Microsoft is buying gaming powerhouse Activision Blizzard in what is the industry's biggest deal in history. 

The transaction includes iconic franchises including multiplayer online role-playing game World of Warcraft and first-person shooter series Call of Duty.

Activision is also handing over 2016 Game of the Year winner Overwatch, popular mobile game Candy Crush and action game series Diablo.

Microsofts' investment in the development of the metaverse is also a key part of the deal.

"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 Satya Nadella, chief executive of Microsoft.

"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."

Recently, Activision has faced allegations of sexual harassment of employees and misconduct by several top managers.

The company is still addressing those allegations and said it had fired or pushed out more than three dozen employees and disciplined another 40 since July.

Microsoft executives talked up Activision's 400 million monthly active users as one major attraction to the deal and how vital these communities could be in Microsoft's various metaverse plays.

Activision's library of games could give Microsoft's Xbox gaming platform an edge over Sony's PlayStation, which has for years enjoyed a more steady stream of exclusive games.

"The likes of Netflix have already said they'd like to foray into gaming themselves, but Microsoft has come out swinging with today's rather generous offer," said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

According to Refinitiv data, the Microsoft-Activision deal would be the largest all-cash acquisition on record, trumping Bayer's $US63.9 billion offer for Monsanto in 2016 and the $US60.4 billion that InBev bid for Anheuser-Busch in 2008.

Source | ABC/Reuters