The XBox Thread - Page 214

Microsoft is building an Xbox mobile store to directly offer games on mobile devices, challenging Apple and Google. The software giant first hinted at a “next-generation” store it would “build for games” earlier this year but has now quietly revealed details of the plans in filings with the UK’s Competition and Markets Authority (CMA).

The CMA is currently investigating the $68.7 billion Activision Blizzard acquisition and has asked Microsoft for context. In its filings, Microsoft says a big motivation for the purchase is to help build out its mobile gaming presence. Its plans for this space apparently include creating an Xbox mobile gaming platform and store. Here’s what the company says in the filings:

The transaction will improve Microsoft’s ability to create a next generation game store which operates across a range of devices, including mobile as a result of the addition of Activision Blizzard’s content. Building on Activision Blizzard’s existing communities of gamers, Xbox will seek to scale the Xbox Store to mobile, attracting gamers to a new Xbox Mobile Platform. Shifting consumers away from the Google Play Store and App Store on mobile devices will, however, require a major shift in consumer behavior. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new.

Call of Duty: Mobile and Candy Crush Saga are two hugely popular mobile games published by Activision and King, respectively, and Microsoft could leverage these titles to help build out a game store to rival Google Play and the App Store. Given Apple’s policies blocking third-party app stores on iOS, it’s difficult to imagine Microsoft competing on iPhones anytime soon. But that’s clearly not stopping it from envisioning an Xbox mobile app store.

Microsoft’s acknowledgment of a mobile gaming push comes as the company increasingly positions Xbox Cloud Gaming as an option for mobile gaming on emerging handhelds. Microsoft was quick to support Xbox Cloud Gaming on Valve’s Steam Deck, followed by a partnership with Logitech and Razer for their cloud gaming-focused handhelds. That means a push into mobile gaming could happen on multiple fronts — not just on phones and tablets.

Beyond hardware, there’s a lot of revenue at stake here, too. Games are some of the most popular downloads on mobile and drive in-app purchases on app stores. Microsoft clearly wants a piece of that pie. Look at how the company describes the opportunity:

The transaction gives Microsoft a meaningful presence in mobile gaming. Mobile gaming revenues from the King division and titles such as Call of Duty: Mobile, as well as ancillary revenue, represented more than half of Activision Blizzard’s ... revenues in the first half of 2022. Mobile customers account for around three-quarters of its MAU. Microsoft currently has no meaningful presence in mobile gaming and the Transaction will bring much needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to contribute its learnings from developing and publishing mobile games to Xbox gaming studios.

However, the CMA has barely discussed the potential for Microsoft’s entrance into mobile gaming as part of its investigation and is instead largely focusing on console gaming, which Microsoft argues is an increasingly smaller part of the overall market. In a graph posted at Microsoft’s Activision Blizzard acquisition site, the company depicts the entire gaming market as worth $165 billion in 2020, with consoles making up $33 billion (20 percent), PCs at $40 billion (24 percent), and mobile gaming at $85 billion (51 percent).



Building a successful rival to the Google Play Store or App Store would be a huge challenge, though, and Microsoft will need to woo third-party developers if it hopes to make inroads.

The company seems to be laying the groundwork here by committing to a set of principles that would allow developers to freely run their own app stores on its Xbox mobile platform and offer their own payment systems to process in-app purchases. That’s a benefit Apple certainly doesn’t offer. (These commitments don’t fully extend to Xbox consoles yet, but Microsoft said earlier this year it’s “committed to closing the gap on the remaining principles over time.”)

Microsoft says these same principles will also apply to the future Xbox mobile store, which could be enough to lure developers onto the platform. One company that might be particularly interested is Epic Games, which has allied itself with Microsoft in the past few years in the fight against Apple’s App Store policies.

Game Pass subscription targets fell short of Microsoft company goals, according to a new financial filing from the tech giant. According to a report from Axios, Microsoft targeted a 73% gross rate for Game Pass for last fiscal year, which ended June 30, 2022. The service grew instead by 28%.

These goals are tied to Microsoft CEO Satya Nadella's pay. The company also failed to reach a similar marker in the 2021 fiscal year. However, in the 2020 fiscal year, Game Pass subscriptions exceeded expectations. Other goals that would affect the CEO's salary include Microsoft Cloud revenue, Teams usage, and LinkedIn sessions. Overall, Nadella received a $55 million payout in stocks and cash.

At the Wall Street Journal Tech Life Event, Microsoft Gaming CEO Phil Spencer said that Game Pass is profitable and that PC sign ups are seeing tremendous growth, although console sign ups are slowing down. He also alluded to possible price hikes after the holiday season. Xbox Game Pass currently costs $9.99 a month for either PC or Console. Game Pass Ultimate, at $14.99 a month, is a bundle that includes both PC and Console game pass, as well as Xbox Live Gold. Microsoft does not release any sales data concerning Game Pass. However, it did announce in January 2022 that the service had reached 25 million subscriptions.

Game Pass's market power has been a key part of Sony's objections to Microsoft's ongoing acquisition of Activision Blizzard. The UK's Competitions and Markets Authority echoed Sony's concerns, leading to a counter-statement from Microsoft. Last week, an anonymous stockholder sold a massive amount of Activision Blizzard shares, reflecting a possible lack of confidence that the deal would go through.