Phil Spencer says Xbox business will become ‘unsustainable’ if it remains ‘irrelevant’ on mobile

Microsoftthe games manager said that Xbox will struggle to continue as a global business if the company does not establish a foothold in mobile.

Although the company’s proposed acquisition of ActivisionBlizzard is often touted as the Xbox maker looking to buy Call of Duty, Phil Spencer reiterated previous claims that the $68.7 billion deal is primarily driven by Microsoft’s mobile gaming ambitions.

“The idea that Activision is all about Call of Duty on console is a construct that could be created by our competitor on console,” he told The Verge’s Podcast decoder (transcribed by VGC).

Without naming sony directly, the Xbox boss then referred concerns the PlayStation maker has taken to competition regulators is currently reviewing the transaction.

“I did not hear [that] nintendo sent in complaints about the deal,” Spencer noted.

Candy Crush Saga – First level

He said that over the past five or six years, all of the growth in the $200 billion global gaming business has come from the mobile segment, while console and PC revenues have remained “relatively flat.”

Spencer, when asked about a recent comment Microsoft made to a regulator about being a small player on PC and mobile, said, “I don’t think anyone needs that quote from us to understand how much point we are irrelevant in mobile. Anyone who picks up their phone and decides to play a game would see it for themselves.

“And PC too, our trials and tribulations over the last five, six years in PC games are well documented, and we’re continuing to work on it, and I love the work of the Xbox app team, and our PC studio is doing a great job on PC, but it’s taking time.

He added: “When it comes to the Activision opportunity, and I keep saying this, and it’s true, it definitely starts with people wanting to play games on every device they have, and funnily enough, the smallest screen we play on is actually the biggest screen when you think about the base installed in the phone.

“It’s just a place where if we don’t grow in relevance as a gaming brand – we’re not the only ones seeing this – over time the business will kind of become unsustainable, for all of us. If we’re not able to find customers on the phones, on any screen that someone wants to play on, you’re really going to be segmented into a niche part of the game where running a business world will become very difficult.

Spencer added, “As a percentage of overall games business, console business is declining as overall business grows and console remains relatively stable as a business, same with PC.

“And then when you look at the biggest game companies, Tencent being the biggest games company in the world a lot of their revenue comes from mobile and then they put their commercial success that they’ve gained from the work they’ve done in the market acquiring other studios to a very fast pace.

Phil Spencer says the Xbox business will become
Activision Blizzard says Call of duty mobile has been downloaded over 650 million times

“It puts a lot of us who are maybe traditionally segmented on one screen and one device, in a position of, OK, if you play this over 10 years, if the console itself isn’t going to grow, and the PC will grow some years and not [other] years and mobile continues to grow, how do you continue to run the business and stay competitive with others that are out there, either by acquiring talent, creating new business models, new distribution , by creating new franchises?

“It’s critical that if you’re trying to run a large-scale global gaming business, you meet your customers where they want to play, and increasingly, mobile is where people want to play.”

Activision Blizzard said last week that its monthly active user base totaled 368 million for the quarter that ended September 2022. Candy Crush maker King had 240 million players, World of Warcraft and studio Diablo Snow storm for 31 million and Call of Duty publisher Activision for 97 million.

King has more players than the other Activision Blizzard divisions combined and also generates more revenue. Thus, Spencer was told that Microsoft is actually buying the Candy Crush company rather than the Call of Duty one.

“Absolutely,” he replied. “And in addition, the number that’s not in the Candy Crush King number is Call of Duty Mobile, and Diablo mobile, which are big franchises that exist in the Activision bucket and in the Blizzard bucket, which are also major players on phones.”

The proposed acquisition of Activision Blizzard for $68.7 billion would be the biggest deal ever for the gaming industry, comfortably surpassing the record $12.7 billion merger between Take-Two and Zynga completed earlier this year.

This agreement brought take twoconsole and PC blockbusters like Grand Theft Auto, BorderlandsNBA 2K and BioShock under the same roof as Zynga’s hugely popular social mobile gaming brands like FarmVille and Words With Friends.

Phil Spencer says the Xbox business will become

Spencer said, “If you look at the totality of what Activision Blizzard King does, where their customers come from, where they make money…it’s the same reason Take-Two looked at Zynga and said that we have to build our mobile aptitude.

“I would say Activision Blizzard King did a better job earlier, definitely better than us, and they’re now in a position where they have great PC franchises, great console franchises, and great mobile. For us, the real differentiation they bring is their mobile capability. »

Microsoft recently announced its intention to create a “next-gen game store” to compete with Apple and Googlehelped by its acquisition of Activision Blizzard.

“Building on Activision Blizzard’s existing gaming communities, Xbox will seek to move the Xbox Store to mobile, attracting gamers to a new Xbox Mobile Platform,” he said.

“Driving consumers away from Google The Play Store and App Store on mobile devices, however, will require a major shift in consumer behavior. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new.

During the same interview with The Verge, Spencer said he was ready to commit to Sony and the regulators who Call of Duty will stay on PlayStation longer than currently planned.