Microsoft hinted at building a “next-gen gaming store” back in early 2022 and has now quietly revealed details of its plans in documents filed with the UK Competition and Markets Authority (CMA) as part of a merger deal with Activision Blizzard.
In the documents, Microsoft says the main motivation for buying Activision Blizzard is to help expand its presence in mobile gaming. His plans for the space appear to include the creation of an Xbox mobile gaming platform and store. Here’s what the company says in the documents:
“The deal will enhance Microsoft’s ability to create a next-generation game store that runs across devices, including mobile devices, by adding Activision Blizzard content. Building on Activision Blizzard’s existing gamer communities, Xbox will strive to scale the Xbox Store for mobile devices, bringing gamers to the new Xbox mobile platform. However, consumer churn away from the Google Play Store and the App Store on mobile devices will require major changes in consumer behavior. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try new things.”
Call of Duty: Mobile and Candy Crush Saga are two hugely popular mobile games released by Activision and King respectively, and Microsoft can use these games to build a game store that can compete with Google Play and the App Store. Given Apple’s policy of blocking third-party app stores on iOS, it’s hard to imagine Microsoft shining any attention from iPhone users anytime soon. But this clearly does not prevent the company from introducing its Xbox mobile app store.
Microsoft’s admissions of mobile gaming come as the company increasingly positions Xbox Cloud Gaming as an option for mobile gaming on new handheld devices. Microsoft quickly provided support Xbox Cloud Gaming в Steam Deck от Valvefollowed by partnerships with Logitech and Razer for their cloud gaming-focused handhelds. This means that the promotion of mobile games can be implemented in several directions, and not just on phones and tablets.
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In addition to hardware, there is also a lot of revenue at stake. Games are among the most popular downloads on mobile devices and drive purchases in app stores. Microsoft takes this into account and this is how it describes the possibility:
“The deal gives Microsoft a significant presence in the mobile gaming market. Mobile gaming revenue from the King division and games such as Call of Duty: Mobile, as well as spin-offs, accounted for more than half of Activision Blizzard’s revenue in the first half of 2022. Mobile clients account for about three-quarters of its MAU (Monthly Active Users). Microsoft does not currently have a significant presence in the mobile gaming space and the deal will bring much-needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to share its mobile game development and publishing experience with Xbox game studios.”
However, the CMA did little to discuss the potential of Microsoft’s entry into mobile games as part of its investigation, and instead focused primarily on console games (which Microsoft claims are a decreasing portion of the overall market). In a chart posted on Microsoft’s acquisition site Activision Blizzard, the company shows that the entire gaming market in 2020 is valued at $165 billion, with consoles at $33 billion (20%), PCs at $40 billion (24%) and mobile. games — $85 billion (51%).
Gaming market earnings. Image: Microsoft
However, creating a successful competitor to Google Play or the App Store is a difficult task, and Microsoft will have to bring in third-party developers if it hopes to succeed.
It looks like the company will stick to principles that will allow developers to freely run their own app stores on the Xbox mobile platform and offer their own payment processors to process in-app purchases. This is an advantage that Apple certainly doesn’t offer.
Microsoft says these same principles will apply to the upcoming Xbox mobile store (which could be enough to lure developers to the platform). One potentially interested company could be Epic Games, which has teamed up with Microsoft over the past few years in a fight against Apple’s policies on the App Store.
In the event of a successful deal with Activision Blizzard, Microsoft will receive 30 in-house game development studios, as well as additional esports development opportunities. In 2020, the tech giant acquired ZeniMax, which owns Bethesda, id Software, Arkane Studios, and others, for $7.5 billion.
Source: The Verge
