Microsoft may end up controlling a shocking amount of the most popular, beloved video game franchises in modern media if its $69 billion bid to buy Activision Blizzard passes regulatory scrutiny. If the deal is completed, however, Microsoft’s strategy to boost its Xbox ecosystem may be less ambitious than previously planned.
Over the course of the last few weeks, Microsoft has made a series of concessions regarding publishing rights, in an effort to appease regulatory concerns over the potential knock-on effects of the deal.
European Union regulators approved the deal on Monday, saying that licensing commitments made by Microsoft helped ease anti-competitive concerns.
The EU will require Microsoft to automatically license “popular” Activision Blizzard games to competing cloud services. Activision’s big console and PC titles have received most of the attention in this deal, particularly the perennial bestseller Call of Duty franchise. But Activision Blizzard also includes Candy Crush maker King in its portfolio (technically, the company’s full name is Activision Blizzard King, though it’s often omitted).
In October, Microsoft submitted a document to the UK’s Competition and Markets Authority (which recently rejected the deal), establishing that it intended to use Activision Blizzard King’s IP to create a beachhead for itself in the mobile gaming space.
Candy Crush is big business, with 138 million new installs across mobile platforms in 2022. It’s frequently overlooked by press and enthusiasts, but the mobile gaming market is a little bigger than the PC and console markets put together. Candy Crush isn’t the single most popular mobile game in the world, but it’s consistently in the top 10 and has been for years.
It is unlikely that Microsoft was going to leverage its control of Candy Crush to make it exclusive to its theoretical mobile “Xbox Store.” Microsoft has a couple of other big games that it’s never bothered to use in that way, most notably Minecraft, and Xbox executives have said repeatedly that the company views platform exclusivity as a good way to limit its audience.
The EU’s “concession” here is likely a simple enforcement of something Microsoft was likely to do anyway, in much the same way that Microsoft has never pulled Minecraft off of rival consoles. There wasn’t much of a risk that Microsoft wouldn’t keep pushing Candy Crush to every platform that could handle it, at least under its current strategy and management.
Through that lens, the EU has simply required Microsoft to stick to its stated road map and continue to develop the Xbox as a sort of system-agnostic virtual platform. That also requires Microsoft to not limit any future Activision Blizzard releases to the Xbox and PC, as it’s done with the forthcoming Starfield from Bethesda Softworks.
That in turn, however, does put Microsoft in an odd position. Part of the rationale behind acquisitions like Activision Blizzard, one imagines, was to bolster Microsoft’s Xbox arm. Now it’s looking more like Microsoft is being forced further into a new position, that of an independent game publisher.
It clearly wants to develop the Xbox as a gaming ecosystem in its own right, where you can use Microsoft’s cloud servers and subscription services to play console-quality, high-end games on any device. In this scenario, the only reason to get a physical Xbox is if you want one, or if you simply want physical media, because otherwise you can get most of what you’d want out of an Xbox off your smartphone or tablet.
Between Microsoft’s own policies and regulatory concessions, however, you increasingly don’t need any engagement with the Xbox ecosystem to play Xbox games, especially on PC. All its recent exclusives are available on competing platforms such as Steam, and now it’s made multiple concessions over the course of this acquisition about bringing Activision Blizzard products to other platforms like the Nintendo Switch.
Video game consoles have traditionally lived or died on their exclusives, and once again, the Xbox doesn’t have any to speak of. There are no games that require you to own an Xbox, physical or virtual, to play them.
If Microsoft owns Call of Duty, but effectively can’t do anything with it that specifically benefits any version of the Xbox platform, that’s an entirely profitable enterprise, but it may come at the expense of the Xbox itself.