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Activision Blizzard board votes to reelect Bobby Kotick as CEO

During a shareholder meeting, the board at Activision Blizzard voted to reelect Bobby Kotick as CEO.

As detailed in the official filing for the annual meeting of stockholders, one of the proposals voted on was on which directors would be elected to serve another term, including Bobby Kotick in the role of CEO. Despite the controversies and ongoing litigation concerning workplace harassment centered around him, Kotick received over 533,000,000 votes in favor of reelection with less than 63,000,000 voting against him.

Activision Blizzard and Kotick have been under fire for numerous allegations regarding workplace harassment, with many shareholders and employees calling for his resignation. This news also comes just after an internal investigation by the company’s own board found “no evidence” of executives ignoring employee harassment.

This vote will allow Kotick to serve one more year as the company’s CEO unless he resigns or is removed, which may be possible once the buyout from Microsoft is finalized and CEO of Microsoft Gaming Phil Spencer takes control.

Along with Kotick’s reelection, the board will also hold a vote on creating a report on their investigations of harassment in their company. However, even if shareholders do vote for such a report, Activision Blizzard is under no obligation to actually produce one.

After so many individuals have spoken out about the systemic issues within Activision Blizzard, many of which name Kotick and other high-ranking members of Activision Blizzard specifically, seeing Kotick getting reelected is a major blow for those who hoped to see the CEO held accountable for what reportedly transpired at the company under his leadership.

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Jesse Lennox
Jesse Lennox loves writing, games, and complaining about not having time to write and play games. He knows the names of more…
Why cloud gaming is the linchpin in Microsoft’s troubled Activision Blizzard acqusition
Key art showing multiple devices playing games via the cloud.

The United Kingdom’s Competition and Markets Authority (CMA) delivered a shocker this week when it blocked Microsoft’s acquisition of Activision Blizzard on Wednesday. While a lot of focus on Microsoft’s fight was centered around whether or not the acquisition would give Xbox consoles an unfair advantage over PlayStation consoles, what ultimately decided it was a much smaller market: cloud gaming.
The idea of being able to stream the game you’re playing from the cloud has existed for well over a decade. Cloud gaming’s relevance to the video game industry has only grown over the past several years thanks to both failed and successful efforts from big tech companies like Google, Amazon, and, most importantly, Microsoft. Still, cloud gaming is considered relatively niche, with Activision Blizzard Bobby Kotick calling it "inconsequential" in an interview with Bloomberg and UCL Associate Profession Joost Rietveld saying it’s not a distinct market in a submission to the CMA.
Despite those pleas, the CMA claims that cloud gaming is a “nascent market” and that “already strong incumbent in this market even stronger” in its 418-page report on the matter. Following the CMA’s decision on Wednesday, I spoke to several different analysts to find more clarity about how big Microsoft is in the cloud gaming space and why the CMA should feel compelled to intervene. While experts mostly side with Microsoft over the CMA on this decision, one greater truth emerged from these discussions. Whether one thinks cloud gaming is relevant to this acquisition or not, this emergent style of gaming has reached a point of no return where it'll be instrumental to the video game industry going forward. 
Microsoft, king of cloud gaming
Cloud gaming may sound like a niche within the industry, but that's not entirely accurate. BrandFinance Managing Director Laurence Newell tells Digital Trends that “cloud-based services account for over 70% of Microsoft’s brand value, amounting to a staggering $137.5 billion.” That’s quite an eye-catching number that understandably would raise a regulator's alarm bells. However, Newell admits that gaming only makes up 8.5% of Microsoft’s revenue, and cloud gaming is an even smaller amount of that slice.
Despite its relatively small impact on the wider company, most of the experts I spoke to agreed that Microsoft has emerged as a cloud gaming leader thanks to its compatibility with a large segment of the Xbox Game Pass Ultimate library. Conversely, Activision Blizzard has had almost no cloud gaming presence outside of one Sekiro: Shadows Die Twice port on Google Stadia before that service’s shutdown. If it were to be acquired, it is inevitable that more Activision Blizzard games would likely come to cloud-based gaming services.

Despite the shutdown of Google Stadia and the relatively small brand value received from cloud gaming compared to the rest of the company, the CMA still points out in the press release about its decision that “monthly active users in the U.K. more than tripled from the start of 2021 to the end of 2022. It is forecast to be worth up to 11 billion British pounds globally and 1 billion pounds in the U.K. by 2026.” Associate Professor of Strategy and Entrepreneurship at the UCL School of Management Joost Rietveld, who has also been a consultant for Microsoft during its acquisition process, challenges the notion that cloud gaming as a whole is a single market.
Instead, Rietveld splits it into four categories, placing Xbox Game Pass into a category called “cloud gaming as a feature,” which is when it’s “offered as part of a consumer-facing distribution platform” or “included within a bigger bundle of services provided by the platformer.” Under Rietveld’s view, services like Nvidia GeForce Now, Ubitius, and EE -- all of whom Microsoft has made individual deals to bring Activision Blizzard and Xbox Game Studios titles to -- fall into different categories and thus shouldn’t be considered or directly compared to Xbox Game Pass. No matter how they’re categorized now, the real question mark looming over the technology is its future growth, according to Omdia Senior Principal Games Analyst Steve Bailey.
“Will it remain a niche additional service or become the gaming platform of the future?” Bailey asks in his statement to Digital Trends. “Our projection is that cloud gaming is growing rapidly (revenue should more than double by 2026), but it’s still a long way from taking over the games market, so it remains arguable either way.”
“Arguable” stands out as the keyword to me here. Like any emergent technology, we’re heavily debating the positives and negatives of cloud gaming, specifically through the lens of this acquisition. But what exactly is it that the CMA sees in Microsoft that worries them?
The CMA’s problem with Microsoft
“The CMA’s argument is not that acquiring Activision Blizzard would allow Microsoft to dominate the console market as a whole, where Sony and Nintendo have strong positions relative to Xbox, but only that it would help it to achieve a dominant position in cloud gaming specifically,” Bailey tells Digital Trends. “Microsoft and Activision Blizzard will likely argue that this is disproportionate, given the relatively small scale of the cloud gaming market.”

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Microsoft’s Activision Blizzard acquisition blocked in the U.K. over cloud concerns
microsoft activision blizzard deal questions overwatch 2 lucio

The U.K.'s Competition and Markets Authority (CMA) has blocked Microsoft's attempt to acquire Activision Blizzard because of its potential negative impact on cloud gaming. 
Since January 2022, Xbox parent company Microsoft has been trying to acquire Activision Blizzard, the video game publisher behind franchises like Call of Duty, Diablo, Warcraft, and Overwatch. The companies have run into lots of regulatory hurdles, though, especially from the CMA and FTC, the latter of which is currently suing Microsoft. While it seemed like the CMA was inching towards approving the deal, the U.K. regulator ultimately decided to block it due to its potential impact on the fledgling cloud gaming market.

"Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service," a press release from the CMA explains. " Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities."
Over the past couple of months, Microsoft has attempted to ease these cloud gaming concerns by making deals with companies like Nvidia and EE. The CMA did not think these remedies were enough, though, saying that Microsoft's efforts didn't account for enough potential business models, cloud gaming services that don't use Windows, and how the deal could take "the dynamism and creativity of competition" away from the U.K.'s cloud gaming market.
Obviously, Activision Blizzard and Microsoft aren't too happy about this decision. Activision Blizzard directly attacks the CMA in a statement provided to Digital Trends, saying that the "report contradicts the ambitions of the U.K. to become an attractive country to build technology businesses," before calling the country's economic prospects "dire" and threatening that it will reconsider its plans for growth in that country. 
Microsoft's statement from Vice Chair and President Brad Smith is a bit more measured, saying that Microsoft is "fully committed to this acquisition and will appeal." Citing the deals the company has already made to bring Call of Duty to more platforms, Smith says that the decision shows "a flawed understanding of this market and the way the relevant cloud technology actually works."
https://twitter.com/BradSmi/status/1651182266406584320
Microsoft has a lot of work cut out for itself if it still wants to force this deal through after pressure from the FTC and CMA. As the appeals process could take up to nine months or more, it seems unlikely that the acquisition meets its original June 2023 deadline; it's probable we'll be following this fight to acquire Activision Blizzard for the rest of the year. 

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FTC files lawsuit to block Microsoft’s Activision Blizzard acquisition
Lilith appears in a Church in Diablo 4.

The Federal Trade Commission (FTC) will sue Microsoft to block its acquisition of Call of Duty and World of Warcraft publisher Activision Blizzard.
A 3-to-1 vote ultimately determined the FTC's decision to issue the lawsuit as the commission fears that the deal would give Microsoft an unfair advantage in the gaming industry and hurt innovation. FTC Bureau of Competition Director Holly Vedova explained the FTC's intent in a press release.
"Microsoft has already shown that it can and will withhold content from its gaming rivals," she said. "Today, we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets."
That press release also highlights the FTC's belief that Microsoft's acquisition of ZeniMax Media is problematic due to a track record of "using valuable gaming content to suppress competition from rival consoles." In addition, after the Activision Blizzard acquisition, Microsoft could potentially "harm competition by manipulating Activision’s pricing, degrading Activision’s game quality or player experience on rival consoles and gaming services, changing the terms and timing of access to Activision’s content, or withholding content from competitors entirely."
This $69 billion acquisition has dominated gaming industry headlines all year as Microsoft has been doing all it can to make the deal seem favorable to the industry. As recently as December 6, Head of Xbox Phil Spencer emphasized the potential positives of this acquisition, confirming plans to continue to bring Call of Duty to Nintendo platforms and Steam for 10 years if the Activision Blizzard merger is complete.
By filing this complaint, the FTC begins proceedings that will result in a hearing and trial before an administrative law judge to determine whether or not Microsoft will acquire Activision Blizzard. 

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