One of Microsoft’s biggest aspirations in the video game market is getting subscriptions. Its Game Pass platform allows you to play more than 100 titles, on Xbox, on a computer and even on a smartphone (smartphone), for a monthly fee of 10 euros. And the Activision Blizzard studio catalog will be key to nurturing this service.
Microsoft CEO Satya Nadella alluded to this in an email sent to your employees and made public these days: “We will invest and innovate to create the best content, the best community and the best cloud services for gamers. We want to make it easier for people to connect and play great games where they want, when they want, and how they want.”
Part of the motivation for shelling out $68.7 billion for Activision is a hunger for content, which is the engine of subscription services. The developer has franchises with a lot of pull, such as Call of Duty or world of warcraft, and classic sagas like star craft or Devil. But it also has titles aimed at a more children’s or family audience, such as Spyro the Dragon, which could expand the current Game Pass user profile.
In any case, the acquired catalog has titles that serve as a claim. According to the industry analysis firm NPD Group, the two video games that generated the most money in the United States during 2021 belong to the franchise Call Of Duty. Collectively, Activision has around 400 million active players per month. A fishing ground to fish for new subscribers for Game Pass, which already has 25 million.
Although for now Microsoft will not reserve the exclusivity of the new catalog. “Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support these communities,” said Phil Spencer, CEO of Microsoft Gaming and to whom the directors of the acquired company will report after a transition period. In any case, it will be added to the offer that Microsoft already has, which has acquired a string of video game developers in recent years. The most notorious is ZeniMax Media, which owns Bethesda Softworks (Fallout). Since it launched Game Pass in 2017, the tech giant has bought eight companies from gaming. Activision would be the ninth.
Competition with Sony
The eternal competition with Sony is at the heart of the deal. The console war is usually tilted in favor of the Japanese. Last September, 13.4 million PlayStation 5s had been sold, while was estimated In eight million units shipped Xbox Series X and S. The purchase gives Xbox a more advantageous position to compete with its rival.
But the new titles also serve to compete strongly beyond the video game console arena. The Game Pass subscription is available on PC and mobile, an area that will be enhanced by candy crush, also from Activision. Precisely this field is the most lucrative in the sector. Games generated $180.3 billion in 2021, according to Newzoo. 28% comes from consoles, 20% from PC and 52% from mobile video games.
Video game subscription services follow the trend set by other sectors. The indisputable paradigm is the video in streaming, with Netflix in the lead. But music is also increasingly consumed on demand, with Spotify, Apple Music, Amazon Music Unlimited or YouTube Music. Newspapers and online media themselves have resorted to their own subscription models.
In the United States, the average user is subscribed to four video-on-demand platforms. And gamers pay for three, according to a deloitte report April 2021. And beyond that, in the not entirely digital world, subscription businesses also proliferate, from a box with new clothes every month in exchange for a fee to a food menu that is delivered to the user every day, but that it pays monthly. The Subscription Trade Association (SUBTA) esteem that by 2023, 75% of companies that have direct sales models will offer subscription services.
In video games, this type of business model has accelerated in recent years. Now Microsoft has included in its Game Pass Ultimate the possibility of playing from the cloud with any device. This formula allows the game to be run from the company’s data centers and served to users. These only need an ultra-fast, low-latency fiber connection to ensure a good experience. But the company is not the only one that offers this modality.
Other alternatives
Google launched its own platform, Stadia, and so has Amazon, with Luna integrating with its live streaming service Twitch, which is very popular with professional gamers and influencers. Added to these is Nvidia’s proposal, GeForce NOW, which already has over 12 million subscribers. The video game studio Electronic Arts launched EA Play, with the same role, and it’s about about 13 million players (although part of them come from Game Pass, thanks to an agreement between both companies).
Spencer, CEO of Microsoft Gaming, pointed out the importance of the purchase to position the company in this area. “Activision Blizzard’s amazing franchises will also accelerate our cloud gaming plans, enabling more people in more places around the world to participate in the Xbox community using phones, tablets, laptops and other devices they already own.”
Although another of Microsoft’s motivations cannot be ignored, in this case in the long term. “Video games are the most dynamic and exciting category in entertainment on all platforms today, and will play a key role in the development of metaverse platforms,” said Nadella. Although it is a technology that is still in its embryonic phase, the giant has all the ingredients to step strong in this field. It has a solid infrastructure in the cloud, recently announced that it has a virtual world project underway and has a wide range of video games.
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