How Microsoft’s acquisition of Activision Blizzard will change gaming forever (and not just that!)

Digital gaming has been booming for the past few years, creating a business battle between titans like Sony and Microsoft and new emerging players. The overall business is a combination of companies creating new games and chasing talented coders across the planet on the one hand and companies producing hardware, in particular gaming consoles, on the other. The biggest players have the capacities to deliver both the hardware and the games. These are the businesses that are one step ahead to reinvent the gaming industry.

Microsoft decided to buy Activision Blizzard and with this acquisition they also got their hands on a broad portfolio of games to fill their Xbox and delight their gaming subscribers. The $75 billion deal will make Microsoft the world’s third-biggest gaming company, behind Tencent and Sony. This is their second move in gaming after buying Minecraft several years ago, the three-dimensional world-building game. Microsoft has already 25 million game players subscribed to its Xbox console, while Activision Blizzard games are played by 400 million people. This shows how important it is to ensure vertical integration and critical mass. This decision is strategic for Microsoft and with this step the company wants to focus in the future on all kinds of online interactions: at work, in education and at home.

After this acquisition the gaming market remains highly fragmented, which makes me think that there is still room for further consolidation. Microsoft took a step ahead, but other big players could make the next move in the months to come. The gaming market is today very similar to the streaming video war that is currently reshaping the TV and movie industry and where cable companies, Netflix, Disney and telecom operators are battling to grasp market share in an expanding market, the one of home and mobile movie services. Gaming is the market where virtual and augmented reality will extend first, a market to test and learn before these technologies enter other markets.

If we look at it from a players’ point of view, gaming is the environment that resembles the most the upcoming Metaverse. You play, you see others playing, you socialize and you can even buy stuff related to the game. The time spent by players in this environment is comparable to the time others spend on Facebook, Instagram or WhatsApp. In the early 2000’s you had 200 million gamers compared to about 2.7 billion today and it is probably becoming the most predominant form of media. Game makers have found new ways to monetize from these expanding audiences through advertising, in-game purchases and subscriptions.

Gamers use different kind of hardware for playing: consoles, televisions, computers and mobile phones. I remember playing Pacman and other games in the early 80’s. Gaming started a few decades ago with simple games played on TV using a console, then it moved to computers and mobile phones and more lately it has turned into a socializing sport with connected gadgets and connected players.

I see the recent purchase of Activision Blizzard as a first step towards the metaverse — the virtual world that will be the next big iteration of the internet. The metaverse is a platform. It’s a series of connected technologies like the internet. Video games have come to be seen as one path towards these more immersive online worlds.

I imagine the future of gaming like a virtual world of games expanding to become venues where players can do things such as making purchases or watching movies. Whatever you do in the virtual world or through Google search today, you could do inside of a game tomorrow. Gaming will become a new battleground for tech companies as this space will represent a big part of the space where digital life will happen tomorrow. By the end of the day gaming is about people, places, things and movement. The Metaverse will also be about all that and about relations between people. The same technologies could even be applied as a following step to businesses where meeting room tables could soon be replaced by avatars and holograms and all sorts of embodied presence.

How could Microsoft move forward after that? ?This purchase was a great strategic decision, taken after a thorough analysis of the market, displaying broad intuition on what the future will look like and identifying what Microsoft was missing in its portfolio of assets and talent.

As next steps, I could imagine the following:

• Microsoft may consolidate the gaming creation with the purchase of other players, converting Activision into the new Netflix of gaming. This would mean creating the world leader of game services with hundreds of millions of subscribers across the world.
• They could then add more exclusive content to boost Game Pass, Microsoft’s subscription service.
• Microsoft is also likely to use mobile gaming to get stronger in emerging markets, countries where Xbox penetration is low probably because of its price. In Africa there are few Xboxes, but everyone has a mobile phone.
• A further step would be buying emerging start-ups that develop e-commerce solutions to sell products and services in the Metaverse world. This new platform will need enhanced technologies; buying developed technology will allow Microsoft to move quicker than the rest of its competitors. They will most likely apply them first in the gaming space and afterwards on Metaverse social platforms where people will interact. Being the King of Gaming would help Microsoft to move people from office platforms to social ones where they can move with the same identification profile, credit card, etc. One of the strengths of this company is that almost everyone has a Microsoft operating system on their computer. And now everyone will be able to play Microsoft on a mobile phone! As gaming subscription booms, millions of people will simply move from one Microsoft platform to another. ?
• Using the technology in gaming to develop the Metaverse technology could even be used in a new version of “Teams” software. Imagine employees, customers and suppliers interacting through avatars, ?with holograms and virtual reality assets to do business inside this platform.
• With all of these changes the Metaverse could become the new internet. Everything that Microsoft has learnt from dominating the current operating systems should be used to dominate the next one. The urgency is to lead in the Metaverse.
• Cash generated from current Microsoft businesses is a great advantage for the business, but this is not the only asset they have. Microsoft masters already many technologies that can support the Metaverse, and for now only few companies have these capabilities, giving them a strong competitive advantage.

With this acquisition, gaming will change forever and so will digital interactions between people.?The Metaverse world is getting closer. Whether we like it or not, it seems that is the future! ?