Following a challenging year, Microsoft’s head of video gaming remains committed to exploring acquisitions and strategizing for competition in the handheld gaming and mobile store sectors.
In an interview held on Tuesday at Bloomberg’s New York offices, Phil Spencer emphasized the importance of deals that enhance “geographic diversity,” particularly in Asia. He noted that acquiring another mobile company could complement the video game titles Microsoft acquired through its $69 billion purchase of Activision Blizzard last year.
“We definitely want to be in the market, and when we can identify teams and technologies that align with our gaming goals at Microsoft, we will remain proactive,” Spencer stated. He clarified, however, that no major acquisitions are on the immediate horizon, as the company is currently focused on assimilating Activision Blizzard’s workforce.
Microsoft is keen on diversifying its gaming teams, with a particular eye on opportunities in China. A recent collaboration with Tencent Holdings led to the development of a mobile version of the classic franchise Age of Empires, which was globally released in October.
The executive expressed a strong interest in the handheld gaming market, indicating that there are plans to explore this category further. While prototypes are under development, Spencer has tasked his team with assessing the market dynamics to inform their approach. He indicated that any new device might still be several years away.
In the near term, Spencer mentioned that developers and engineers would concentrate on enhancing the Xbox app’s functionality on existing portable devices while collaborating with hardware manufacturers to ensure seamless connectivity with Xbox games. He acknowledged that the current performance of the app on some devices is satisfactory but not exceptional.
“In the long run, I enjoy the idea of building devices,” Spencer affirmed. “I believe our team can achieve innovative breakthroughs, but we want our direction to be informed by current trends and market learnings.”
The anticipated launch of Microsoft’s online mobile game store has been postponed as the team conducts further market research. Originally announced in May with a target release in July, the store’s rollout is still pending discussions with mobile developers, including those linked to Microsoft-owned titles like Candy Crush and Call of Duty Mobile. Furthermore, ongoing legal cases regarding Apple Inc.’s iOS and Alphabet Inc.’s Android mobile stores have hindered Microsoft’s ability to effectively deploy its own mobile storefront.
“A web-based store would eliminate the need for users to navigate app stores to install applications, but it still requires a means to discover the store,” Spencer explained. “If we simply rely on building it and expecting users to come, I doubt that strategy will succeed.”
This reality necessitates that Xbox creates a distinctive and appealing store experience for players while also attracting content creators. Concurrently, preparations are underway for a landscape where Apple and Google mobile devices may become more compatible with Xbox offerings.
“The industry is moving in a favorable direction,” Spencer suggested. “The trend toward more open platforms benefits both users and creators, and I see this momentum continuing.”
Having recently introduced the first wave of Xbox games for Sony’s PlayStation and Nintendo’s Switch, Spencer expressed satisfaction with the outcomes and affirmed that Microsoft will pursue additional collaborations across its game portfolio.
“I don’t view any area of our portfolio as off-limits,” he stated, while also noting it is premature to discuss any developments regarding the next installment of Halo.
In the wake of the Activision acquisition, Xbox let go of over 2,500 employees and shut down three game-design studios. Despite currently navigating a difficult mobile gaming landscape, Spencer remains optimistic about the outlook for 2025.
“The Xbox business has never been in better health,” he commented, citing growth in cloud and PC gaming alongside increased console activity. “Our current performance bodes well for the future of our hardware and the games we create.”
Spencer is also positive about the potential expansion of mobile gaming.
“I am quite optimistic about the trajectory of this industry,” he noted. “To engage new players, we must embrace innovation in business models, devices, and access methods. The market will not grow with $1,000 consoles.”
© 2024 Bloomberg LP
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