Call of Duty or Candy Crush?

eSports, Platforms and Microsoft's latest move

Let me start with a disclaimer! I am no esports person. In fact, not even a video gamer even when I did have some hand-eye coordination in younger days.

But I am fascinated by the industry more so when it has opened up interesting options for all the stakeholders.

So, when MSFT offered to buy ATVI for 68.7 Billion US dollars, it got me thinking about the implications of the deal from platform perspective especially the future of metaverse.

As the title may suggest, we could look at it from two perspectives- Microsoft answering Call of Duty to strengthen its esports portfolio OR Microsoft reverting to good old days of being a monopoly Crushing Candies i.e. competitors.

Microsoft now owns GitHub, Outlook, Minecraft, Xbox, Call of Duty, Azure, Bethesda, Candy Crush, Teams and LinkedIn other than MS Office, Windows etc. They also have hardware related to B2C and B2B interface of their softwares. In short, they are ready of the MetaVerse! They also have Yammer (you might want to google it)!

DTW

During the Week, Microsoft announced its intent to acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. This would make Microsoft as the third largest gaming company by revenue, behind Tencent(Blade console) and Sony (Playstation console.

Microsoft @Microsoft

When Candy Crush and CoD become your actual job. Microsoft x Activision Blizzard. 🎮❤️📱 news.microsoft.com/2022/01/14/mic…

January 18th 2022

4,065 Retweets24,733 Likes

Microsoft’s move could be analysed from two perspective- Proactive and Reactive. Microsoft’s gaming business across mobile, PC, console and cloud provides it a strategic and competitive advantage against its industry peers.

Microsoft vs other gaming companies

Microsoft’s action wiped $20bn from it’s nearest rival Sony’s valuation and propelled Sony to its biggest one-day drop since the global financial crisis as its shares closed 12.8 per cent lower. This is reflective of the investors’ concerns that Sony would find it difficult to match Microsoft’s growth through an organic growth strategy and would have to cough up higher premium for acquiring PC and mobile based multiplayer games.

According to an industry report by Mordor Intelligence,

The global gaming market was valued at USD 173.70 billion in 2021, and it is expected to reach a value of USD 314.40 billion by 2027, registering a CAGR of 9.64% over 2022-2027. Mobile gaming is the most favored form of gaming globally, overtaking both console and PC gaming.

Microsoft brought a canon to a gun fight as with its 2.3 Trillion USD market cap and cash on hand for the quarter ending September 30, 2021 at $130.615B, it can outspend all its regular gaming industry competitors.

Microsoft has its arsenal of console, cloud, OS and games thus making it a formidable competitors for most of it rivals who are focused on just games or at most a couple of components of the gaming ecosystem. They also have a war chest of 130 Billion USD and a formidable market cap of over 2.3 trillion USD. They have been completely sidestepped the anti-regulatory glare that’s mostly concentrated on FAANG.

Microsoft vs other BigTech peers

When we look at Microsoft’s real competitors which include FAANG, this looks like a survival strategy and seems to be long term play for staking a claim for the metaverse (not to be confused with Meta’s plan for a ZuckVerse). Everybody believes that gaming would be at the forefront of the Metaverse involving AR/VR. According to Satya Nadella, chairman and CEO, Microsoft,

Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms. We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.

Almost half of the gaming revenue comes from samrtphone games and that’s the space where Microsoft faces its biggest future battle with Apple and Google. Both its rivals are also the gatekeepers of iOS and Android respectively thus exercising huge control over user experience. Other two entertainment rivals i.e. Facebook alias Meta and Netflix also have gaming ambitions. FB has already made it clear it intentions of staking pole position in Metaverse by rechristening itself as Meta. Netflix has broadened its offering to include games through its streaming service. Amongst the live streaming services, Twitch owned by Amazon has made huge leap in creating communities which can bring revenue for the content creators and thus create thickness on the platform.

In our next issue, we would discuss how Microsoft has created Hardware, Software and Product platforms to fuel its growth.

OTW

Over the Weekend, I was part of the 9th IBS Conference on Marketing & Business Strategy (ICOMBS), on the theme “Marketing 5.0: Opportunities and Challenges”.

The conference provided academia and industry an opportunity to share and discuss the changing role of marketing in today‟s dynamic world. Marketing 5.0, by definition, is the application of human-mimicking technologies to create, communicate, deliver, and enhance value across the customer journey. Marketing 5.0 is the next tech: a group of technologies that aim to emulate the capabilities of human marketers that includes artificial intelligence (AI), NLP, sensors, robotics, augmented reality (AR), virtual reality (VR),IoT, and block chain.

Even though the event was held online owing to current pandemic conditions, it was a great experience to listen to some of the biggest names in marketing academic world including Prof. Viswanath Venkatesh, Verizon Chair of Business Information Technology at the Pamplin College of Business, Virginia Tech and a pioneer in Technology Acceptance research. It was also an opportunity to catch up with old friends and colleagues spread across the length and breadth of country and some joining in from abroad.

Previous ICOMBS have had a long lasting impact on our academic offering including launch of electives like Marketing Analytics and Managing Platform Businesses.

Stay Safe.

I Love You

Shailendra

OTM

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Thanks for staying till the end. :)

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