By Benjamin Ward, Computer Science Student at King’s College London
When it comes to the video gaming industry, there are primarily 3 sectors. First, the PC sector, with the largest provider of games being Steam with 120 million monthly users in 2020. Second, within the Mobile sector, iPhone users utilise the AppStore, while Android users utilise the Google Play Store. Third, the console sector, which includes three main players; Xbox being owned by Microsoft, PlayStation being the product of Sony, and Nintendo. Nintendo is seen as separate from the other two. This is due to the types of games it develops as well as because the console itself is designed and marketed towards a different demographic. However, Xbox and PlayStation are seen as rivals. This is because many games are released on both platforms at the same time, thus competing for customers.
The ‘console wars’ is a term used by the community to compare the companies. The fans of the respected sides will defend their brand, attempting to convince the other side that their console is better. This might seem pointless to many, but after spending a few hundred pounds on a new console, the last thing one wants to hear is that the other console is better. The main way to check the status on the console wars is by comparing the sales of both current consoles. For PS3 and Xbox 360, being released in the middle of the 2000s, over a 10-year period PlayStation sold 87 million units and Xbox sold 84 million units. However, with the release of the next generation of consoles in 2013, PlayStation stormed ahead of the sales. By 2021 they sold over 115 million PS4s compared to the Xbox One sales at 50 million. The reasons behind the large difference can be attributed to many factors such as price, marketing as well as specifications. But most argue that the success of PS4 was largely dependent on the exclusives.
Exclusives are games that can only be played on a particular platform. This is because a company of a platform owns the game, or has a contract with a publisher to be the sole distributer. This can be a driving factor for many people when deciding what platform to play on. For example, if someone wanted to play the new Spider-Man game, they must buy a PlayStation. These can be powerful tools for such companies. PlayStation used them to great effect, as the exclusives that were released in the PS4 lifespan cannot be matched to those Xbox released.
Xbox had to develop their competitive advantage, so they created more exclusives. Microsoft owns 23 game development studios compared to the 17 Sony has. However, as the common saying goes, quality over quantity. If Microsoft simply buys small studios, then this will not lead to significant value. Yet, that is not the case. Indeed, in 2021 they bought ZeniMax, the parent company of a very renowned studio called Bethesda, for $7.5 billion. This acquisition surprised the whole community, as a very large games studio is now owned by Microsoft. All their future games could now be exclusive, including the long awaited ‘The Elder Scrolls VI’ and ‘Starfield’.
Within the first month of 2022, Microsoft announced that they will buy Activision Blizzard for $68.7 billion. If this is realised, it will be described as the most expensive tech acquisition ever, beating the purchase of Nokia, GitHub and WhatsApp. Some speculate that the realisation of this acquisition is not guaranteed due to its potentially anti-competitive behaviour. However, it can be assumed that Microsoft’s counsellors examined any potential issues before agreeing to the acquisition, rendering such concerns immaterial.
Within Activision Blizzard, Microsoft would be gaining ‘Activision’, the owners of ‘Call of Duty’. This is significant because Call of Duty is historically one of the most popular games, releasing a new title every year. With the current state of the market, with both Sony and Microsoft struggling to reach high demands for the new consoles, this allows more time for customers to decide which console they prefer. The possibility that all future Call of Duty games will be available only on Xbox, would incentivise some to purchase the Xbox console. Moreover, the ever-expanding gamepass Xbox players can access with a monthly subscription, allows them to play all the available games in the gamepass library without extra charge. This has become a good alternative for players instead of buying games at the original full price. This, in turn, increases the power Microsoft has in the console sector of video games.
Another big section of Activision Blizzard is ‘Blizzard Entertainment’. They are the creators of many popular games such as Overwatch, Hearthstone and World of Warcraft. World of Warcraft is a very well-known PC game, alongside other PC games Blizzard has developed. This would help Microsoft expand into the PC industry and gain many more customers. This, in combination with the gamepass for PC, guarantees success.
One of the lesser-known benefits for Microsoft will be acquiring the publisher called ‘King’. They are the creators behind the Candy Crush Saga, the mobile app that impressed with over 2.7 billion downloads. This will introduce Microsoft to the mobile sector, allowing Xbox to be prevalent over all three gaming sectors.
Both the current Microsoft acquisition and many previous ones, beg the question, is this good for gamers? As Xbox is exponentially growing their library of games, they make many of them exclusive. This restricts many gamers that are PlayStation players, since they are unable to experience these titles. As previously mentioned, the fans can be very passionate and loyal to their platform, thus rendering them unable to switch even when this might be disadvantageous. But, this is business, companies need to have some leverage over their competitors. However, as Xbox has shown with Minecraft, the fact that a company owns a video game, does not necessarily mean they cannot share it. Minecraft’s developers Mojang were bought by Microsoft in 2014 for $2.5 billion. Since then, they are determined to allow players to play how they want, supporting them and expanding the available platform choices. With the recent purchase of Activision Blizzard, many are worried they will be unable to play Call of Duty if they are not Xbox players. However, Phil Spencer, the head of Xbox, announced they intend to keep Call of Duty on PlayStation. This announcement was positively received by many gamers around the world, demonstrating signs that perhaps the so-called console wars will be put to rest. While, examining this from a more critical point of view, Xbox might have done this so that the largest tech acquisition does not seem like a threat to competition.