Microsoft acquires gaming giant for $68.7 billion dollars The battle to become the ‘Netflix of gaming’ has begun
By Morten Suhr Hansen
$68.7 billion dollars. That is the price, when Microsoft takes over one of the worlds absolute giants within online gaming: Activision Blizzard. The company stands behind games such as ‘Call of Duty’, ‘World of Warcraft, ‘Overwatch’, and ‘Candy Crush’. The acquisition of Activision Blizzard is by far the most expensive purchase Microsoft has ever made.
The amount may seem outrageous, but it actually does make sense for Microsoft who, in a press release, describes the foundation for the acquisition (which is still awaiting final confirmation). There are now more than 3 billion people in the world, who play games regularly, and especially in younger generations, games are popular. Gaming is the fastest-growing entertainment category and a business that already makes extensive revenue.
Microsoft is already strongly involved with gaming with their gaming console Xbox. So what is the bigger ‘game plan’ for Microsoft, with this purchase?
The gaming market is moving fast towards subscriptions
By many experts, the acquisition is viewed to be part of Microsoft’s overall business strategy that is less about selling physical products and more about increasing the subscription income. It’s been a long time since Microsoft’s main focus within software changed from traditional licensing to software-as-a-service and the same has happened for Microsoft’s attitude within gaming. Microsoft already runs the subscription service ‘Game Pass’ that gives users access to an enormous catalogue of games across Microsoft and Xbox platforms for a fixed, monthly fee, exactly like we know it from Netflix and Spotify when it comes to movies and music.
Xbox Game Pass was launched in 2017, and for a price of $15 dollars a month, subscribers get access to hundreds of games across multiple platforms like Xbox, PC, and mobile. In connection to the acquisition of Activision Blizzard, Microsoft announced that they now have 25 million paying subscribers on Game Pass.
The addition of Activision Blizzard is also viewed as an important part of Microsoft’s plan to win the market for subscription-based gaming services. Microsoft is betting that the market for games will expand exactly like the market for movies and music did and that the future consumer will be ‘streaming’ games over the internet. Microsofts CEO, Satya Nadella, has openly proclaimed that the goal of Microsoft is to create the ‘Netflix of gaming’.
With the addition of more than 400 million monthly users from Activision Blizzard, hereof many million paying subscribers from closed systems like World of Warcraft, it is safe to say that Microsoft is moving closer to this goal.
The acquisition of Activision Blizzard opens flanks against Sony and Apple
The move from Microsoft can be viewed as a direct punch against Sony who, with their Playstation, is leading on the market for games and gaming consoles. With Playstation, Sony has managed to build a subscription base on Playstation Plus of nearly 50 million subscribers and it is speculated whether Microsoft is going to pull popular games away from other platforms, like Playstation, and make the exclusive to Xbox and Windows-operated computers and mobile devices.
This is also a move against Apple, in the battle between Windows and iOS. Apple is a future player in the gaming market with the establishment of Apple Arcade which is part of a bundle with popular services like Apple Music and iCloud.
To make the playing field even more complete, the online giant Amazon has announced their arrival with Amazon Prime Gaming which, in many countries, is part of the Prime package, which has just rounded 200 million subscribers across the globe.
The competition on being the ’Netflix of gaming’ could come from an unexpected side
So, there is no doubt that the battle to win the market for online gaming and take the position as ‘Netlix of gaming’ is fierce and will stand between giants like Microsoft, Sony, Apple, and Amazon.
But perhaps the most serious competition will come from an unexpected side – Netflix themselves! With 250 million subscribers worldwide and with extensive knowledge of the streaming market, Netflix has all the prerequisites for becoming a serious player on the gaming market and the rumours that Netflix will move into the gaming market in 2022 are persistent. Preparations are undoubtedly being made and in November of last year, Netflix quietly tested the first games in its app, however only for Android users.
The giants are preparing for a war that won’t differ much from the war between ‘The Alliance’ and ‘The Horde’ in ‘World of Warcraft’. Game On!