After a difficult year, Microsoft’s video game chief is still considering acquisitions and planning how to compete and cooperate in the market for handheld gaming devices and mobile stores.
Phil Spencer said in an interview at Bloomberg offices in New York on Tuesday that deals that increase “geographic diversity”, including Asia, may be worthwhile. He said acquiring another mobile company would add to Microsoft’s $69 billion (approximately Rs 582,417 crore) acquisition of Activision Blizzard last year.
“We absolutely want to be in this market and we’ll definitely be vigilant when we can find the team, the technology and the capabilities to complement what we’re doing in Microsoft Gaming,” Spencer said. However, he said there’s nothing “imminent” at the moment and that a large deal may not happen at this time as the company spends a lot of time onboarding Activision Blizzard employees.
He said Microsoft hopes to diversify its gaming team by focusing more on China. The company has teamed up with Tencent Holdings Ltd. to develop a new mobile version of Age of Empires, a world-building series that first appeared in the ’90s. Microsoft and Tencent released the game globally in October.
“This is a great area for us to learn from a creative team that has really unique abilities,” Spencer said. “The real opportunity is to work with creative teams in China and to look globally.”
The executive has repeatedly expressed his admiration for handheld gaming devices and said he “expects us to do something in that category.” While the company is developing the prototype and considering its possible uses, Spencer also asked his team to focus on the market and develop a vision based on what they learn. Such a device is still several years away, he said.
He said that in the coming months, designers and engineers will focus on making Xbox applications run better on existing portable devices and working with hardware manufacturers to ensure that their products are in sync with Xbox games and experiences. He said the current Xbox app is decent on some devices, but not great yet.
“Long term, I like that we build equipment,” Spencer said. “I think our team can do some really innovative work, but we want to be informed by learning and what’s happening now.”
Spencer said the company’s planned launch of an online store for mobile games has been delayed as the group conducts more research into the market. Xbox president Sarah Bond announced the store in May, with a planned release date of July. But staff are still talking to mobile developers, including those responsible for Microsoft’s Candy Crush Saga and Call of Duty Mobile, to formulate plans. As regulatory cases involving Apple Inc’s iOS and Alphabet Inc’s Android mobile stores make their way through courts around the world, Microsoft still has no effective way to build its own stores on phones.
“So a web store means people don’t have to go into the app store to try to install something, but you still have to have a way to find the store,” Spencer said. “If we just hope, like, if we build it, they’ll come, I bet that’s not going to work.”
That means Xbox has to make its store unique to players and figure out what will appeal to content creators. At the same time, it’s preparing for a world where Apple and Google mobile devices are more open to Xbox.
“I think the ball is moving in the right direction,” Spencer said. “I think the idea of open platforms, giving users more choices, creators having more choices, you’re seeing the momentum, right?”
After releasing the first Xbox games for Sony Group’s PlayStation and Nintendo’s Switch, Spencer was pleased with the results. He said Microsoft will be doing more of this and won’t rule out any games from Microsoft’s stable.
“I don’t see a ‘you can’t do this’ red line in our portfolio,” he said. He said it’s too early to make any decisions about the next version of Halo.
After acquiring Activision Blizzard, Xbox laid off more than 2,500 employees and closed three game design studios. Spencer feels good about 2025 as the company navigates what management said was a tough year in a challenging mobile gaming market.
“The Xbox business has never been healthier,” he said, citing growth in cloud and PC gaming and console usage. “The business is doing well right now, and I think that means a healthier future for the hardware and games we build.”
Spencer also said he is optimistic about the growth of mobile gaming.
“I’m very happy with the direction the industry is going,” he said. “To attract new players, we need to be creative and adapt to new business models, new devices and new ways of access. We are not going to expand the market with a $1,000 (roughly Rs. 84,408) console.”
© 2024 Bloomberg
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