Microsoft is building the Xbox Mobile Store to offer games directly on mobile devices, challenging Apple and Google. The software giant first hinted at a “next-generation” store it would “build for games” but has now quietly revealed details of the plans in a filing with the UK’s Competition and Markets Authority (CMA).
The CMA is currently investigating the $68.7 billion acquisition of Activision Blizzard and has asked Microsoft to provide context. In its filings, Microsoft says the main motivation behind the purchase is to help expand its mobile gaming presence. The plans for this space apparently include the creation of an Xbox mobile gaming platform and store. Here’s what the company says in the documents:
The deal will improve Microsoft’s ability to create a next-generation game store that works across devices, including mobile, with the addition of Activision Blizzard content. Building on existing communities of Activision Blizzard players, Xbox will aim to bring the Xbox Store to mobile, attracting players to the new Xbox Mobile platform. But moving users away from the Google Play Store and the App Store on mobile will require a fundamental change in consumer behavior. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new.
Call of Duty: Mobile and Candy Crush Saga. are two hugely popular mobile games published by Activision and King, respectively, and Microsoft could use these titles to help build a game store to compete with Google Play and the App Store. Given Apple’s policy of blocking third-party app stores on iOS, it’s hard to imagine Microsoft competing on the iPhone anytime soon. But that clearly doesn’t stop us from envisioning an Xbox mobile app store.
Microsoft has acknowledged its mobile gaming efforts as the company increasingly sees Xbox Cloud Gaming as an option for gaming on mobile laptops. Microsoft quickly supported Xbox Cloud Gaming on Valve’s Steam Deck, and later partnered with Logitech and Razer for their cloud gaming handhelds. This means that mobile gaming can be promoted on multiple fronts, not just on phones and tablets.
Besides the hardware, there’s also a lot of revenue here. Games are among the most popular downloads on mobile devices and drive in-app purchases in app stores. Microsoft clearly wants a piece of that pie. See how the company describes the opportunity:
The deal gives Microsoft a significant presence in mobile gaming. Mobile game revenue from King division and titles like Call of Duty: Mobile, as well as ancillary revenue, accounted for more than half of Activision Blizzard’s … revenue in 2022. the first half of the year. About three-quarters of its MAUs come from mobile customers. Microsoft does not currently have significant mobile gaming operations, and the deal will bring much-needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to bring its expertise in developing and publishing mobile games to Xbox game studios.
However, the CMA’s investigation barely discussed Microsoft’s entry into mobile gaming, instead focusing on game consoles, which Microsoft says are a shrinking share of the overall market. In a chart published on Microsoft’s Activision Blizzard acquisition website, the company depicts that in 2020 the value of the entire gaming market is 165 billion billion (51%).
Still, building a successful competitor to the Google Play Store or App Store would be a huge challenge, and Microsoft will need to woo third-party developers if it hopes to make inroads.
The company appears to be laying the groundwork here, committing to principles that would allow developers to freely run their own app stores on its Xbox mobile platform and offer their own payment systems to process in-app purchases. That’s not really what Apple offers. (Those commitments don’t yet apply to Xbox consoles, but Microsoft said earlier this year that it was “committed to closing the remaining principles gap over time.”
Microsoft says the same principles will apply to the upcoming Xbox mobile store, which could be enough to attract developers to the platform. One company that may be of particular interest is Epic Games, which has teamed up with Microsoft over the past few years to fight Apple’s App Store policies.
Epic Games CEO Tim Sweeney hailed Microsoft’s first hints of an open app store model in 2019, ahead of the epic battle between Epic and Apple a year later Fortnite will disappear from the iPhone. Epic said Apple should allow third-party payment systems in its App Store, or even allow competing app stores to work on the iPhone and iPad.
Epic eventually called on Microsoft to help fight the lawsuit, and Microsoft increased the pressure on Apple by making some significant changes to the Windows Store just days before Epic vs. Apple trial last year.
Epic did not win its legal argument and Fortnite still not back to iPhone. But Epic turned to Microsoft. Fortnite Xbox Cloud Gaming earlier this year after court documents revealed that Epic initially blocked the game from Xbox Cloud Gaming because the service was “competing with our PC offerings.”
This closer corporate partnership could help convince Epic to get on board with Microsoft’s mobile gaming plans early. Epic has already adopted the Samsung Galaxy Store for Android and has Fortnite and Call of Duty: Mobile Microsoft’s Xbox mobile game store would be a good start in the uphill battle against Apple and Google.
But a big potential obstacle to Microsoft’s mobile gaming ambitions could be its control The call of duty both on mobile and console. Microsoft has seen success with Xbox Game Pass and has made it clear that it wants to bring Activision games to the service. Regulators are now considering how this will affect competition.
Xbox Game Pass is also at the heart of the ongoing battle between Microsoft and Sony The call of duty. Sony says Microsoft could take over The call of duty a far cry from PlayStation, and Microsoft says it wouldn’t make business sense. This disagreement has escalated into a public war of words between the head of Sony’s PlayStation and the head of Microsoft’s Xbox, but the real conflict is taking place behind closed doors.
Microsoft now says maintain The call of duty PlayStation is a “commercial necessity for Xbox’s business and transactional economy” and that it would put revenue at risk The call of duty from Sony consoles. “Microsoft has made it clear that it expects revenue from distributing Activision Blizzard games to Sony PlayStation.
But even if The call of duty will remain PlayStation, Sony could still lose some serious revenue if Microsoft offers the title Xbox Game Pass. Microsoft previously claimed that Sony was paying for “blocking rights” to prevent certain games from being available on Xbox Game Pass, and now says that it is The call of duty. “The agreement between Activision Blizzard and Sony includes restrictions on Activision Blizzard’s ability to place The call of duty titles on Game Pass for several years,” Microsoft said in its documents.
The CMA and other regulators now have the unenviable task of sorting out these disputes between Sony and Microsoft and working out exactly how the deal could harm consumers or competition. Microsoft still hopes to close the deal by 2023. spring, but there’s a good chance we’re in for months of battle, as well as the chance to gain rare insight, like with these mobile plans, into the gaming industry’s secret ambitions.