How Microsoft Just Upped Their Game; The Race For Content

To all Xbox lovers, Microsoft has heard you. More content, great content, is on its way. Microsoft is about to change the gaming industry with its recent, juicy, $68,7 billion cash offer for Activision Blizzard, the developer of famous games such as Call of Duty and Candy Crush.

The metaverse race seems to be starting in all seriousness with the offer Microsoft made for Activision Blizzard and the shifting focus of Microsoft on, as its CEO Satya Nadella, states, “cloud software, community and content” and focusing on a younger consumer. With just under 3 billion active gamers worldwide, 26% of whom spent 1 to 5 hours a day on video games, it is clear where the money trail leads and that gaming is key and gaming content is king.

The first frontier of the metaverse is in and on various gaming platforms, such as Fortnite, Animal Crossing and Roblox, which currently are the ones enabling others to create 3D experiences on their platforms, like concerts, virtual fashion shows, skateparks and the (soon to be) expected Nike virtual stores for the sale of their virtual sneakers. Fortnite, last year, hosted the Rift Tour with Ariane Grande and Roblox has done numerous collaborations with third parties, amongst others a very successful one with Gucci. Nintendo’s Animal Crossing/New Horizons has seen collaborations with Louis Vuitton, Off White, Chanel and Net-a-Porter.

Despite the ‘arms race’ by technology titans to colonise the metaverse, there are plenty of people who think that the metaverse will not materialise, that it is overhyped and will take years to become a true part of our lives. They could be right. But, when companies like Meta and Microsoft start positioning to be key players in the space, it is at least time to look at the metaverse with a good dose of energy and curiosity.

With gaming content come big, big revenues. Revenues that keep flowing with every hour played as games have all sorts of ways to monetise their players through virtual merchandise and incredible experiences. Many a parent’s credit card may have shown some unexpected in-game purchases (and these do add up…).

Every brand is out there to get a piece of the gaming pie, either by directly selling in-game items for in-game use only or by selling limited edition designer items as NFTs, which can be held on blockchain by the owner for as long as they wish. The content creator/owner of the game makes a commission on every sale made by third parties inside their games, much like a supermarket charging third party brands to be on their shelves.

Like investors are keen on dividends, companies – in return - are keen on creating stable, recurrent, revenue streams. And the gaming industry is providing this. In buckets. The Netflix subscription model is much envied by others as Netflix can collect income from its customers every month and can also increase prices if they have to (to adjust for inflation for example). As the gaming industry is expected to be bigger than streaming in the near future, Microsoft has set itself up to collect healthy, recurrent and growing subscription payments for its games.

With this deal, Microsoft surely has fired the opening shot and many other gaming content creators as well as metaverse aspirants will be spitting in their coffees and be busy mulling over their next moves. Microsoft, combined with Activision Blizzard, will be the 2nd largest gaming company in the world, after Sony. This will really change the game, literally. Gaming and the metaverse, despite some naysayers, just got a lot more exciting.

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