With the Activision Blizzard acquisition, Microsoft Gaming takes a huge step forward

Kip Kniskern

Xbox logo onstage

Somewhat buried in the blockbuster news this morning that Microsoft has agreed to acquire Activision Blizzard for $68.7 billion is what looks to be a major organizational restructuring not only of Xbox, but of Microsoft itself. Along with news that Phil Spencer has been promoted into a new role, that of CEO, Microsoft Gaming, the announcement blog post drops a bit of another bombshell at the end of the post with an image of Microsoft Gaming’s new “Gaming Leadership Team:”

Although it’s dropped in right at the end of the post with no explanation, there’s quite a lot to unpack here. First (and in no particular order), of the twelve leadership team positions, seven are held by women, a possible nod to Activision’s notoriously toxic work environment for women, and how that era is soon to be officially and finally over. A Wall Street Journal post yesterday on Activision’s attempts to clean themselves up is the epitome of “yesterday’s news” now, but even after “exiting” some 40 employees, it’s pretty obvious that Activision isn’t going to be able to just sweep these problems under the rug.

Spencer emailed employees this morning about the Activison news, with clear cut indications that if it hasn’t already, the culture is about to change at Activision:

Microsoft is committed to our journey for inclusion in every aspect of gaming, among both employees and players. We deeply value individual studio cultures. We also believe that creative success and autonomy go hand-in-hand with treating every person with dignity and respect. We hold all teams, and all leaders, to this commitment. We’re looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.

Next, this time is unlike most orgs at Microsoft (with LinkedIn being probably the biggest exception): included in this leadership team are CVPs of Human Resources, Gaming Legal, Gaming Marketing, Chief of Staff, and Gaming Finance. This appears to be built less like a branch of Microsoft, as Xbox Gaming has been, and more like its own independently run company (again, similar to how LinkedIn is now run). Although Microsoft Gaming wasn’t an acquisition, to be run independently, the Activision acquisition (along with the ZenMax/Bethesda and Minecraft ones before that), has vaulted Microsoft Gaming into a new, and suddenly much larger sphere of influence within the company.

In his email about Activision, Spencer signaled some of what’s to come in this new organizational structure, with game marketing moving out of Chris Capossela’s org and into Microsoft Gaming’s own:

I’m excited to announce effective today that Jerret West, CMO of Gaming, and his marketing team will move from Chris Capossela’s organization to report directly to me. Jerret will continue to be a member of Chris’ leadership team and leverage critical parts of Microsoft’s marketing muscle including Communications, Media, and Consumer Sales.

Also just yesterday, new Microsoft Gaming CEO Phil Spencer had some prescient things to say about the possibility of a “PS Game Pass,” calling it “inevitable, but also saying:

So for us, we should continue to innovate, continue to compete, because the things that we’re doing might be advantages that we have in the market today, but they’re just based on us going first, not that we’ve created something that no one else can go create.

“I like it because it feeds our energy on what are the next things that we should be working on as we continue to build out the things that we’ve done in the past. Because I think the right answer is to ship great games, ship them on PC, ship them on console, ship them on cloud, make them available Day 1 in the subscription. And I expect that’s what our competitor will do.”

With Microsoft Gaming, Microsoft is looking not to catch up to Sony, but to move into the next era of gaming, where sure, games are important, and maybe more important than ever, but an ecosystem including PC, console, cloud gaming, and even the metaverse, all running on Azure, and backed by a 2 trillion dollar company are the real advantages Microsoft Gaming is using to compete with Sony.

(updated to clarify that Phil Spencer emailed his own employees, not Activision employees)