Microsoft, Activision-Billard: The future of the gaming industry
The highest-grossing film this year is “Top Gun: Mayberick”. Within the first month of its release, the film raked in $100 million from the market. On the other hand, the biggest game ‘Call of Duty: Modern Warfare II’ only took 10 days to withdraw the same amount of money from the market. The reach of video games has increased due to the Corona pandemic. In 2020, its activity increased by almost a quarter. The global gaming industry could be worth more than $170 billion this year, five times global box office revenue.
Meanwhile, as the gaming industry has gradually flourished, regulators’ attention has also increased. In January, Microsoft agreed to buy gaming company Action-Billiard for $69 billion, the biggest deal in Microsoft and gaming industry history. Regulators in at least 16 regions have since launched investigations into the agreements between them. Over the past two months, the UK competition authority and the European Commission have been looking into this issue. The United States Federal Trade Commission will also make a quick decision on this. The implementation of the agreement depends on these regulatory bodies.
According to data firm Media Research, Trustbusters’ immediate concern is the console market or the games market. Sony and Nintendo have been at the peak of the “console wars” for two decades. However, supply chain issues hampered sales of Sony’s latest PlayStation.
Currently, Sony is concerned that gamers will abandon PlayStation if Microsoft makes “Call of Duty” exclusive to Xbox.
Sony’s complaint seems a bit rich. None of the console players are in a position to promote exclusivity, says George Dziziashvili of research firm Omdia. Additionally, Sony kept PlayStation games “Uncharted” and “God of War” off of Xbox. So if Microsoft puts Call of Duty on PlayStation, it can make hundreds of millions of dollars a year from there.
Several equations are changing the game market. Microsoft is working on the weaknesses of its current position. Although the company is not well positioned in the gaming market, whether on desktop or mobile, it is doing well in emerging markets. For example, cloud-based games and game subscriptions. Microsoft holds 41% of the subscription gaming market. Sony has 30% and Nintendo 10%.
Microsoft also has a significant contribution to the Game Pass service. Game Pass would be even more interesting if Call of Duty was added to their library.
The age of subscription and cloud gaming could add new dimensions to competition. Microsoft may be in an advantageous position in this regard. But the rivals also have room to improve. However, it is unclear when such a change could take place in full swing. Subscription games are growing rapidly. But in this case, there may be a cost of 10% in five years. Moreover, cloud gaming has not yet become popular.
Google will shut down its Stadia in January due to poor response. Meanwhile, Amazon’s Luna service has yet to launch. Microsoft is best placed when it comes to cloud gaming. But even then, cloud streaming services contribute less than one percent to gaming spending.
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