Yahoo Finance Why Xbox – and Activision Blizzard – are vital to Microsoft: Microsoft Gaming CEO
Microsoft-owned (MSFT) Xbox was looking strong at its Games Showcase on Sunday.
The major gaming titles Xbox emphasized, set to come out this year and next, included “Star Wars: Outlaws,” “Fable,” “Forza Motorsport,” “Fallout 76,” “Persona 3,” and “Starfield.” The company also announced a new console, the Xbox Series S, with 1TB of storage.
Gaming is a key element of Microsoft's long-term plans. The company is in the midst of attempting to acquire Activision Blizzard (ATVI) for an astonishing $69 billion. The mega-deal even includes Candy Crush-maker King, which Activision acquired for $5.9 billion back in 2016.
However, it's a deal the companies have struggled to close as a result of regulatory hurdles in the US and UK. Microsoft CEO Satya Nadella, however, has stayed the course.
The company is currently appealing the UK's Competition and Markets Authority's decision to block the deal and fighting the Federal Trade Commission's lawsuit against the tie-up. The US in particular is incredibly important to Microsoft. The country is an enormous gaming hub and is expected to generate $92.27 billion of the industry's $396.2 billion in global revenue this year.
On Sunday, Microsoft Gaming CEO Phil Spencer spoke about the depth of Xbox and Microsoft's commitment to getting the deal over the finish line.
"The Activision Blizzard-King acquisition, I'll just be honest, has been a real learning experience for me, in a good way," said Spencer. "If you think about our progress as a company, I think 40 countries have approved the deal, and there are two countries where we're very focused on getting approval. For those two in front of us, at Microsoft, they're very committed, we're very committed."
"We think there's a real capability that Activision Blizzard-King has specifically in mobile and PC, just growing our portfolio that will help us find more players, reach more players," said Spencer. "The work is ongoing, but we remain confident... We're out there to find solutions for regulators who have questions."
So far, Microsoft’s had a solid 2023 – after the release and near-immediate popularity of ChatGPT, the company doubled down on its investment in the AI chatbot’s maker, OpenAI. It’s an investment that’s paid dividends, leading to a resurrection of Microsoft's search engine Bing and spurring a range of ChatGPT-style integrations in existing products like its Microsoft Office apps.
Microsoft stock is up about 36% year-to-date.
'The gaming business is performing'
Though Microsoft has long been known for its enterprise tech applications, Spencer emphasized the importance of gaming to the company and why Microsoft is in the business in the first place.
"In terms of mission, I think I'll go back to why Microsoft is in the gaming business," Spencer told the audience.
"A few years ago, we looked at an amazing segment of entertainment that has community, it has amazing creators, and it was really going through some changes when we think about how technology and business models are relating to video games," he continued.
"We thought we could really play a role in the continued growth of the video games industry. We talk all the time about the billions of people who play video games, the size of the business and we thought there's a really great opportunity for Microsoft to be a catalyst."
Ultimately, for Microsoft and Xbox, numbers on gaming have been in many ways looking better than they ever have, Spencer said.
"We announced that last quarter for Microsoft was our largest non-holiday gaming quarter in the history of us being in the gaming business," he added. "So, the gaming business is performing, we have more players than we've ever had."
For Q3 2023, Microsoft reported that Xbox's services and content revenue was up 3% year-over-over, while the total revenue in the company's "more personal computing" category – of which Xbox is a part came out to $13.3 billion, down 9% year-over-year.
Allie Garfinkle is the Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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