What the Metaverse has to do with Microsoft’s deal for Activision

When asked about the term “metaverse” during a roughly 15-minute investor and media call held shortly after the Tuesday announcement, executives from Microsoft and Activision responded affirmatively “many times (more than ten).

If you take a look at our vision for what a metaverse could be, we believe that there will not be one centrally controlled universe,” says the team “On the conference call, Microsoft CEO Satya Nadella stated his company’s strategy. “We have to support a large number of metaverse platforms.””

analysts who follow Microsoft said the move was a way for the company to position its booming game business as an entry point into the metaverse, a future vision of the internet that has been the subject of increasing hype—particularly since Facebook announced a new focus and a new name in October, naming Meta Platforms, Inc.

People will come together in digital form in the metaverse, according to current thinking in the technology industry, to work, play, shop, and socialise in immersive virtual worlds where they will see each other as avatars, or virtual characters.

In videogames, players are immersed for hours at a time in virtual worlds where they spend money on digital goods and gather their avatars to interact with one another. This is an example of how such a world might look and function.

The stock prices of some companies that made early bets on metaverse-related technologies have risen, and a number of exchange-traded funds dedicated to the topic have recently been launched. And while Apple Inc. has said little about its future plans, investor excitement about how the company may benefit from the rise of the metaverse has helped the company become the first to reach a valuation of $3 trillion in intraday trading this month, according to Bloomberg.

Before the Covid-19 pandemic, videogame software was already a more than $100 billion global industry. During the epidemic, games became even more popular as moviegoing and other forms of public entertainment were curtailed. Gamers, on the other hand, are a minority in the world, and the vast majority of them spend only a portion of their spare time playing. They are only a small part of what proponents of the metaverse hope will one day be a much larger world.

A metaverse future is still in the early stages of development, as is the technology and infrastructure required. Modern virtual-reality headsets, for example, are still clunky and expensive, despite advances in technology.

Meanwhile, Microsoft continues to have a slew of compelling reasons to acquire Activision. Because Activision is one of the world’s largest videogame companies and owns some of the most popular franchises, Microsoft was able to pay less than what Activision was worth less than a year ago in the transaction.

“What Microsoft is acquiring is a large community of active gamers, but what this means for the metaverse in the long run is anyone’s guess. ” “Brad Reback, an analyst at Stifel Nicolaus & Co. “There is still a lot of work to be done in terms of determining what the metaverse will eventually become.””

Microsoft, which already has a sizable videogame business, is positioning itself for the future of the metaverse, not only against fellow tech giants such as Meta, but also against other videogame companies, according to the company.

Users can teleport between millions of games, dedicated social spaces, and concert venues on Roblox Corp.’s self-named platform, and they can also purchase virtual goods to enhance their experience. The video games “Fortnite” and “Second Life” developed by Epic Games Inc. and Linden Research Inc., respectively, include extensive virtual worlds.

With the acquisition of Activision Blizzard, which is still subject to regulatory approval, Microsoft would gain access to a number of online games with metaverse elements. For example, several million people participate in and socialise with the game “World of Warcraft” from Activision.” They appear as avatars in a virtual fantasy landscape where they can purchase virtual goods such as pets. The company’s games have a total of nearly 400 million monthly players across all of their titles.

The support of gamers, however, will be necessary for Microsoft and other companies to make a significant impact in the metaverse, said Adrian Montgomery, president and chief executive officer of Enthusiast Gaming Holdings Inc., which hosts online communities for game enthusiasts. In fact, the success of what the metaverse eventually becomes is entirely dependent on them.”

As the metaverse comes to life, according to tech forecasters, there will be a plethora of virtual realms for people to congregate in other than games, such as virtual offices, schools, sports arenas, and shopping malls, among other things. Despite this, they believe that many of the fundamental tools and technologies for the metaverse will emerge first and foremost from video games. The technology that tracks a person’s movement in the real world so that their gaming avatar can match it in the metaverse, for example, could improve the experience of participating in virtual office meetings.

“Virtual meetings will be significantly more immersive and interactive than they are currently,” says the author “Derek Belch, founder and CEO of Strivr Labs Inc., a Palo Alto, Calif.-based startup that develops virtual-reality training software for the workplace, made the announcement.

Already, videogames are having an impact on technology, including graphics, cloud computing, artificial intelligence, and virtual marketplaces, among other things. Analysts believe that Microsoft could apply the tools and knowledge acquired from Activision to its other game studios and even to products aimed at businesses.

With or without the arrival of the metaverse, the videogame industry has been experiencing a period of rapid expansion and consolidation in recent years, which has been fueled in part by the pandemic’s social-distancing restrictions.

Consumer spending on video game software is expected to increase by approximately 23 percent in 2020 compared to the previous year, according to estimates from Newzoo BV. Despite the fact that growth slowed to approximately 1.4 percent last year, total spending reached approximately $180 billion, according to the analytics firm. Meanwhile, according to data from PitchBook, mergers and acquisitions in the game industry will nearly triple to $26.2 billion in 2021 from $8.9 billion in 2020, representing a nearly threefold increase.

Investors haven’t punished or rewarded Microsoft for its large bet this week, according to reports. Since the announcement of the acquisition plans, Microsoft shares have fallen by approximately 2 percent. Activision’s stock has risen by more than 25% since the beginning of the year.

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