Microsoft plans to create its own Xbox mobile game store, a competitor to Google Play and the App Store
Microsoft hinted at creating a ‘next-generation games store’ as early as 2022, and has now quietly revealed details of its plans in documents filed with the UK’s Competition and Markets Authority (CMA) as part of its merger deal with Activision Blizzard.
In the filing, Microsoft says its main motivation for buying Activision Blizzard is to help expand its presence in mobile gaming. Her plans for the space likely include an Xbox mobile gaming platform and store. Here is what the company says in the documents:
“The deal will expand Microsoft’s ability to create a next-generation game store that will work across devices, including mobile, with the addition of Activision Blizzard content. Building on Activision Blizzard’s existing gamer communities, Xbox will aim to scale the Xbox Store for mobile devices by bringing gamers to the new mobile platform. However, the exodus of consumers from the Google Play Store and the App Store on mobile devices will require a major shift in consumer behavior. Microsoft hopes that by receiving well-known and popular content, gamers will be inclined to try something new.’
Call of Duty: Mobile and Candy Crush Saga are two extremely popular mobile games released by Activision and King respectively, and Microsoft can use them to build a game store that can compete with Google Play and the App Store. Given Apple’s policy of blocking third-party app stores on iOS, it’s hard to imagine Microsoft getting any attention from iPhone users anytime soon. But that clearly doesn’t stop the company from introducing its Xbox mobile app store.
Microsoft’s admissions about promoting mobile gaming come as the company increasingly positions Xbox Cloud Gaming as an option for mobile gaming on new handheld devices. Microsoft quickly added Xbox Cloud Gaming support to Valve’s Steam Deck, followed by partnerships with Logitech and Razer for their cloud gaming-focused handhelds. This means that the promotion of mobile games can be implemented in several directions, and not only on phones and tablets.
Besides the hardware, there’s also a lot of revenue at stake. Games are among the most popular downloads on mobile devices and drive purchases in app stores. Microsoft takes this into account and describes the possibility here:
‘The deal gives Microsoft a significant presence in the mobile gaming market. Mobile gaming revenue from the King division and titles such as Call of Duty: Mobile, as well as ancillary revenue, accounted for more than half of Activision Blizzard’s revenue in the first half of 2022. Mobile customers account for about three quarters of its MAUs (Monthly Active Users). Microsoft currently does not have a significant presence in the mobile gaming space, and the deal will bring much-needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to share its expertise in developing and publishing mobile games with Xbox Game Studios.’
However, the CMA barely discussed Microsoft’s potential entry into mobile gaming as part of its investigation, and instead mostly focused on console games (which Microsoft says make up an increasingly smaller portion of the overall market). In a graphic posted on Microsoft’s Activision Blizzard acquisition site, the company shows that the entire gaming market is valued at $165 billion in 2020, with consoles accounting for $33 billion (20%), PCs accounting for $40 billion (24%), and mobile games – 85 billion dollars (51%).
However, creating a successful competitor to Google Play or the App Store is a difficult task, and Microsoft will have to bring in third-party developers if it hopes to succeed.
It appears that the company will adhere to principles that will allow developers to freely run their own app stores on the Xbox mobile platform and offer their payment systems to handle in-app purchases. This is an advantage that Apple certainly does not offer.
Microsoft says the same principles will apply to the upcoming Xbox mobile store (which may be enough to lure developers to the platform). One potentially interested company could be Epic Games, which has teamed up with Microsoft in the past few years to challenge Apple’s App Store policies.
If the deal with Activision Blizzard is successful, Microsoft will receive 30 in-house game development studios and additional eSports development capabilities. In 2020, the tech giant acquired for $7.5 billion. the ZeniMax company, which includes game studios Bethesda, id Software, Arkane Studios, etc.
