What Xbox buying Activision could mean for the future of gaming

Gaming used to be simple. Not long ago, a few major companies would have competing consoles on the market at the same time and, by and large, the biggest selling point for each was a roster of exclusive games. But with Microsoft’s shocking acquisition of Activision Blizzard, that might not be the case anymore.

Truth be told, it still feels like total nonsense to even type those words, but there’s no use in avoiding reality. The folks who run Xbox spent $68.7 billion to acquire the company that, among other things, publishes Call of Duty, World of Warcraft, and Tony Hawk’s Pro Skater. It’s easily the largest such deal in video game history, comically surpassing Take-Two’s $12.7 billion buyout of Zynga the week before. To put it further in perspective, Microsoft’s bombshell purchase of ZeniMax (the folks behind Elder Scrolls, among other franchises) a couple years ago was worth just $7.5 billion. Not even Sony’s seismic purchase of Bungie, worth $3.6 billion, can compare.

Much has already been said about what it could mean for Activision’s toxic work culture, which has been rife with allegations of sexual harassment by high-level figures within its development studios. There have been calls from both inside and outside the company for longtime CEO Bobby Kotick to step down, which will apparently happen when the deal closes next year. There are also antitrust concerns surrounding such a large acquisition. But for you, the fans, this deal could bring about a future where it doesn’t even matter if you have an Xbox console. If you want to play some of the biggest games around, you may have no other choice but to give Microsoft your money.

Some of your favorite games will probably come back from the dead

The first and most obvious reason why Microsoft would feel the need to spend so much money on a deal like this is to control Activision’s absurdly large library of games, which also includes things like Crash Bandicoot, Spyro the Dragon, Skylanders, and Guitar Hero. Yes, think about this for a second: Crash and Spyro, who were once de facto PlayStation mascots many years ago, now belong to Xbox. The whole thing is just silly. Things like this have happened before with Microsoft buying Banjo-Kazooie developer Rare out from under Nintendo 20 years ago, but never on this scale before.

Unfortunately, Activision became a pretty poor steward for many of those properties over the past decade or so. Even unambiguous successes like the Tony Hawk’s Pro Skater remakes were accompanied by bad news afterward, as developer Vicarious Visions was almost immediately put on Diablo remaster duty instead. More and more studios within Activision stopped making original games and became cogs in the Call of Duty machine once that series became a juggernaut in the late 2000s. Put simply, it was a real bummer to watch.

This will change under Microsoft’s ownership. That’s not idle speculation or a baseless assumption, either — Microsoft Gaming CEO Phil Spencer said as much in an interview with the Washington Post.

“We’re hoping that we’ll be able to work with them when the deal closes to make sure we have resources to work on franchises that I love from my childhood, and that the teams really want to get,” Spencer told WaPo. 

Crash and Spyro, who were once de facto PlayStation mascots, now belong to Xbox. The whole thing is just silly.

In other words, if you love King’s Quest or Guitar Hero, this could be good news. (I’m not holding out hope for DJ Hero, but I’m just going to put it out there and hope that manifests in a new game for that incredibly underrated series.) And, of course, any future franchise revivals will be made available as part of a subscription to Xbox Game Pass, Microsoft’s $15/mo Netflix-style service which gets you unlimited free access to a growing library of Xbox and PC games.

Don’t forget about mobile

Before moving onto what this deal means for people who both do and don’t own Xbox consoles (or just love Activision games), it’s important to note that Microsoft is also buying into an audience that could generate $200 billion in 2024: Mobile gamers. King, the company behind the ludicrously popular Candy Crush franchise, is also under the Activision umbrella and will now belong to the same company as Windows and Xbox. 

At the moment, Microsoft doesn’t really have any stake in mobile gaming beyond offering the ability to play Game Pass games over the cloud on phones.

I spoke to Michael Futter, founder of gaming analyst firm F-Squared, and he said not to underestimate how important the King part of this acquisition will be.

“King now gives Microsoft an enormous foothold in a segment they weren’t in before,” Futter said. “This is…a broadening of what Microsoft does, as opposed to vertical integration, which is how you would look at the Activision and Blizzard sides of the deal.”

Put another way, Microsoft is about to make a whole bunch of cash with a new source of revenue so it won’t have to rely too much on console and PC games. Individual Candy Crush games have made $2 billion in revenue through in-app purchases, so maybe Microsoft could give away in-game currency or items with a Game Pass subscription, which would almost assuredly be advertised within Candy Crush itself. Of course, that’s just scratching the surface; don’t be surprised to see some kind of goofy Halo mobile crossover in the future.

What if you love Call of Duty but don’t want an Xbox?

There are a couple of billion-dollar questions coming out of this deal and one of them is: What the heck happens to Call of Duty?

The popular first-person shooter franchise has long given preferential treatment to PlayStation users through early access to new maps and occasional exclusive game modes. Two of the top 10 most downloaded PlayStation games of 2021 were Call of Duty games.

In an attempt to assuage fears that the series would become Xbox and PC-exclusive, Spencer posted a very carefully worded tweet promising that it will “honor all existing agreements” to keep the series on its main competitor’s platform. A separate report from Bloomberg said at least the next three annual releases in the franchise will be multiplatform.

Tweet may have been deleted

Of course, that could mean a bunch of different things. Maybe nothing changes and every new Call of Duty game comes out on both consoles because that would make a lot of money and keep players happy. Or maybe the free-to-play battle royale Warzone mode stays on PlayStation, while any bespoke new single-player campaigns or other content are gated behind Xbox exclusivity. Sony confirmed that future Bungie games will not be PlayStation-exclusive, so Microsoft could take a similar stance with Call of Duty.

The broader point here is that though not everyone may want an Xbox or a gaming PC, a good chunk of that Activision Blizzard audience will still want access to some of the games Microsoft just acquired. This leads to our second billion-dollar question: Could some kind of Game Pass app come to PlayStation consoles?

Whether it would allow direct downloads of games or cloud streaming, it’s a tantalizing prospect. But it’s one that Futter flatly and firmly believes will not happen. Whether it’s because Sony is rumored to be working on a Game Pass competitor itself or because it would simply create problems for consumers over time, he doesn’t see that in the cards. Maybe separation is a good thing in this case.

“That would be very bad for consumers, in my opinion,” Futter said. “At that point you are taking two of the three major players and you are inextricably linking their success, which creates an environment where price fixing, collusion, cooperation among those two parties ultimately is likely to be bad for consumers.”

Why spend $60 on each new Call of Duty release when you can pay a smaller monthly fee to have ready access to that and more than 100 other games?

Still, don’t be surprised if some kind of arrangement takes place in the future to liberate Xbox games from Xbox and Windows hardware. Game Pass cloud streaming on phones is already a thing and Microsoft has been very clear about the fact that it doesn’t really care if you buy an Xbox as long as you pay up for Game Pass.

And that’s probably a smart strategy for Microsoft, given that Xbox has never really been able to hang with its biggest competitors from a pure hardware sales perspective. No Xbox console has ever outsold its PlayStation counterpart. The Xbox 360 came closest with a gap of just 3.4 million units separating it and the PS3, but Sony sold approximately 130 million more PS2s than the original Xbox and around 65 million more PS4s than Xbox Ones.

Future games from the Activision portfolio might be best on Xbox or PC with the potential for improved performance or exclusive features, but they probably won’t all be only on Xbox or PC.

Game Pass could be a necessity

Speaking of Game Pass, that’s the key to everything going on with Xbox these days. The Netflix-like subscription service gives you unlimited access to an evolving library of games (including anything made by Microsoft itself from day one) for a paltry $15 monthly fee. Oh, and it’s not limited to Xbox — there’s a whole PC Game Pass marketplace with a separate roster of games, and again, anything Microsoft makes comes out day-and-date on PC.

Now that Activision’s library will get folded into Game Pass, it’s simply going to be too good of a deal to pass up for lots of players. Why spend $60 on each new Call of Duty release when you can pay a smaller monthly fee to have ready access to that and more than 100 other games? From a purely financial standpoint, there’s really no case against Game Pass if you love games. It recently passed 25 million subscribers, so clearly lots of people agree.

However, it could have interesting effects on the ways games are designed down the road. Over time, Microsoft may care less and less about how many individual copies of a game are sold because all that really matters is that people subscribe to Game Pass. This could possibly lead to even more games like World of Warcraft where the goal is to keep a player hooked for a long period of time so those monthly fees keep rolling in. Your attention becomes more valuable than your dollars at that point.

I spoke to NYU Game Center director Frank Lantz about this and he echoed that concern. As Lantz sees it, an abundance of games that exist purely to dominate player attention rather than exhibit artistic merit would make gaming look more like gambling.

“We all know from our love/hate relationship with social media that maximizing for attention can lead to kind of terrible equilibrium, right? Lowest common denominator things where it’s not about quality, it’s just about raw engagement,” Lantz said. “We don’t want the game industry to become more like the casino industry.”

On the other hand, one of the best things about Game Pass right now is how much exposure it gives to smaller indie games that people might not want to pay $20 for, but will try for free. (We’ve all picked something unusual up at a buffet just because it’s there and we were feeling adventurous.) Bandai Namco’s brain-punk action RPG Scarlet Nexus is far from an indie darling, but its developers have cited Game Pass as a reason for its success. My two favorite games of 2021 were Sable and Unsighted, both of which are tiny in scale and are on Game Pass.

That said, it’s possible Microsoft’s love for massive acquisitions could lead to splashy, big-name games like Call of Duty drowning out some of the more experimental, smaller games on Game Pass down the line. Lantz acknowledged the danger of that happening, but said as long as there are decision-makers who care about games as an art form, it doesn’t have to be that way.

“The games industry has always been rooted in a kind of hobbyist enthusiasm for the power of computers to be not just effective calculating devices, but to produce things that are interesting and cool and funny and weird and beautiful,” Lantz said. “As long as that spirit is still present, then I think that we can balance these things.”

Whether Xbox’s library is driven purely by mega-blockbusters or features a smattering of small indie gems may not even matter in the end. Microsoft is now sitting on a mountain of gaming gold and it knows that no matter your allegiance, you’ll pay to play.

And that’s how it wins a console war without even selling consoles.