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Video Game Stocks Leap After $68.7 Billion Microsoft-Activision Takeover Deal

Microsoft's record $68.7 billion play for Call of Duty maker Activision Blizzard could spark a wave of takeover speculation in the video game sector.

Updated at 1:20 pm EST

Microsoft's  (MSFT) - Get Microsoft Corporation Report $68.7 billion play for Activision Blizzard  (ATVI) - Get Activision Blizzard, Inc. Report has video game stocks on the move Tuesday as the sector's biggest-ever deal sparks a wave of fresh takeover speculation.

Microsoft will pay $95 a share for the Call of Duty and World of Warcraft gamemaker, the companies said Tuesday, a level representing a 45% premium to Activision's Friday closing share price.

The deal, the video game sector's biggest, could see rivals scrambling to secure their place, as well as their scale, in the 3 billion player-strong market as companies to establish and monetize their subscriber bases ahead of their move into the so-called metaverse, a hyper-realized version of the internet pioneered by Facebook parent Meta Platforms  (FB) - Get Meta Platforms Inc. Class A Report

Video game companies generated around $180 billion in revenues last year, an industry report published in October noted, a modest increase from 2020 levels lead by around $90 billion in revenues from mobile gaming options. 

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"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," said Microsoft CEO Satya Nadella. "We're investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all." 

Zynga  (ZNGA) - Get Zynga Inc. Class A Report shares, for example, were marked 0.2% higher following news of the Microsoft-Activision deal as investors bet that new suitors may emerge for the Farmville maker following its agreed $12.7 billion takeover by Take-Two Interactive  (TTWO) - Get Take-Two Interactive Software, Inc. Report last week.

Electronic Arts  (EA) - Get Electronic Arts Inc. Report could be a potential buyer, given its reliance on mobile and a desire to ensure Take-Two doesn't steal some of its market share, but it's also having to work through recent acquisitions of Glu and Playdemic, which cost a collective $3.5 billion.

Roblox Crop  (RBLX) - Get Roblox Corp. Class A Report were also on the move, falling 2% to $77.51 each, while Electronic Arts was marked 4.7%  higher at $136.53 each

Take-Two shares jumped 2.05% to $155.70 each while the U.S. listed shares of China-based Tencent Holdings  (TCHEY)  slumped 6% to $57.04 each.