Microsoft Battle for Activision Turns on The Future of Gaming

Microsoft acquired Activision Blizzard Inc. for $69B. Antitrust authorities investigating to stop the merger are most likely more worried about the future of gaming in the cloud. This has lately drawn attention to decades-old notions of console-exclusive games played on Xbox and chief rival Sony Group Corp.’s PlayStation.

Cloud gaming is a new concept that is still developing. Most video games are purchased for around $70 each and downloaded onto a console or computer. These include Activision’s Call of Duty and Elden Ring, both developed by FromSoftware Inc. Microsoft, on the other hand, wants to influence the situation. It is one of the most popular cloud computing service providers. Xbox Game Pass is a subscription service providing access to more than 300 titles for $10 per month to players who want to download games on the Xbox or PC. This pass has been the company’s primary focus in terms of gaming. Cloud gaming allows users to stream certain games to any device, even tablets, and smartphones, and is available for a higher subscription tier at $15 per month.

Some analysts and executives believe cloud gaming may eventually make consoles less relevant. Yet, it is still in its infancy regarding technology and content available today. On the other hand, Microsoft has the infrastructure and materials to boost its market share. It hopes that by bringing Activision games like Candy Crush and Call of Duty under it, it will be able to provide additional games to its Game Pass members. Microsoft would gain an early advantage in the cloud by including Activision’s games. According to the FTC and Sony, this would make them all exclusive to their platforms.

FTC Is Concerned Big Tech Will Dominate the Market

Gamers may stream and play graphically intense and technically complex games like Assassin’s Creed Origins and Halo Infinite on smartphones or tablets. It will no longer be necessary to have the computing power or storage to run them. Technology has proved difficult to adopt. The high-quality graphics and ultra-fast data processing with no lag, known as low latency, are the key factors to be developed more.

The FTC is even more worried about Microsoft’s ability to swiftly dominate the market because of the difficulties in gaining traction in cloud gaming. Peter Spencer, head of Microsoft Gaming, has downplayed the importance of consoles in Microsoft’s future. He claims the company loses between $100 and $200 on every Xbox sold. Meanwhile, industry analyst Omdia predicts that cloud gaming will generate $5.1B in 2022 and climb to $12.7B by 2027. That’s around 3% of this year’s gaming revenue, projected to be $172.7B.

The FTC filed a lawsuit against Meta in federal court last week. It claims that the company’s planned purchase of Within Unlimited Inc., a virtual reality firm that develops Supernatural, is illegal. According to the FTC, meta sought to purchase the app to monopolize the nascent virtual reality industry. They find the Microsoft situation to be similar.