When a big tech company makes a big strategic decision like Microsoft is about to make, it invokes the metaverse.
The vision for the metaverse, a virtual world where ideas can be exchanged and digital goods can be sold, has become so enthusiastic that Facebook changed its name to Meta last year. Other companies think they will make billions in this virtual bazaar. The rationale sounded familiar when Microsoft said that it would get building blocks for the metaverse.
It wasn't correct. The future of video games looks like a Hollywood studio trying to build a roster of well-known franchises according to Microsoft. It is about assembling a collection of famous games that can be played on all sorts of devices, and the people who know how to make them. Call of Duty and Candy Crush are just two of the famous titles that have been created by the company.
In recent years, Microsoft has shifted its focus from its Xbox console to a gaming environment where high-powered devices matter less than the flexibility to play games wherever and however consumers want, whether on an old iPhone or a cheap laptop. Cloud gaming, a still-emerging technology that uses a company's data centers to stream the game to a device, would provide the power if the company's vision of the future is correct.
Microsoft has pioneered a $10-a-month video game subscription service, rather than by the quality and brand appeal of their hardware, in a world where companies would have to distinguish themselves by their content and their ability to offer cheap games across devices. Sony and Nintendo are mostly following traditional models, but that's not the case with SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA SALVAGEDATA
Microsoft is making sure that millions of players will come under its umbrella by acquiring a new portfolio of studios.
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Microsoft is hoping to draw a new subset of fans, like those involved in competitive gaming leagues, here at an event in 2019.
Microsoft is helped by the fact that players who like shooter games like Call of Duty, those who participate in competitive video gaming leagues devoted to games like Overwatch and Hearthstone, and the massive audience of mobile gaming are all in Asia.
King, a mobile game maker, recorded $1 billion in operating profit in the last year, and Microsoft does not have a robust mobile gaming offering. Candy Crush, the matching phone game with vibrant colors and loud sound effects, has generated $7.1 billion in player spending since it was released in 2014, according to the mobile research firm SensorTower.
The appeal of Xbox Game Pass has forced the gaming industry to rethink how it can make money. Game Pass subscribers pay a flat fee of $10 or$15 per month in exchange for access to hundreds of titles, which will now include some of Activision's biggest games.
The Game Pass milestone of 25 million subscribers was included in the announcement of the Microsoft purchase.
Microsoft is making a bet. It wants people to use newer, often-buggy tools to stream games directly to older devices, rather than stick with the tried-and-true system and buy a sleek new PS5 from Sony. Apple does not allow gaming services on its phones. It doesn't hurt to have the appeal of the studios to offer as a reward for sticking with games played through Microsoft.
Michael Pachter, a gaming analyst with Wedbush Securities, said that asking how Call of Duty fits into Microsoft's vision is like asking "how does Friends fit into Netflix." Without content to stream, it wouldn't exist.
It's more important that the content is exclusive. The Last of Us and Spider-Man are only available on the PS3. If Microsoft wants, it could require people to subscribe to Game Pass or be a part of the Xbox community for access to the latest Call of Duty.
For kids and casual players, that is huge, according to the streamer who streams Call of Duty: Warzone to 63,000 followers on the streaming service.
Microsoft wants to break down barriers with its vision of a device-agnostic future. Phil Spencer, Microsoft's chief executive of gaming, said in an interview Tuesday that the company's goal was to allow the new titles to reach as many players as possible.
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Phil Spencer, Microsoft's chief executive of gaming, said the company wanted to broaden its reach to gaming.
Mr. Pachter said that the appeal of Sony hardware could be lessened by such a move.
Would you buy a PS5 for your kid if they only played Call of Duty this weekend? I wouldn't.
Sony is a smaller company with less cash to spend, so the additions could put pressure on them to make a similar move.
The independent game developer said that he wasn't sure if Sony had the chance to respond.
Mr. Pachter suggested that federal regulators might seek assurances from Microsoft that they would allow non-Xbox players to continue enjoying the games.
Other concerns will be faced by Microsoft. A lawsuit brought by a California employment agency last summer has led to accusations of sexual harassment and discrimination in the workplace. Workers walked out on the job and called for a union.
Even as it looks to distance itself from Sony, Microsoft's acquisition could strengthen its position relative to other tech giants with deep pockets, that have signaled their intentions to invest more in the lucrative gaming business.
The New York University professor who studies the business of video games said buying the company was a way to make it harder for others to get it.
He said that they raised the bar regarding the cost of acquisition. Bring your wallet if you want to be at the table.
It is not clear how owning more shooter, role-playing and strategy video games helps Microsoft get to the metaverse. Mr. Spencer and Bobby Kotick offered a more sober explanation in their interviews.
Mr. Kotick said the goal was to make sure that the games people play on their phones, consoles, computers, and other screens are the best they can be.
It is possible that gaming will end up being popular in the metaverse. Daniel Ahmad, a senior analyst at the gaming research firm, said that Call of Duty was constantly updated with new content and interacted with the community of players. He said that it could be a piece of the puzzle for building out the metaverse experiences.
Such ideas are far away.
Karen Weise contributed reporting.
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