Microsoft-Activision’s $69 Billion Deal: What it means for the future of Gamepass

What the biggest deal in the history of gaming means for the biggest gaming subscription ever

List of Game Studios owned by Xbox after the deal goes through

Microsoft just bought Activision Blizzard Game Studios, for a MASSIVE 68.7 Billion dollars. That’s the most expensive deal in the history of the gaming industry. Also, the tech giant, in a post on Xbox Wire, confirmed that Gamepass reached 25 million subscribers today.

Gamepass is one heck of a deal that gamers all over the world admire. It’s a must-have subscription for those who are looking to play many of the latest hits without ripping off their wallets. It’s like Netflix, but with games instead of shows. A single subscription with access to $5,000+ worth of games- with new games being added all the time. Plus if you’ve never joined the subscription before, you can jump in for just $1 for the first month and $9.99/14.99 per month thereafter.

On the contrary, Gamepass provides you with games that are subject to removal at any date. This means that any game on the sub you might be playing might be removed someday (unless it’s from one of their 1st party studios, because I don’t think they’ll remove those once adding them). You don’t ‘own’ the games on their sub, you just have temporary access to those games. This isn’t a big deal for most gamers usually unless a multiplayer game is removed, or if someone loves to jump back on a game again and again. Also, not many people play games regularly, and some end up playing a single game or two (usually multiplayer) for a long time. Those games might be on Gamepass, but paying $10/15 per month for only these 1–2 game(s) which may someday be removed from the pass is absurd, and not highly recommended (instead of spending $100+ per year, you could just buy the games for $60 each and keep them forever). Also, almost no one plays all the games provoded by the pass, so if you’re paying for the sub you’re paying for all the games in it, but you don’t end up playing most of them if you’re an average casual gamer. This is, however, pretty obvious for most entertainment subscriptions out there, and not much of a bummer for most. Such subscriptions usually have some subsidiary perks that come with them, including exclusive content (here, in-game), and Gamepass, at the time of writing, isn’t lacking of them. However, the perks change from time to time and the overall value of the sub over a particular period of time may not equate to the value provided at some other time.

Now, let’s talk about the MASSIVE 69 billion dollar Microsoft-Activision deal that went official about a day ago, and has already taken the internet over by a storm. Youtube, Twitter, Instagram; the news is everywhere, or so it seems. If you are somewhat accustomed to the popular titles in the gaming industry, you probably know about famous titles like Call of Duty, World of Warcraft, Crash Bandicoot, and Candy Crush. Activision is the parent company behind all these titles, plus many more. Activision Blizzard also owns many big game studios which are- Blizzard Entertainment, Sledgehammer, Treyarch, Infinity Ward, King, Digital Legends, and Raven Software. It’s one of the biggest parent game studios out there, and it just got sold for $68.7 Billion Dollars (about $95 per share). That’s the most expensive deal ever in the gaming industry. And if it goes through, which is expected to happen anytime before/in June 2023, it will lead Microsoft to the third place in the gaming industry, surpassed only by Sony and Tencent.
Last year, Microsoft purchased Zenimax, which is the parent studio behind Bethesda Softworks (Studio behind games like The Elder Scrolls: Skyrim and Fallout) for 7.5 Billion dollars. And we thought THAT was too much money. I still don’t think most of us have 7.5 Billion dollars lying around though.

Now, what does all of this mean for Gamepass? Well, there are a few different ways this can go, considering the deal goes through.

Firstly, which I personally think would happen, Microsoft could make newer game titles of popular game series’ (like Call of Duty, World of Warcraft 4 if it’s coming) exclusive to Gamepass. They could add it day one on the subscription, and try to pull famous console brands to add the sub on their platform (For ex. Sony, as Xbox CEO Phil Spencer stated that Xbox does not want to pull people off from other console brands and also wants to find ways to make it all work together, like sharing of achievements, permanent bans, etc).

Another way this can go about, which I wouldn’t be surprised if happens, is if Microsoft adds most of the newer titles on Gamepass but does not make them exclusive to it. This means that the newer games will still be available for purchase on Playstation, Nintendo, PC and even Xbox, but will also be available on Gamepass (probably day one). This would be a very smart, strategic and indirect move to gain popularity among the different console brands out there, while still probably earning a decent profit.

They can also decide to make some or all of the games Xbox exclusive, which means that these games could only be purchased for Xbox. If they do this, they might make it available on Gamepass for Xbox. However, this would be a pretty dumb move and could also prove expensive for the company. The studios under the company (Microsoft) can later run out of funds and would probably not make near as much profit they are today. Microsoft, already running on a comparative loss, may stop funding these studios as much. This seems somewhat of a dumb move and I personally believe Microsoft will refrain from executing this for the newly acquired studios.

One least expected way this can take a turn to is if Microsoft decides to leave things as it is, just eventually adding a few titles to Gamepass every now and then. This may be budget-friendly, but may not be worth it as the whole point of purchasing such a big studio by Microsoft is expected to be to try and hold an advantage over currently leading contenders Playstation and Nintendo.

Eventually, they can also choose to adopt a mix of all possibilities which can get a bit messy, but predicting that is kind of pointless at the moment. Now, let’s take a look at what (imo) Microsoft aims to do with Gamepass and what the chances of everything going as planned are:

You may have this question: how does Microsoft manage to bring such a vast library of games including so many day-one releases to their subscription? Well, think about how Netflix does it. How Amazon, Disney, and Peacock do it. Well, that’s how Microsoft plans to do it. It has quite a similar roadmap for their $10 subscription, and they’re betting big. One of the top features they’re spending most on and being bullish about is their enticing Project xCloud, which is their cloud streaming service. With games like the whole Halo Master Chief Collection, Halo Infinite (YES!), and FH5 (It’s only getting better), and little to no input lag, (considering you have a high-speed capable internet connection,) you can play games with beefy requirements without having the right hardware. Furthermore, it works on mobile as well and is only getting better.

Plus, 25 million subscribers. If we take the $10 per sub for everyone, that’s $250 million per month. However, many of the subscribers have enrolled for the $1 for the first-month deal, some have used the Xbox Gold to Ultimate trick, and in some countries, people availed the 1+7 month bonus deal. So, the figure is probably very different from the expected $250 million per month. However, with how things are going for Microsoft, that day isn’t far away from when they’ll be making $250 million+ per month from the sub.

Is Microsoft doing all this on a profit? Um, probably not. Keeping the latest Microsoft-Activision deal aside, Microsoft is seemingly still not making a profit out of their subscription, largely because of so many games offered, perks given and deals offered on their subscription.

So why is Microsoft still spending so much money, if it’s not actually making a profit from their sub? Well, they are betting big on the future. They might not be making much of a profit yet, but they expect to soon. And other subscriptions such as Netflix also faced a loss for their first few years before they started making huge, incomparable profits. that’s what Microsoft plans to do, in the same entertainment industry just on a different aspect. An All exclusive pass might be on it’s way that might just provide you access to all the subscriptions out there for a minimal price ($50?). When? Sometime between 2025–2030 is my bet.

Will they achieve what they expect to? Will they lead the gaming industry in the future? Currently, on how fast and on a huge scale (especially after the deal with Activision) things are going, Microsoft may start making a profit very soon and may also dominate the Gaming industry for a long time unless somehow Playstation’s Project Spartacus flips things around. Where there’s money, there’s competition. At least in a non-repressive democratic world. And you know how important competition is, for optimal growth of an industry.

Once again, thanks for reading and if you believe I missed something or if there’s something you could explain better, feel free to comment away!

Originally published at http://caffeineandtech.wordpress.com on January 19, 2022.

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16 with a keen interest in Technology

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Lakshya Daryani

Lakshya Daryani

16 with a keen interest in Technology

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