Bobby Kotick Defends $69B Microsoft Deal Amid Lawsuit

Former Activision Blizzard Chief Executive Officer Bobby Kotick has launched a vigorous defense of his decision to sell the gaming giant to Microsoft for $69 billion. In a legal filing responding to a lawsuit from aggrieved investors, Kotick painted a grim picture of the current gaming landscape, arguing that declining revenues and hardware sales prove the sale was a necessary escape hatch.

The lawsuit, initiated by Swedish pension fund Sjunde AP-fonden (AP7), accuses Kotick of orchestrating a rushed merger to insulate himself from liability and secure massive personal financial gains. Kotick, who departed the company at the end of 2023, has denied all allegations of wrongdoing. His counter-argument relies heavily on the poor performance of the industry following the deal's closure.

The core of the dispute centers on the $95 per share takeover price. Investors contend this figure was too low and that Kotick manipulated the process to keep his job and secure $400 million in change-of-control benefits. The plaintiffs have named Kotick, the former company, and its new owner, Microsoft, as defendants in the case.

In his response, Kotick did not limit his defense to internal metrics. He also pointed fingers externally, accusing Swedish gaming conglomerate Embracer Group of being involved with the lawsuit to gain a competitive advantage. Embracer, which owns rights to major franchises like Tomb Raider and Lord of the Rings, has categorically denied these accusations.

A specific claim regarding the performance of Activision's flagship franchise has drawn significant attention from the gaming community. Kotick asserted that Call of Duty sales are "off over 60% from the prior year." He utilized this statistic to argue that the sale provided a crucial lifeline that shareholders should appreciate.

"Today, given that console sales are at an all-time low and Call of Duty sales are off over 60% from the prior year, Plaintiff should be expressing extreme gratitude for the foresight Activision leadership demonstrated in consummating this transaction."

While Kotick did not provide specific documentation for the 60% figure in the filing, external data supports a downturn for the franchise. Circana reports that November full-game dollar sales for Call of Duty: Black Ops 7 finished below those of Black Ops 6 during the same period the previous year. Furthermore, the franchise is currently navigating the "Game Pass effect," as day-one subscription releases likely cannibalize traditional unit sales.

Kotick’s assertion that the console market is at an "all-time low" is backed by stark industry data. November 2025 represented a catastrophic month for video game sales in the United States, marking the worst November for hardware unit sales since records began in 1995.

The decline was widespread and affected all major hardware manufacturers:

• Xbox Series hardware sales dropped 70% year-over-year.
• PS5 sales declined by more than 40%.
• Combined Nintendo Switch unit sales fell over 10%, despite the launch of the Switch 2.

Hardware spending fell to $695 million, the lowest total for November since 2005. Kotick argues that this macroeconomic downturn validates the timing of the Microsoft acquisition.

Kotick also used the filing to take a victory lap over the Federal Trade Commission (FTC). The FTC had originally opposed the merger, arguing that Microsoft owning Call of Duty would stifle competition. Kotick countered that the franchise's recent struggles—specifically the 60% sales drop he cited—prove that competition remains fierce, citing Battlefield as a key rival.

He further noted that Activision historically missed nearly all ambitious targets set forth in its Long Range Plans, a fact known to the board during negotiations. In response to the backlash from Black Ops 7 performance, Activision has already announced structural changes to the franchise. The company has pledged to never release back-to-back games within the same sub-brand (e.g., Modern Warfare or Black Ops), breaking a cycle of annual repetition that may have contributed to franchise fatigue.

The legal dispute between Bobby Kotick and AP7 hinges on whether the $69 billion valuation was a fair market price or a manipulated exit strategy. Kotick’s defense relies on the premise that the gaming industry's sharp contraction in late 2025 rendered the sale price not only fair, but generous.

As the case progresses, the gaming industry will be watching closely to see if the courts accept the argument that market collapse justifies the largest acquisition in gaming history. Meanwhile, Microsoft faces the challenge of revitalizing a Call of Duty franchise that is currently trending downward in traditional sales metrics.