“Even post-this acquisition, we will be number three.”
Satya Nadella has downplayed the likelihood of Microsoft’s enormous $69bn Activision Blizzard buyout being blocked by the US Federal Trade Commission.
In an interview with the Financial Times, Nadella said the deal should be viewed in the context of the video games industry market – where Microsoft is not top dog.
Far from gaining a monopoly, he suggested, Microsoft would simply be a “big” player in a “fragmented” market.
When the deal is expected to be completed next year, Microsoft will be valued third in terms of video games industry players – behind both Sony and Tencent.
“At the end of the day, all the analysis here has to be done through a lens of what’s the category we’re talking about,” Nadella said. “And what about the market structure? Even post-this acquisition, we will be number three with sort of low teens [market] share, where even the highest player is also [in the] teens [for market] share. It shows how fragmented content creation platforms are. And so, that’s the fundamental category. Yes, we will be a big player in what is a highly fragmented place.
“Also, the analysis will have to extend to say: Why are these content companies trying to become bigger? It’s because the place where the constraints really are is distribution. The only open distribution platform for any gaming content – guess what? – is Windows… the biggest store on Windows is Steam. It’s not ours. People can do any payment instrument, whereas all the other gaming distribution platforms are closed. To some degree, that’s why we are very hopeful that, by becoming stronger, even with low share, we can create more distribution for many small players… using things like xCloud.”
The past year has seen a cascade of acquisitions within the games industry. For its part, Sony has announced plans to snap up six developers in 12 months, including Destiny maker Bungie.
But Microsoft’s pricey payout for Activision Blizzard is certainly the biggest of them all – and it will be fascinating to see what happens next. For a rundown of everything Microsoft will get, here’s our full list of Xbox Games Studios and what they’re working on.