Phil Spencer, who began his career with Microsoft as an intern in 1988 and subsequently became head of the games business, was integral in the acquisition of Activision Blizzard. Gaming has had a supplementary position in Microsoft's portfolio for a considerable amount of time, given that they are the frontrunners in PC software. Don Coyner, the first individual to work on marketing in Microsoft's Xbox division, stated: "It is an impressive sum of money for Microsoft, whose core business is not gaming."
In 2014, Phil Spencer and Satya Nadella were uncertain whether Microsoft should continue investing in Xbox, which was behind Sony in the gaming world. However, the newly appointed executives at the software giant made a bold decision - to make gaming a central part of their long-term plans. This culminated in their purchase of video game publisher Activision Blizzard for an astounding $69 billion - the company's biggest acquisition ever! Don Coyner, Microsoft's first Xbox marketing officer, commented that the hefty expenditure reflects the software maker's confident belief in the gaming sector. Spencer explained to Shacknews in 2020 that he was appointed to head Microsoft's gaming division due to the team's dwindling numbers. The long and complex regulatory process of this high-value deal kept its closure postponed for 21 months. However, in July, Spencer and the rest of the team won a decisive battle in court, and the deal was officially closed late last month. According to the company's reports, gaming contributes 7.3% of Microsoft's total revenue, despite being a comparatively small part of their offering. The success of this massive investment will be watched with great anticipation.
Spencer had been a vocal champion of Activision's strengths, and was an important figure in bringing about the deal. Although the two companies have experienced some tense moments, Spencer had enjoyed a longstanding relationship with Activision CEO Bobby Kotick. Microsoft had been unsuccessful in securing the publisher's titles for its Game Pass library during 2020 negotiations.In mid-November 2021, Spencer made contact with Kotick to inform him of Microsoft's interest in exploring strategic opportunities between the two. Soon after, The Wall Street Journal reported on undisclosed misconduct within Activision - causing its share price to plummet 11% in the following three trading days.A regulatory filing detailed how Spencer then enquired if Kotick would speak to Nadella, to which he agreed. The two CEOs held a conversation the next day, during which Nadella communicated Microsoft's interest in acquiring Activision. Roughly two months from then, the companies unveiled their intent to merge.Microsoft declined to make Spencer available for comment.
In 1988, Spencer joined Microsoft as a software development intern. Two years later, after receiving his bachelor's degree in technical and scientific communication from the University of Washington, he was hired by the company as an engineer and worked on several projects, such as Encarta, Microsoft Money, and Microsoft Works. When the early stages of the Xbox development began, Spencer was responsible for an internal game studio. In 2008, he took over all the studios, and in 2014, following the release of the Xbox One console and the appointment of Nadella as Microsoft's CEO, he took charge of the Xbox division. Understanding the need for premium content, Spencer played a key role in convincing Nadella to purchase Mojang, the studio behind Minecraft, for 2.5 billion dollars in 2014. Since then, Minecraft has become the top-selling video game, with more than 300 million copies sold. In 2021, Spencer was involved in Microsoft's 8.1 billion dollar acquisition of ZeniMax Media, the publisher of the Doom and Fallout franchises. In a 2020 email to two marketing executives, he mentioned he was also working on a bid for Warner Bros. Games, which didn't materialize in the end.
Spencer and his Microsoft peers then diverted their attention to mobile gaming, addressing Zynga, the publisher of FarmVille, Niantic, developer of Pokemon Go, and others before finally opting for Activision Blizzard. "Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile," Microsoft declared in its press release detailing the deal. As we know, Activision is renowned for its Call of Duty and Overwatch franchises, but it additionally publishes the popular Candy Crush puzzle games on Android and iOS. Having a strong passion for gaming, Spencer has admitted to playing Candy Crush himself, along with spending approximately 15 hours a week on video games in general, as disclosed during an interview with Bloomberg last year. Moreover, he plays Banjo-Kazooie from Microsoft's Rare studio and Halo Infinite. In 2021, he amused himself with Bungie's Destiny 2, while one other person streamed the activity via Twitch.Despite Microsoft's presence in OS and productivity software, its Xbox brand falls behind Sony even after two decades of rivalry. "I feel we are in a huge hole with our games lineup both for platform marketing/differentiation and our Gamepass content," Spencer remarked in a 2022 email to Xbox heads, exposed during the FTC case. In 2021, Xbox managed to obtain several well-received titles such as Zenimax's Starfield and Forza Motorsport, published by Xbox Game Studios.Spencer has acknowledged certain improvements as well. When Sony divulged the PlayStation 5 details in 2020, he expressed his pride by writing to Microsoft CEO Satya Nadella and CFO Amy Hood that, "After almost 12 hours of soaking in their unveil, taking apart their specs and looking at the community responses I just wanted to say that I'm proud of our team." Spencer perceived that Microsoft had superior gaming hardware, software and services.Furthermore, he often likes to express acknowledgment of accomplishments of others. David Hufford, who is an employee in communications and analyst relations at Microsoft, recalls approaching Spencer to deliver a speech at an event in 2021 to commemorate the 20th anniversary of the original Xbox launch. He continued to inform CNBC in an email that Spencer rejected, preferring to direct the focus more on Robbie Bach and Jeff Henshaw - former entertainment and devices leader and Xbox co-founder, respectively. Even former Microsoft chief Xbox officer Bach couldn't persuade Spencer to appear on stage and give remarks, Hufford asserted.
The revenue from gaming rose in the most recent quarter by 1%, whereas the entire business expanded by around 8%, a disparity which an earlier version incorrectly reported a percentage for.
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