Microsoft’s Acquisition of Activision Blizzard: What Does It Mean for the Future of the Video Games Business?
The news of Microsoft winning over the UK regulator and being able to proceed with its acquisition of Activision Blizzard was certainly a relief. The process, which initially seemed interesting and even a bit fun, quickly turned unsavoury once PlayStation expressed objections and regulators raised serious concerns about the deal’s impact on the video games industry. However, this chapter of the story is finally over, with both the EU and the UK regulator, the CMA, imposing strong concessions on Microsoft regarding streaming.
The Dominance of PlayStation in the Console Space
Despite the concerns raised, it is clear that PlayStation, along with Nintendo, continues to hold the dominant position in the console market. This can be seen in the latest sales charts, which show PS5 maintaining its lead over Xbox. Microsoft’s release slate has struggled to compete with its rivals, including Nintendo. While the recent release of Starfield led to improved sales and engaged players, early console figures indicate that PlayStation still held the upper hand in many territories during September.
Creating Competition in Console Hardware and the Shooter Genre
The deal will create more competition, not just in console hardware, but within the shooter genre, too.
Looking beyond the immediate impact on console sales, the deal between Microsoft and Activision Blizzard could actually result in more competition, not only in console hardware but also within the shooter genre. Most of Activision Blizzard’s major games are centered around the PC platform, with titles like Warcraft, Diablo, and Candy Crush. While Call of Duty remains a significant console title, there is a ten-year window for Microsoft to build a competitor if it decides to stop making the game for Sony’s consoles when the deal ends in 2033/2034. This presents an opportunity for other companies to team up with PlayStation and its large audience to challenge Call of Duty’s market share.
Addressing Concerns about Streaming and Subscriptions
The main concerns raised by regulators revolved around the potential impact on the future of streaming and subscriptions within the video games industry. Microsoft’s concessions, including giving away its streaming rights and enabling other streaming partners, ultimately convinced regulators that the deal was safe. While the long-term impact remains to be seen, it is clear that the EU and UK regulators were cautious about approving a deal that could prove to be anti-competitive down the line.
The Real Work Begins: Integration and Mobile Strategy
Now that the deal is finalized, the focus shifts to the integration of the two businesses and how they can grow and transform the video games industry. Microsoft has a track record of adopting a “limited integration strategy” when it comes to acquisitions, allowing the acquired companies to continue operating independently. However, with Activision Blizzard becoming the third games publishing organization alongside Xbox and Bethesda, some level of integration may be necessary in this competitive market.
In terms of mobile, Microsoft sees this acquisition as a major play in the mobile gaming space. While it now possesses strong mobile products like Candy Crush and Call of Duty, competing with the likes of the App Store and Google Play may require further steps. The next stage in Microsoft’s mobile push remains a question mark.
The Role of Blizzard and the Future of PC Games and Game Pass
Blizzard, known for its successful PC game development, raises questions about its role within Microsoft’s fast-growing PC games business, including Game Pass. As for Game Pass itself, the expected impact of titles like Call of Duty on the subscription service is yet to be determined. The rise of subscriptions over traditional game sales could have far-reaching effects on the industry, particularly for independent creators.
Additionally, Microsoft’s decision to sell off the streaming rights to the Activision Blizzard library raises interesting questions about the future of game streaming itself. Is this model not as promising as initially believed?
Looking Ahead: Unanswered Questions and the Future of the Video Games Business
With the acquisition saga finally concluded, the focus now turns to analyzing and discussing the multitude of unanswered questions and concerns raised by this deal. The impact on the future of the video games industry is yet to be fully understood. The coming years will reveal whether this acquisition truly brings about the positive competition regulators hoped for or if it presents unforeseen challenges.
Sign up for the GI Daily here to get the biggest news straight to your inbox