Microsoft’s Fight for Activision Is a Bet on the Future of Gaming

Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. has focused attention on the decades-old paradigm of console-exclusive games played on its Xbox and chief rival Sony Group Corp.’s PlayStation, but antitrust officials seeking to block the deal are potentially more concerned about the future of gaming in the cloud.

Cloud gaming is still in its infancy. Most video games, from Activision’s Call of Duty, to Elden Ring, developed by FromSoftware Inc., are purchased individually for about $70 each and downloaded onto a console or computer. But Microsoft, one of the leading cloud computing service providers, is seeking to change that. It has focused its significant gaming efforts on building up a subscription service, Xbox Game Pass, which offers a library of more than 300 titles for about $10 a month for gamers who want to download games to play on the Xbox or PC. A higher tier of the subscription, at $15 a month, includes cloud gaming, which enables subscribers to stream certain games onto any device, even tablets and phones. 

While cloud gaming is still nascent in terms of the technology and content available today, some analysts and executives think it could eventually make consoles less relevant. And Microsoft is in pole position with the infrastructure and content to increase its share. By bringing Activision titles like Candy Crush and Call of Duty under its roof, Microsoft is betting that it will be able to offer more games to its Game Pass subscribers. The FTC’s concern — and Sony’s too —  is that Microsoft will take an early lead in the cloud by adding Activision’s games, eventually making them all exclusive to its own platforms.

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