On January 18, Microsoft announced that the company will buy Activision Blizzard, the game development and interactive entertainment content publisher. This news matters because if the deal succeeds, Microsoft will strengthen its position as a leader in the metaverse.

The News

In a news release, Microsoft said that it will acquire Activision Blizzard in an all-cash transaction valued at $68.7 billion. Activision Blizzard is renowned for creating popular online games such as Call of Duty and Overwatch. Activision Blizzard has also seen its public reputation (as well as its market value) take a beating recently amid ongoing investigations of sexual harassment. In fact, the Microsoft announcement occurred only one day after it was reported that Activision had fired dozens of employees for misconduct.

While Activision works to address its problematic culture, it remains a popular developer of immersive content – a world where people use avatars to play for hours on end. And avatars playing in immersive worlds is one important component of the metaverse.

Microsoft understands the value that Activision brings through its gaming titles. As Microsoft said in its announcement, “This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.”

If the deal is approved, it will be completed in Microsoft’s fiscal 2023.

Why the News Matters

The planned acquisition should remind businesses that the metaverse is more than a concept. The metaverse – a set of connected virtual worlds where people live through avatars – is very real. Elements of the metaverse exist today. For instance, Fortnite, owned by Roblox, is a hugely successful platform where people (through their avatars) play games and watch virtual concerts. Microsoft’s own Minecraft is another example of a metaverse-style environment.

Gaming companies such as Epic Games have been early metaverse visionaries. Whatever designs Activision Blizzard might have had for the metaverse were rapidly eclipsed by the company’s ongoing misconduct scandals.

The announcement also offers some insight into how the metaverse is evolving. Gaming platforms alone do not constitute the metaverse. Someone needs to connect them so that avatars can move seamlessly between them. Microsoft views itself as both a connector and content developer, but not the only content developer. As CEO Satya Narayana Nadella said, “When we think about our vision for what a metaverse can be, we believe there won’t be a single, centralized metaverse.” 

Microsoft has been relying on platforms such as its own Xbox product to host the metaverse. Activision Blizzard adds more content to Microsoft’s corner of the metaverse.

What Businesses Should Do

It’s important that businesses understand their role in the metaverse. A business may have multiple roles, and they may overlap:

  • Builder and host
  • Content creator
  • Financial backbone
  • Commerce creator (and we have discussed many examples  of this on our blog).
  • Educator
  • And more

In addition, these roles may apply to a consumer-oriented metaverse (e.g., Roblox) and business-oriented metaverse (e.g., creation of virtual workplaces).

Microsoft likely sees itself having all the above roles.

An all-encompassing metaverse with a virtual economy is in early stages of development, but it’s clear that many businesses are figuring out how to build engaging products and offer services in virtual worlds. We suggest that businesses use test-and-learn tools such as design sprints to imagine how they might operate more extensively in virtual environments. The beauty of the design sprint is that it is engineered to help product development teams tackle questions for which there are no obvious answers, which is ideal for the metaverse. For instance, a business might ask:

  • How might our business monetize the evolving metaverse?
  • How might we develop products virtually beyond what we’re doing today?
  • How might we create experiences that make it possible for people to more easily and securely make purchases virtually?
  • How might we tap into the power of  virtual currencies to build customer loyalty?
  • How might we help employees break through limitations of time and space to operate more effectively in virtual environments? 

At Moonshot, we help businesses figure out how to innovate with product development cost-effectively through our own FUEL methodology, which combines tools such as design sprints with product development approaches such as lean innovation.  

Contact Moonshot to get started.

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