For decades, the gaming industry has been dominated by video game companies such as EA Games and Sony while “Big Tech” has stayed clear of the industry. That, however, came to an end in 2022 with Microsoft’s $68.7bn acquisition of Activision Blizzard. This is the first time one of the tech giants has shown an interest in traditional gaming. For those not in the know, Activision Blizzard is the company behind the wildly successful Call of Duty series, as well as Guitar Hero, Tony Hawk’s Pro Skater and wait for it – Candy Crush. So, what has led to this momentous moment as Big Tech and gaming collide? Let’s take a closer look…
The Perfect Storm
The gaming audience and market is bigger than ever before, so discerning companies realize it’s a smart business decision to capitalize on this. Take a look at the online casino sector as an example. Studies have shown over 26% of the world’s population gambles. Do the math and that equates to almost 2.8 billion people making use of online casinos. If you think about it, the best US sweepstakes casino offers, on average require an initial deposit to unlock a welcome bonus, you’re looking at billions in revenue from that alone!
Beyond online casinos, over 3 billion people play games on PC, PlayStation and in the cloud. When Big Tech runs those numbers, it’s just too much of a money generator to continue turning a blind eye to the gaming industry.
There is also another more simplistic motivation for a tech giant like Microsoft showing interest in gaming. They have been engaged in a “battle of the consoles” with Sony for almost 20 years now, with PlayStation sales far outweighing Microsoft’s Xbox. By stepping in to acquire a company such as Activision Blizzard, who’s most popular games are console-based, they have a glowing opportunity to corner the market with Xbox exclusive game titles and ramp up sales for their own consoles.
Stepping Stone to the Metaverse
Google, Meta (formerly Facebook) and Microsoft have been discussing the development of a “metaverse” for a few years now, which they see as the next iteration of the internet. They envision it to be an immersive and virtual world where people can connect and interact while gathering information. Gaming also happens to be the fastest-growing entertainment medium, surpassing movies and TV. So, it makes sense that video games will be the ideal stepping stone towards building this virtual world.
Microsoft’s Vision For the Future of Gaming
The CEO of Microsoft Gaming, Phil Spencer, has reiterated their intentions to work closely with Activision Blizzard’s development team to bring these well-loved games onto virtual platforms that will enable gamers around the world to play their favorite games anytime, anywhere. By leveraging Microsoft’s access to advanced technologies and top talent, they can catapult their games into the future.
Mobile gaming is the fastest-growing space in the sector with 95% of gamers playing games on their mobile phones. While the company has already been something of a trailblazer in this sector with their smash-hit Candy Crush, their vision is to bring a variety of PC and console only games to mobile. Imagine being able to play Halo or Warcraft on your phone in a world just as immersive as in its original form. Their vision is to make gaming more inclusive and accessible by bringing these titles to gamers in emerging markets who may only have access to games via mobile.
Microsoft already has a gaming portal called Game Pass which currently boasts over 25 million subscribers. Activision Blizzard’s games are planned to be released through this portal, which could attract more of the 400 million-odd monthly active players the company already possesses to Game Pass.
Challenges for Big Tech
Despite the power and pull a billion-dollar company such as Microsoft has in the tech world, their movements into the gaming industry are not met without resistance. Microsoft’s acquisition has officially been blocked by the UK Competition and Markets Authority while the US Federal Trade Commission has also expressed its intention to block the deal. Whether the deal is given the green light in the countries in which they wish to operate in remains to be seen.
Conclusion
Microsoft has made the first move to bring Big Tech to the gaming industry by once again establishing itself as a force to be reckoned with. Of course, it remains to be seen whether the acquisition was motivated by a desire to overshadow Sony’s PlayStation market capitalization or whether it was a smart move in response to the gaming industry’s fast-growing market share within the entertainment industry. While Google and Facebook have expressed their desire to follow suit, we’re yet to see a truly successful fusion of Big Tech and gaming. So, we’ll have to watch this space to see what develops in the years to come.
