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Microsoft leans-in to the Metaverse

Today we’re looking at recent announcements by Microsoft, which may have gone under the radar as they are embedded in the company’s recent Form 10-K. Not normally the subject of in-depth interrogation by anyone except shareholders, this is Microsoft’s annual report, required by the U.S. Securities and Exchange Commission (SEC), that provides a summary of the company's financial performance. So let’s dive right in!


Filed on the 28th of July, Microsoft’s Form 10-K includes a number of interesting statements, which suggest a change in direction when it comes to the Metaverse. Microsoft have previously shied away from the word ‘Metaverse’ in its SEC filings, choosing instead to talk about the coming together of physical and virtual worlds, the Internet of Things (IoT), and mixed reality.


Under page three’s “Embracing Our Future”, Microsoft state that they “are enabling metaverse experiences at all layers of our stack, so customers can more effectively model, automate, simulate, and predict changes within their industrial environments, feel a greater sense of presence in the new world of hybrid work, and create custom immersive worlds to enable new opportunities for connection and experimentation.” This, in combination with last year’s Ignite conference, Microsoft's annual technology gathering, where chairman and CEO Satya Nadella mentioned the Metaverse six times in his opening keynote, and Microsoft’s inclusion in the recently announced Metaverse Standards Forum, suggests that Microsoft are starting to lean-in to the Metaverse.


The Metaverse is only mentioned twice in its Form 10-K. The second time is on page seventy-eight in relation to Microsoft’s acquisition of Activision Blizzard, home to the World of Warcraft and Call of Duty franchises. Here Microsoft state: “On January 18, 2022, we entered into a definitive agreement to acquire Activision Blizzard, Inc. (“Activision Blizzard”) for $95.00 per share in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. Activision Blizzard is a leader in game development and an interactive entertainment content publisher. The acquisition will accelerate the growth in our gaming business across mobile, PC, console, and cloud and will provide building blocks for the metaverse.”


In our previous Future titans of the Metaverse post we speculated that Microsoft would be seeking Metaverse-oriented opportunities to create new platform-level solutions, like Azure, and application-level solutions, like Microsoft Teams. On page five of its Form 10-K, Microsoft states that: “We are accelerating our development of mixed reality solutions with new Azure services and devices. Microsoft Mesh enables presence and shared experiences from anywhere through mixed reality applications. The opportunity to merge the physical and digital worlds, when combined with the power of Azure cloud services, unlocks new workloads and experiences to create common understanding and drive more informed decisions.” So far, we’re feeling pretty vindicated…


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