Microsoft is building a mobile store that will compete with Apple and others. In filings with the UK's Competition and Markets Authority, the software giant revealed details of its plans for a "Next- Generation" store.
Microsoft has been asked to give context for the $68.7 billion acquisition by the CMA. Microsoft says it wants to build out its mobile gaming presence. Plans for this space include the creation of an XBOX mobile gaming platform. Here's what the company has to say.
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 popular mobile games that Microsoft could use to build a game store that would compete with the App Store. It is hard to imagine Microsoft competing against Apple on the iPhone. That doesn't stop it from imagining an XBOX mobile app store.
Microsoft 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 supported cloud gaming on Valve's steam deck, followed by a partnership with Logitech and Razer for their handhelds. There could be a push into mobile gaming on more than one front.
There is a lot of money at stake here. Some of the most popular downloads on mobile are games. Microsoft would like a piece of that pie. The opportunity is described by the company.
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.
The potential for Microsoft's entry into mobile gaming as part of its investigation has barely been discussed and is instead focused on console gaming which Microsoft argues is an increasingly smaller part of the overall market. The entire gaming market will be worth $165 billion in 2020, with consoles accounting for 20 percent, PCs for 24 percent, and mobile for 51 percent.
Microsoft will need to woo third-party developers if it wants to make inroads into the app store market.
The company seems to be laying the groundwork here by committing to a set of principles that would allow developers to run their own app stores on its Xbox mobile platform and offer their own payment systems. That isn't a benefit Apple offers. Microsoft said earlier this year that it is committed to closing the gap on the remaining principles over time.
The same principles will apply to the future Xbox mobile store, which could make it easier for developers to join the platform. One company that might be particularly interested is Epic Games, which has allied itself with Microsoft in the fight against Apple's App Store policies.
Tim Sweeney welcomed Microsoft's first hints at an open app store model in 2019! It's been argued that Apple should allow third-party payment systems in its App Store.
Microsoft put up a lot of pressure on Apple with changes to the Windows store days before the trial began.
The legal argument didn't win for the company. The game was brought to Microsoft's cloud gaming service after it was revealed that the game was blocked from the PC because it was competitive with the PC offerings.
It is possible that this partnership will help persuade Epic to join Microsoft's mobile gaming plans. It would be a good start to take on Apple and Google by having Call of Duty: Mobile on the Microsoft XBOX store.
The control of Call of Duty on both consoles and mobile could be a problem for Microsoft. The success of the Xbox Game Pass has led Microsoft to want to bring games from Activision to the service. Regulators are trying to figure out how this will affect competition.
Microsoft and Sony have been fighting over Call of Duty, and the Xbox Game Pass is at the center of it. Microsoft says that it wouldn't make sense to take Call of Duty away from the PS4. There is a real conflict happening behind closed doors that has spilled out into a public war of words.
Microsoft says it would put revenue at risk if it pulled Call of Duty from Sony's consoles. Microsoft is counting on the revenue from the distribution of games on the Sony PS.
Sony could lose out on serious revenue if Microsoft offers Call of Duty on the Game Pass. In the past, Microsoft has claimed that Sony is paying to keep some games off of the Game Pass. There are restrictions on the ability of Call of Duty titles to be placed on Game Pass for a long time according to Microsoft.
Regulators have to untangle the arguments between Sony and Microsoft and figure out how this deal will hurt consumers or competition. There is a chance we have months of battles ahead, as well as the chance to gain rare insights, as with these mobile plans, into the secret ambitions of the gaming industry.