Alejandro Arrieche
Microsoft is reportedly working on developing its own digital store for mobile games according to disclosures made by the firm to justify the acquisition of Activision Blizzard to regulators in the United Kingdom.
The software company founded by Bill Gates first hinted at its intentions back in February this year when it revealed a series of principles that would regulate the activities of the Microsoft Store on Windows and “the next generation marketplaces we will build for games”.
Meanwhile, the company reassured its intentions in a response sent to the Competition and Markets Authority (CMA) of the UK in regards to the acquisition of the company that develops popular titles such as Call of Duty and World of Warcraft.
“Building on Activision Blizzard’s existing communities of gamers, Xbox will seek to scale the Xbox Store to mobile, attracting gamers to a new Xbox Mobile Platform”, Microsoft stated.
Moreover, the firm could be aiming to compete with the strong duopoly of Apple (AAPL) and Alphabet (GOOG) in the mobile app space with this store as reflected by further statements made to the CMA.
“Shifting consumers away from the Google Play Store and App Store on mobile devices will, however, require a major shift in consumer behavior. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new”, the company commented in its first response to the agency’s inquiries.
Microsoft Will Have a Hard Time Fighting the Titans of the Mobile Space
Achieving this goal may not be easy for the Redmond-based tech company as iOS – the operating system of Apple’s iPhones – does not permit the inclusion of third-party marketplaces that allow users to download apps.
Therefore, the firm may have to rely on Android phones only initially to distribute only games via the Xbox Store and could partner with phone manufacturers to pre-install the software on their devices.
Microsoft may be seeking to compete by offering better terms to developers such as not prioritizing their apps over those of third parties and allowing game companies to use any payment platform they would like to process in-app purchases.
For many years, mobile game developers have complained about the hefty fees charged by existing mobile marketplaces such as the Apple App Store, which currently stand at 30% of the revenues collected.
In October 2021, Google decided to slash its commission from 30% to 15% for recurring subscriptions during its first year. In addition, the company announced that it will be implementing a reduced fee of 10% for streaming apps and e-books.
Apple was the first of the two to reduce the commission it charges from 30% to 15% but only for a selected group of apps such as newly launched programs and those making less than $1 million per year.
Mobile Game Market Could Be Worth $200B Five Years from Now
The market for mobile games has been growing rapidly since the pandemic and it is projected to be worth around $221 billion by 2027 according to data from Statista. Several firms including Netflix (NFLX) have been stepping into this space by introducing popular titles to their large platforms.
Thus far, the Los Gatos-based streaming platform has included 30 different games on its platforms and is not charging an additional fee to users for accessing the titles. In addition, the firm built an in-house studio in Finland to produce original games for its most popular series and movies.
The large size of this particular segment of the gaming industry will probably keep attracting large tech corporations to the space. Some other companies that could soon step into this realm or expand their offering of mobile titles include Samsung, Disney, Sony, and Nintendo.
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This article was written for Business 2 Community by Alejandro Arrieche.
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