As Microsoft’s pending $68.7 billion-dollar acquisition of Activision Blizzard continues to undergo investigation in the UK, new filings reveal Microsoft’s plans for a next-generation app store that will let it break into the $85 billion mobile gaming market.
Microsoft is currently in the middle of a Phase 2 investigation from the UK’s Competition and Markets Authority, as announced in early September, over concerns regarding Activision Blizzard’s prominence in the international video game industry.
As reported by The Verge earlier this month in its Phase 2 submission Microsoft outlined several benefits from Activision Blizzard. This included the reveal that it plans to build a “new Xbox Mobile Platform” with the “Open App Store Principles” it announced in February.
That “Xbox Store” will then use “well-known and popular content” to draw people into its standalone Xbox Store and away from competitors such as Apple and Google.
That “popular content” would include Activision Blizzard’s multiple popular mobile titles, primarily Candy Crush Saga (CCS), which is noted elsewhere in the same submission as one of Activision Blizzard’s three main franchises, alongside Duty Call World of Warcraft. They are the best. CCS, CoD, WoW are said to make up over three-quarters of Activision Blizzard’s net revenue.
The launch of the website in 2012 was a success. CCS It has been consistently one of the top-grossing games in mobile gaming, with $1.2 Billion in revenues in 2021. Activision Blizzard purchased King (a Maltese mobile development company) in 2016.
It is somewhat of an omission in several ways. For one thing, much of the conversation around the acquisition has been focused on Activision Blizzard’s PC and console titles, particularly with regard to issues of Call of Duty’s console exclusivity.
CoD had been a major point of contention in the CMA’s first round of investigation, particularly Microsoft’s highly-lampooned argument that CoD — a series with annual releases that are typically every year’s No. 1 best-seller across PC and console — is not an irreplaceable, “must-have” game.1
The disclosure of an upcoming “Xbox Store” changes the math considerably, however. Mobile gaming is much less known than console and PC games, yet it makes up about half of all the games market. Forecasters predict that mobile gaming will account for more than half the sector’s revenue in 2022.2
Microsoft claims that 51% (at $85 billion) of games are played on mobile devices. Analysts will put it much lower. The widespread use of smartphones by developing countries as well as stories that have made multi-billions in revenue like “The Game Changer”, are the main drivers behind this figure. Pokemon Go or TiMi Studio Group’s Honor of Kings.
One of Microsoft’s big marketing phrases in the last couple of years has been “play anywhere,” as embodied by initiatives such as Xbox Cloud Gaming. The company’s ninth-generation gaming strategy has been less about traditional strategies like console exclusivity and, as Nintendo did with the Wii in the 2000s, doing more to reach out to an audience that wouldn’t typically buy a console.
Against that backdrop, it’d be more surprising if there wasn’t some kind of Xbox mobile plan in the works. It is however a bold move to invest in an app store that’s competitive. This paints Activision Blizzard in a different light.
It was already a big deal when it “just” looked like Microsoft would own the single biggest action franchise in the games industry, but now, it also seems to be planning to disrupt mobile gaming.
1: Microsoft’s argument is understandable on some levels. It’s not like there aren’t enough military-themed shooters. That said, CoD’s market dominance didn’t just happen because of institutional momentum; many of the games are genuinely popular and influential. It’s like if Disney were to argue that Star Wars just isn’t a big deal because other space operas exist.
2: There’s a lot of ink that you could stablet over that mismatch–mobile’s relative lack of press coverage vs. its actual market share–but the easiest explanation is that much of mobile is devoted to what’s typically called “casual” play. It’s a few hundred million people playing puzzle games on their phone while they’re waiting for their bus, many of whom will never spend a dime on it. It doesn’t inspire the kind of die-hard hobbyist market that justifies a dedicated press environment.