Microsoft is making a big push to grow its share in the gaming market. The company has recently made several acquisitions, including the $68.7 billion acquisition of Activision Blizzard, which is expected to close in 2023. Microsoft has also been investing heavily in its Game Pass subscription service, which now has over 25 million subscribers.
In a recent speech by Xbox CFO Tim Stuart at the Wells Fargo TMT Summit (Thanks Techraptor), Stuart said that the company is focused on growing its content and services revenue double-digits. He also said that Microsoft is committed to bringing its first-party experiences and subscription services to every screen that can play a game.
The company is currently working on bringing Game Pass to smart TVs and mobile devices. Microsoft is also exploring ways to bring its games to the consoles of its competitors, such as NVidia GeForce Now, PlayStation, and Nintendo. That’s a smart move because then both companies win when they work together to bring games to everyone.
Microsoft’s push to grow its share in the gaming market is being driven by several factors. The gaming market is large and its growth is never-ending. Microsoft wants to remain a major player in it. For them, that means trying to give the players a good enough deal to move to Xbox.
“One of the great things about gaming is, if you find a way to drive value to gamers and they’re paying for that value that they enjoy, it’s actually a great relationship. They don’t feel like they’re being grinded down on the dollars.
Like, I’m paying $17 a month and I get access to hundreds of games. The value is there. And for us, we offer most of our games if not all that we’ve had before Activision. When a game launches, it’s included in Game Pass as well, so that’s one of the unique value propositions that we have.”
Tim Stuart
Microsoft’s goal in the gaming industry is to consistently increase its content and services revenue by double digits. By expanding their market share at a rate faster than the overall market growth, they aim to establish themselves as a dominant force in the gaming landscape. It’s a huge goal.
After an early meeting with Microsoft CEO Satya Nadella, Xbox head Phil Spencer, and CFO Tim Stuart, they decided to pursue gaming. In spite of initial skepticism, Microsoft’s $2.5 billion acquisition of Minecraft, a seemingly simple block-building game, proved to be one of its most successful deals.
It made Microsoft rethink why they decided to get into gaming. Their strategy is to enter large, growing markets where they can establish a competitive edge and capture market share.
According to Stuart, the gaming industry is huge, worth $250 billion, and Microsoft recognizes its potential. Despite the fact that their current share falls short of the market’s total value, they want to capture a significant portion.
