs.

The $ 68.7 billion value that the deal adds to Activision Blizzard is only about 3 percent of Microsoft’s market value, and the two companies have sales and net revenue in similar proportions, so it’s not going to weigh so heavily on Microsoft’s strategic direction.

But the deal will absorb about half of Microsoft’s available cash, limiting its capacity in the near future to make other major acquisitions that could better serve CIOs.

Activision Blizzard comes with a far greater price than any of Microsoft’s other major acquisitions in recent years. These include speech recognition specialist Nuance Communications for $ 19.7 billion in April 2021; ZeniMax Media, another game studio, for $ 8.1 billion in September 2020; version control platform GitHub, for $ 7.5 billion in 2018; social network LinkedIn, for $ 26.2 billion in 2016; or Mojang, developer of the game Minecraft, for $ 2.5 billion in 2014.

For Microsoft, this agreement is not (just) about acquiring more game content for its Xbox and Windows platforms, but about creating the building blocks for the development of metaverse platforms.

Facebook’s change of company name to Meta Platforms brought the concept of metaverse to the forefront last year, but the IT world happily took it over from popular fiction years ago. IBM had a metaverse evangelist back in 2007.

But what is a metaverse really? In short, it’s a virtual reality environment – something like Second Life or the fantasy world that is found in many video games, but which is accessed via a VR headset such as Facebook’s Oculus or Sony’s PlayStation VR. (By comparison, Microsoft’s HoloLens is an augmented-reality or mixed-reality headset because you can see the real world through the images it projects, making it unsuitable for visiting purely virtual worlds, as reality will penetrate.)

“We believe there will not be a single centralized metavers, and there should not be,” Microsoft CEO Satya Nadella said in a conference call to discuss the deal. “We need to support many metaverse platforms as well as a robust ecosystem of content, commerce and applications.”

There are also a kind of metavers that sneak into the workplace. With the transition to working from home, many of us are familiar with video conferencing services such as Zoom or Microsoft’s Teams. These typically offer users – if their computer’s video hardware is powerful enough – the option to hide the pile of laundry or the peeling varnish behind it with a virtual background. Teams go a step further and allow users to not only control how they present themselves, but also how they see colleagues, arrange their images around a virtual meeting table or on virtual theater seats on the screen in front of them.

If bandwidth and budget allow, this experience can be taken even further, so no matter which direction the meeting participants look, they all appear to be in the same virtual space.

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