From the Journal:
Microsoft is facing the biggest test yet of its $75 billion bet on videogames: the release of a new installment of the “Call of Duty” franchise on its Game Pass subscription service, which customers will be able to access for the first time on Friday.
The #tech giant’s acquisition of Activision Blizzard, the biggest deal in its history, was a wager on the future of how people will access and pay for #videogames. Microsoft sought to position itself as a disrupter, believing the streaming revolution would migrate from television and #film toward a growing, interactive medium with billions of rabid fans.
“Call of Duty,” one of the most successful #entertainment properties ever, became part of Microsoft’s portfolio in the Activision deal. The company decided to make the latest installment of the shooter series, called “Call of Duty: Black Ops 6,” available at launch for streaming or downloading via Game Pass for $19.99 a month, hoping it will drive a surge in sign-ups.
It will also be on sale separately for one-time purchase starting at $69.99.
Microsoft sees streaming—and the subscription model that supports it—as a brighter path forward for its videogame business, which trails rivals Sony Group and Nintendo in console sales. So far, convincing gamers to trade downloads and a-la-carte pricing for the cloud and monthly fees has proven difficult for the software maker
“The big picture vision is a Netflix for #videogaming, and I think that’s a very viable option,” said Joe Tigay, a portfolio manager at Equity Armor Investments, LLC, a longtime Microsoft bull. “I don’t know it will happen all at once, but Microsoft is in a good position to do that.”
The videogame industry is facing structural obstacles similar to those Netflix faced before the streaming era began for movies and #TV. Some players are concerned about potential delays that could hurt their chances of winning in competitive games, while many of the most popular games today, such as “Fortnite,” are also free to play. Enthusiasts also tend to devote themselves to only a handful of games at any given time because developers continuously update them with new features.
Some analysts are skeptical that Game Pass—whether people use it for #streaming or old-fashioned downloading—can ever achieve mass appeal.
Game Pass had 34 million subscribers as of January 2022, a number that Microsoft disclosed in February 2023 and hasn’t updated. That is just a fraction of the estimated 3.1 billion people who play #videogames—including mobile titles—worldwide, according to analytics firm ALDORA Intelligence.
Last year, consumers worldwide spent $183.9 billion on #game content alone, and this year such spending is expected to increase 2.1%, according to industry tracker Newzoo.
Microsoft’s goal with videogames is to build “a software annuity and subscription business,” Amy Hood, chief financial officer, said on an earnings call in July.
#gaming
