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January 19, 2022
2 Min Read
Image by Billy Freeman via Unsplash
It's always hard to make predictions in the video game industry, but it doesn't take prophetic vision to guess that the $68.7 billion purchase of Activision Blizzard will make Microsoft a lot of money.
How much money though, and in what context? Some analysts over at Omdia (full disclosure: Omdia is a sister organization of Game Developer) are betting that without a strategy shift by Sony, this could make Xbox the dominant platform by the end of the decade.
In a statement to Game Developer, analyst Matt Bailey noted that Xbox is currently "third place" in the global console market. However Omdia is forecasting that a combination of Microsoft's developer acquisition strategy and increasing value of its Game Pass subscription service will drive sales of Xbox consoles to overcome PlayStation 5 sales later in this generation's life cycle.
"Crucially, the proposed date of completion for the acquisition will coincide with when more casual gamers will be looking to pick up a new console," he explained. "Making Call of Duty exclusive to Xbox – or even just included as part of Game Pass – could be a major benefit for Xbox when these consumers decide between Xbox Series X|S or PS5."
Omdia analyst George Jijiashvili compared the purchase to Take Two's acquisition of Zynga, noting that the Xbox Games division now has access to a much larger casual audience thanks to King, and a much stronger PC audience thanks to Call of Duty and Blizzard Entertainment.
Jijiashvili added that there is now much more pressure on Sony to respond with an equally bold business move, though whether it's an acquisition or a strengthening of its PS Plus subscription service is yet to be seen.
However Microsoft isn't in a dominant position just yet. Jijiashvili predicted that this merger will attract attention from the Federal Trade Commission, which coincidentally yesterday rolled out new rules on acquisitions and mergers. He added that it's unlikely the FTC will ultimately block the acquisition.
It is worth noting here that Microsoft's purchase of Activision Blizzard is truly a merger of mergers. Activision Blizzard is itself the amalgamized mutation of three video game companies, with a number of other development studios like Raven Software, Vivendi, Toys for Bob, and more already under its massive umbrella.
The business implications of such a merger might not rank as a "monopoly" just yet (especially with such broad competition across platforms, and even on Microsoft's own Windows operating system with Valve), but you don't have to be an analyst to get the sense that this move will exert a lot of gravity on the video game industry in the years ahead.
Hopefully, that gravity will be more positive than negative.
About the Author(s)
Senior Editor, GameDeveloper.com
Bryant Francis is a writer, journalist, and narrative designer based in Boston, MA. He currently writes for Game Developer, a leading B2B publication for the video game industry. His credits include Proxy Studios' upcoming 4X strategy game Zephon and Amplitude Studio's 2017 game Endless Space 2.
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