Microsoft has once again reiterated that the acquisition of Activision-Blizzard-King was mostly about securing a foothold in the mobile market.
The highly-debuted megadeal between Microsoft and Activision-Blizzard-King was finally completed last month. After having announced the merger in January of 2022, the deal became a rather long journey with plenty of discussions, regulator blockings, court hearings, and whatnot.
While many have argued that the purchase was about obtaining IP, Xbox head Phil Spencer has also said that the main reason for the deal was about mobile gaming. Yesterday, at the Wells Fargo TMT Summit Conference, Xbox Chief Financial Officer Tim Stuart once again talked about Microsoft’s primary reason to buy Activision-Blizzard-King, thereby also confirming that the Xbox console audience isn’t growing that fast. Obviously with Candy Crush, but also with Call of Duty Mobile, Activision-Blizzard-King knows what they’re doing when it comes to mobile games. “Yes. Mobile is — the most gamers in the world play on mobile”, the CFO said during the conference. “We think about the console landscape and part of the real evolution of the deal was, hey, look, we’ve got a fixed console audience with Xbox or relatively fixed, but not growing that fast. You’ve got a couple of hundred million kind of console addressable market. You’ve got 300 million or 400 million kind of in that PC gamer market, and then you have billions in the mobile market.”
During the conference, the Xbox CFO also talked about making Call of Duty a high-margin first-party business instead of a lower-margin third-party business for Microsoft, in which Stuart also mentioned driving high-margin sales on rival platforms, including PlayStation and Nintendo.
“So, that’s kind of when you think about the Xbox component of Call of Duties — Call of Duty you go from, again, that low-margin business to high-margin business”, Stuart said. “Then what you do is you also expand and say, we’re now driving high-margin sales on PlayStation, on Nintendo.”
The executive also mentioned Blizzard’s World of Warcraft franchise and bringing it into Xbox console and hardware business. Interestingly, this is something that the franchise’s VP and Executive Producer, Holly Longdale, also briefly touched upon earlier this month.
“World of Warcraft has subscription, high-margin businesses”, Stuart said during the conference. “So, you’re bringing in high-margin business into a traditionally more lower-margin business when we think about the Xbox console and hardware.”
Interesting information from Microsoft’s Xbox CFO right there, and it will be interesting to see the impact of the megadeal on the mobile and console market in the near future.
