“Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.” Cloudy Road Ahead “The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play,” the CMA wrote in its decision. But if the deal does not occur, the CMA believes Activision-Blizzard would eventually put its games on other cloud platforms soon anyway, ensuring Call of Duty remains a great equalizer on both cloud and console. After all – if cloud gaming takes off, how many consumers would default flock to Xbox’s cloud ecosystem if it was the only way they could play Call of Duty? Content, the CMA argues, remains king, giving Microsoft a major financial incentive to keep Call of Duty exclusive not on its consoles, but on its cloud services. If Activision-Blizzard were added to Microsoft’s stable, then, the company could easily make Call of Duty and other games like Overwatch and World of Warcraft exclusive to its own cloud gaming services, giving its own cloud platform a major advantage in an emerging market. But in 2022, just one year later, it had skyrocketed to 60%-70%. In 2021, Microsoft’s market share (via xCloud) was between 20%-30%. In one eye-opening example of Microsoft’s cloud gaming market dominance, the CMA shared two charts of cloud gaming service shares, one with data from 2021, and another from 2022. And finally, it has a massive library of games already – a critical necessity for any platform seeking mass adoption. On top of that, Microsoft has both Xbox Cloud Gaming and Azure, technology that gives it “both a short-term and a longer-term solution to host cloud gaming” without the need for third-party cloud platforms. Stadia, the CMA says, struggled for a number of reasons, but one of its main failings was a dearth of unique and new content, and that lack of content is attributable in no small part due to developer struggles to port games to Linux. In fact, the CMA specifically and repeatedly cites Google Stadia, which shut down just one month before the findings were released, as an example of this. First and foremost, it owns Windows, allowing it to stream games via the cloud from its own servers without having to pay extra licensing fees or adapt games to something like Linux – something that’s been historically painful for developers. In fact, the CMA believes that Microsoft is already in a very strong position. While currently cloud gaming struggles due to issues with latency and the need for an Internet connection, the CMA understands that these issues will soon be resolved enough to allow cloud gaming to truly take hold.Īnd when all that happens, the CMA says, Xbox will be in a prime position to dominate the market if it has Activision-Blizzard under its banner. The market has more than tripled in the UK from the start of 2021 to the end of 2022, and is forecast to be worth over £1 billion in the UK by 2026 – more than the market for recorded music. To summarize, the CMA’s research into the current gaming landscape led it to the conclusion that cloud gaming is on the verge of being potentially transformative for gaming within the next few years, including replacing consoles entirely for some. But the second centered around cloud gaming. The first of these, and the one that got most of Xbox’s public attention, was its concern about Microsoft making Call of Duty exclusive to Xbox. Essentially, the CMA held two “theories of harm” about what would happen if the deal went through. The Cloud Conundrumīack in February, the CMA published a massive, 277-page report on what, exactly, it thought about the Xbox and Activision-Blizzard merger at the time. With an appeal on the way that will certainly focus on Xbox’s position in cloud gaming and what that might mean for video games as we know them, let’s take a look at why the CMA is so concerned in the first place, and what might Xbox might do to satisfy its worries and get the UK’s stamp of approval on the most expensive merger in gaming history. And while the gaming giant has repeatedly promised Call of Duty to its console and PC platform rivals enough to assuage the CMA’s console market concerns, fears about Xbox’s domination of the emerging cloud market have continued simmering in the background. But what many may not have noticed is that, at least for the UK regulator, cloud gaming has from the beginning been an equally major concern. Call of Duty, and the possibility that Microsoft might make it Xbox-exclusive upon a successful acquisition, has been at the center of the merger discussion since the deal was first announced last year.
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