Microsoft bought Activision because gaming is the new social media

If the 2010s were the decade of social media in the tech industry, there's reason to think the 2020s are the gaming decade.

On Tuesday, Microsoft said it plans to buy the gaming giant Activision Blizzard -- maker of the Call of Duty, World of Warcraft and Candy Crush franchises, to name a few -- for some $69 billion. If it survives antitrust scrutiny, the deal will make Microsoft, which already owns Xbox, "Minecraft" and Halo, a titan of the gaming world. And that in turn could give it a big role in shaping not just how we work and play but how we interact online.

Games have been a big industry for a long time, from Nintendo and PC gaming in the 1990s to PlayStation and Xbox in the 2000s, to the rise of mobile gaming in the 2010s. But in recent years, leaps in technology and innovations in gameplay have made them ubiquitous, from addictive smartphone time-killers to deeply immersive, console-based worlds that let millions of players interact in real time. And then came the pandemic, which supercharged the popularity of games even as they pushed more of our work and social lives into cyberspace.

On Jan. 18, Microsoft announced a record-breaking, all-cash deal to acquire the maker of video game franchises Call of Duty and Candy Crush for $68.7 billion. (Reuters)

The better and more popular games get, the less they start to look like a niche entertainment medium and the more they start to look like the future of the Internet.

Already, two-thirds of U.S. adults and three-fourths of kids under 18 play video games weekly, according to the Entertainment Software Association, a trade group. Worldwide, nearly 400 million people play Activision Blizzard games each month. That's more active users than Twitter, and comparable to the 450 million users that WhatsApp had when Facebook acquired it for $19 billion in 2016.

But it's not just the number of users that matters. It's how they're using those games. Increasingly, games such as "Fortnite," "Roblox" and "World of Warcraft" serve not just as places to complete quests and shoot bad guys but places to hang out. "Fortnite" hosts massive live concerts attended by millions; "Roblox" invites you to build your own games and experiences and invite your friends; "Warcraft" was a pioneer in encouraging players to make friends, chat and work together in guilds.

These three are not outliers. They're just some of the better-established examples of a trend that is fast becoming the norm. These days, teens are as likely to hang out on Discord or Xbox Live playing video games together as they are to interact on Instagram or Snapchat. Kids who aren't old enough for a Facebook or Instagram account can socialize on Roblox, which is played by nearly 50 million people per day, most of them young.

That convergence of gaming and socializing is part of what has tech CEOs and investors frothing about "the metaverse," a buzzword cribbed from sci-fi that is being marketed as the next generation of the Internet.

"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," Microsoft CEO Satya Nadella said Tuesday in announcing the Activision deal.

He isn't the only one who thinks so. The shift from two-dimensional social media feeds to talking and playing with friends and strangers in real time in virtual spaces was part of the impetus for Facebook's Mark Zuckerberg to rename the company Meta and announce that it's now "a metaverse company" instead of a social media company.

In the most starry-eyed vision of the metaverse, it will be a limitless, always-on digital realm in which we will someday lead full second lives, accessible from any Internet-connected device or platform, carrying with us our avatars, digital goods and cryptocurrencies wherever we go. But that's a very long way off. Microsoft dropping $69 billion on Activision to counter Facebook suggests that the near future of the metaverse will be something less grandiose: an extension of today's corporate platform wars in which the largest companies vie to expand their empires of attention and data by conquering swaths of the fast-growing gaming and remote-work sectors.

As futuristic as "the metaverse" might sound, these moves make more straightforward sense simply as a bet on gaming as an ever-growing part of what people do online. Or viewed another way, it's a bet that socializing and working on the Internet will increasingly take place in apps that look more like games than stand-alone chats or feeds.

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