Microsoft is building the Xbox mobile game store to take on Apple and Google

Microsoft is building the Xbox Mobile Store to offer games directly on mobile devices, which is challenging for Apple and Google. The software giant has hinted for the first time in a ‘next generation’ store that it will ‘build for games’ Earlier this year But now he quietly revealed Details of plans in deposit With the UK Competition and Markets Authority (CMA).

The CMA is currently investigating the $68.7 billion acquisition of Activision Blizzard and has asked Microsoft for context. Microsoft says in its filing that a big motive for the purchase is to help strengthen its presence in mobile games. Its plans for this space obviously include the creation of the Xbox game console and store. This is what the company says in the filings:

The deal will improve Microsoft’s ability to create a next-generation game store that works across a range of devices, including mobile as a result of the addition of Activision Blizzard content. Building on the existing Activision Blizzard communities of players, Xbox will seek to expand the Xbox Store to mobile devices, and attract players to the new Xbox Mobile platform. However, shifting consumers away from the Google Play Store and mobile app store will require a major shift in consumer behavior. Microsoft hopes that by offering popular and popular content, gamers will be more inclined to try something new.

Call of Duty: Mobile And the Candy Crush Saga They are two very popular protected games published by Activision and King, respectively, and Microsoft can leverage these titles to help build a game store to rival Google Play and the App Store. Given Apple’s policies banning third-party app stores on iOS, it’s hard to imagine Microsoft competing on iPhones anytime soon. But that obviously doesn’t stop him from conceiving the Xbox Mobile App Store.

Microsoft’s recognition of its mobile gaming push comes as the company is increasingly positioning Xbox Cloud Gaming as a mobile gaming option on emerging mobile devices. Microsoft was quick to support Xbox Cloud Gaming on Valve’s Steam Deck platform, followed by a partnership with Logitech and Razer for mobile devices focused on cloud gaming. This means that the rush into mobile gaming could happen on many fronts – and not just on phones and tablets.

Other than hardware, there’s a lot of revenue at stake here, too. Games are some of 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 transaction gives Microsoft a meaningful presence in mobile games. Mobile game revenue from the King Division and titles such as Call of Duty: Mobile, plus additional revenue, accounted for more than half of Activision Blizzard’s revenue … in the first half of 2022. Mobile customers account for about three-quarters of MAU. Microsoft does not currently have a meaningful presence in mobile games and the deal will bring much-needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to contribute what it learned from developing and publishing mobile games to Xbox Game Studios.

However, the CMA has hardly discussed the possibility of Microsoft entering mobile games as part of its investigations and instead focuses more heavily on console games, which Microsoft argues is an increasingly smaller part of the market as a whole. in publish chart On site to acquire Microsoft’s Activision Blizzard, the company envisions the entire gaming market valued at $165 billion in 2020, with consoles making up $33 billion (20 percent), PCs making up $40 billion (24 percent), and mobile gaming at $85 billion (51 percent).

Building a successful competitor to the Google Play Store or App Store will be a huge challenge, and Microsoft will need to woo third-party developers if it hopes to make headway.

The company appears to be laying the groundwork here by adhering to a set of principles that would allow developers to freely run their own app stores on the Xbox mobile platform and offer their own payment systems to process in-app purchases. This is a benefit that Apple certainly does not offer. (Those commitments don’t extend fully to Xbox yet, but Microsoft said earlier this year that it was “committed to closing the gap in the remaining principles over time.”)

Microsoft says these same principles will also apply to the Xbox Mobile Store in the future, which may be enough to attract developers to the platform. One company that might be of particular interest is Epic Games, which has teamed up with Microsoft in the past few years in the war against Apple’s App Store policies.

Tim Sweeney, CEO of Epic Games, welcomed Microsoft’s first hints about an open app store model in 2019 ahead of a giant battle between Epic and Apple a year later that saw fortnite Disappear from iPhones. Epic argues that Apple should allow third-party payment systems in its own app store or even allow competing app stores to run on iPhones and iPads.

Eventually, Epic asked Microsoft to help discuss its case in court, and Microsoft increased pressure on Apple with some significant changes to the Windows Store days before Epic vs Apple trial last year.

Epic did not win its legal argument, and fortnite It’s still not on the iPhone. But Epic turned to Microsoft to bring in fortnite to Xbox Cloud Gaming earlier this year after court documents revealed that Epic had originally banned the game from Xbox Cloud Gaming as the service was “competitive with our PC offerings.”

This close partnership between the companies could help persuade Epic to join Microsoft’s mobile game plans early. Epic has already embraced Samsung’s Galaxy Store on Android, and it has fortnite And the Call of Duty: Mobile It’s going to be a good start on Microsoft’s Xbox Mobile Play Store on a tough job to take on with Apple and Google.

However, a potentially big obstacle to Microsoft’s mobile gaming ambitions could be its takeover of Call of duty On both mobile and console. Microsoft has had success with Xbox Game Pass, and has made it clear that it wants to bring Activision games to the service. Regulators are now weighing how this will affect competition.

Xbox Game Pass is also at the center of the ongoing battles between Microsoft and Sony Call of duty. Sony argues that Microsoft can take Call of duty Away from PlayStation completely, while Microsoft says this won’t be good for business. That feud has spilled over into a public war of words between the head of PlayStation at Sony and the head of Xbox at Microsoft, but the real conflict is happening behind closed doors.

Microsoft now says keep Call of duty PlayStation is a “commercial necessity for the Xbox business and transaction economics” and that it will jeopardize revenue if withdrawn Call of duty Sony consoles. “Microsoft has indicated that it is relying on revenue from the distribution of Activision Blizzard games on the Sony PlayStation.”

but even if Call of duty Staying on PlayStation, Sony could still lose significant revenue if Microsoft offered the title on Xbox Game Pass. Microsoft previously claimed Sony was paying for “ban rights” to keep some games off Xbox Game Pass and now says that’s the case with Call of duty. The agreement between Activision Blizzard and Sony includes limitations on Activision Blizzard’s ability to place Call of duty on Game Pass for a number of years,” Microsoft says in its filings.

The CMA and other regulators now have the unenviable task of resolving these arguments between Sony and Microsoft and figuring out how this deal could harm consumers or competition. Microsoft is still hoping to close this deal by the spring of 2023, but there’s a good chance we have months of battle ahead — as well as a chance to gain rare insights, as with these mobile plans, about the games industry’s secret ambitions.