In business, success can sometimes come down to making the best of a bad situation. Knowing when to hold ‘em, when to fold ‘em, et cetera, and knowing how to fold said cards in the most advantageous way for your company, your shareholders, and yourself. In mid-November, Bobby Kotick, the chief executive of the gaming giant Activision Blizzard, had endured a year of production delays, workplace controversies, a federal investigation and state lawsuit, extremely bad press, and an intensifying unionization effort—all of which had pushed $ATVI stock down 45 percent from an all-time high in February. Some in the Sun Valley potluck set were fearful for his future. 

Suitors were circling, meanwhile, looking to buy the video game empire at a massive discount. But even then, Kotick showed no indication that he planned to cash in, according to sources familiar with his thinking. He still had the support of his board, these people said, and he had just been authorized to issue a $4 billion stock buyback that he hoped would fuel the company’s growth.

Then a curious series of events unfurled. After the Wall Street Journal published an inflammatory article alleging, among other things, that Kotick had tried to cover up sexual harassment claims at his company, Microsoft gaming chief Phil Spencer sent a note to his employees stating that he and his executive team were “disturbed and deeply troubled by the horrific events and actions” at Activision, and that Microsoft’s Xbox unit was “evaluating all aspects” of its relationship with the company. Spencer’s note came on the heels of a similar missive from Sony PlayStation chief Jim Ryan, but Spencer’s note must have hit particularly hard given that he and Kotick were friends and had worked together for years. Moreover, Microsoft had spent several years looking at Activision as a potential acquisition target, sources familiar with the matter said. (Spokespeople for Activision and Microsoft could not be reached for comment.)