San Francisco Frontiers - Microsoft-Activision deal: Key things to know

The merger, which is expected to be finalized next year, would beef up Microsoft's muscle in the booming game market while playing to its strengths in software and cloud computing.

Here are key things to know:

- Video game titans -

Merging with Activision will make Microsoft the third-largest gaming company by revenue, behind Tencent and Sony, according to analysts.

China-based Tencent is a huge player in the Asia market and has been investing in game studios outside its home country.

Tencent owns Riot Games, maker of battle royale hit "League of Legends," and has stakes in French game star Ubisoft as well as Activision itself.

Japanese consumer electronics colossus Sony has been increasingly relying on its PlayStation consoles and games for revenue -- as Sony studios crank out titles to play on its hardware.

Microsoft, meanwhile, has been adding to its stable of game studios as it invests in Xbox consoles as well as the trend of games being streamed directly from the cloud.

"To borrow from the company's own jargon, Microsoft's goal is to enable people to play games anytime, anywhere and with anyone," Baird Equity Research analyst Colin Sebastian said in a note to investors.

- Molding the 'metaverse' -

The hot buzz of a future in which people live, work and play in an immersive virtual realm called the "metaverse" is seen as a natural evolution of video games.

Gaming platforms Roblox, Minecraft and Fortnite have created universes where playing is just one dimension among several.

"There's a whole generation that are growing up where their social connection to the world is through video games," Microsoft games unit chief Phil Spencer told The New York Times, referring to young people who meet online after school.

For Microsoft, investing in games therefore allows it to position itself on the future of the internet in general.

"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," argued Microsoft boss Satya Nadella in his statement on the deal.

- Taking on sexism -

A merger would lay Activision's troubles regarding the treatment of women in the workplace at the feet of Microsoft's game chief Spencer.

Activision has faced official scrutiny, lawsuits, and employee outrage over accusations that women employees are harassed and discriminated against at the overwhelmingly male company.

Spencer said in a Times interview that the company has learned from its own mistakes, including having dancing girls at a game developers conference six years ago.

"That was a painful moment in our history of Xbox," he said. "I believe we're stronger now because of that event, not that I would choose to repeat that event if I had that choice."

- Content remains king -

Content is still king of the video game world.

An acquisition of Activision could help Microsoft shore up weaknesses when it comes to mobile games and esports.

"Following the acquisition, Microsoft will gain a dominant position in esports, a growing theme where it has struggled to make a mark in the past," said GlobalData principal analyst Rupantar Guha.

"Additionally, Activision is a mobile gaming leader with plans to launch more mobile titles in the future."

Activision's array of games includes "World of Warcraft" as well as color-matching mobile hit "Candy Crush" and esports-oriented "Overwatch."

H.Reyes--SFF