Activision Blizzard deal positions Microsoft for the metaverse

Microsoft's acquisition of Activision Blizzard would bring game-making savvy for building virtual worlds capable of evolving into the metaverse that tech companies see as tomorrow's internet for work, play and commerce.

Activision Blizzard's experience could help Microsoft build the metaverse as an interconnected, persistent virtual world with its economy. People would interact in that world using three-dimensional avatars and immersive technology like virtual reality (VR) or augmented reality (AR). However, the metaverse is still years from becoming a reality.

Microsoft's $68.7 billion acquisition, announced this week and expected to close in 2023, provides the company with a long-time developer of virtual worlds for gamers. Activision Blizzard's roleplaying game World of Warcraft has given the game maker key insights into engaging people in and monetizing a persistent online environment, said Jeremy Bailenson, founding director of Stanford University's Virtual Human Interaction Lab.

"Microsoft has solved, via acquisition, the hardest problem of the metaverse: getting people to actually spend time inside these virtual worlds," he said. "The amount of expertise gained from absorbing the minds who created and maintained World of Warcraft -- still at almost 5 million users after two decades -- is an epic win."

Big tech companies have touted the metaverse's ability to reshape the internet, including the way people collaborate at work. Facebook rebranded itself as Meta last year to reflect its commitment to the metaverse and has released in open beta a VR-based workplace collaboration product, Horizon Workrooms. BlueJeans by Verizon will launch a virtual workspace called Spaces this year. Microsoft intends to integrate Teams with its VR and AR platform Mesh this year, bringing virtual meeting spaces and cartoon-like avatars to video meetings. The efforts represent a push to collaborate in virtual places -- an early step toward moving work to the metaverse.

Facebook, Verizon and Microsoft are among those firms jostling for a piece of the metaverse economy that Constellation Research estimates could hit $21.7 trillion by 2030. Constellation expects game companies like Sony, Epic Games, Valve and Tencent to be instrumental in building that economy by creating virtual worlds and experiences or developing the AR and VR hardware that allows people to access the metaverse.

Microsoft CEO Satya Nadella acknowledged that game makers would be an essential part of metaverse development in his remarks about the acquisition.

"Gaming is the most dynamic and exciting category in entertainment across all platforms today, and will play a key role in the development of metaverse platforms," he said in a statement.

Game developers can help tech companies meet some of the challenges of creating the metaverse, since they've been working on the problems for years, said David Lindlbauer, assistant professor at the Human-Computer Interaction Institute at Carnegie Mellon University.

For example, movement in VR can cause motion sickness in some people, so VR game makers mitigated the problem by introducing teleportation to different environments. Tech companies could use that mechanism in the metaverse to let workers move across a virtual conference hall without feeling sick.

"Games have always been on the forefront of introducing mechanisms to interact with the [digital] world," Lindlbauer said. "Gaming is a very viable test bed. It allows you to explore the limits."

Activision Blizzard has monetized its virtual worlds. Players in World of Warcraft buy in-game items like pets and mounts with real money. Activision Blizzard's history with these transactions and knowledge of what pitfalls to avoid should be helpful to Microsoft at a time when companies are still trying to figure out how to charge for the metaverse.

By incorporating Activision Blizzard's knowledge, Microsoft can avoid reinventing the wheel as it builds the metaverse. Activision Blizzard itself has recognized the value of its expertise. In a December essay for marketing publication The Drum, company executive Jonathan Stringfield wrote that metaverse-focused tech firms would be wise to pay attention to gaming.

"Those with serious aspirations to understand or build the metaverse in 2022 have the opportunity to start their journey in the multiple 'metaverses' that currently exist in the gaming ecosystem, lest they otherwise merely tread the virtual footsteps of the gamers that came before them," he wrote.

Mike Gleason is a reporter covering unified communications and collaboration tools. He previously covered communities in the MetroWest region of Massachusetts for the Milford Daily News, Walpole Times, Sharon Advocate and Medfield Press. He has also worked for newspapers in central Massachusetts and southwestern Vermont and served as a local editor for Patch. He can be found on Twitter at @MGleason_TT.