According to The Verge, Microsoft will create an Xbox mobile game store. This store will provide games directly to mobile devices, challenging Apple and Google. In a filing with the UK’s Competition and Markets Authority (CMA), Microsoft reveals detail of the plan. The interesting part about the store is that it will be commission free. The CMA is currently investigating Microsoft’s $68.7 billion acquisition of Activision Blizzard. Microsoft claims that it is buying Activision to expand its gaming business.
The company said
“The deal will improve Microsoft’s ability to create a next-generation gaming store. This store will operate on a range of devices, including mobile, with the addition of Activision Blizzard content. Building on Activision Blizzard’s existing player community, Xbox will seek to expand the Xbox Store to mobile devices. It will attract players to the new Xbox mobile platform. However, shifting consumers away from the Google Play Store and Apple’s App Store on mobile devices will require a major shift in consumer behaviour. Microsoft hopes to make gamers more inclined to try new things by offering well-known and popular content”.
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Activision Blizzard has very popular mobile games such as “Call of Duty Mobile” and “Candy Crush Saga” on mobile platforms. Microsoft can use these games to help build a game store. In terms of gaming, this store will compete with Google Play and Apple Store. In addition, Microsoft is heavily promoting its Xbox cloud gaming. It is bringing the service to multiple handheld devices, even Steam Deck.
Microsoft Store will be commission free
Microsoft also said that the acquisition of Activision Blizzard also took a fancy to the powerful monetization capabilities of mobile games, stating:
“The deal gives Microsoft a meaningful presence in mobile gaming. In the first half of 2022, mobile game revenue from King’s division, as well as games like Call of Duty Mobile and ancillary revenue, account for more than half of Activision Blizzard’s revenue…Microsoft currently has no substantial business in mobile gaming. The deal will bring the much-needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to provide Xbox game studios with experience developing and publishing mobile games”.
However, as part of the investigation, the CMA did little to discuss Microsoft’s potential entry into the mobile gaming market. It is focusing primarily on console gaming. Microsoft believes that console games are taking a smaller share of the overall market. In a chart, Microsoft claims the entire gaming market will be worth $165 billion in 2020. However, the console market is worth $33 billion (20%). The PC market is worth $40 billion (24%) while the mobile gaming market is worth $85 billion (51%).
In addition, to attract third-party game developers, Microsoft has committed to a set of principles. The principles allow developers to freely run their own app stores on its Xbox mobile platform. Developers will have their own payment systems to handle in-app purchases. This means that the company will not take commissions like Apple and Google.