It all started of as nothing more than rumblings and rumors. The idea of Microsoft acquiring one of the most well-known and influential companies in gaming seemed too monumental to contemplate. As time went on though, more and more smaller studios began to get snatched up by both Sony and Microsoft. The purchases made by these companies were fueling each others infinitely deep pockets in a competition to hold the most stacked hand of industry talent.

After years of decisions and delegation with boards from all around the world slowly giving their approval, Microsoft was given the green light to make the biggest buyout in gaming history. They now own Activision-Blizzard, but unsurprisingly, it has come at a tremendously hefty cost of $68.7 billion. At a glance, it seems to be a sure-fire way to bolster your company to the top of the gaming industry and stay competitive. However, upon further investigation, it appears there is much larger ramifications for this deal than previously thought. Not just for Nintendo and Sony, but Microsoft too.

Xbox Just got a Major Boost to Every Facet of Their Gaming Business Model

It should be obvious that this deal is going to change the Xbox ecosystem for the better. It has always been a good time to be an Xbox fan, but it’s about to be a great time. Xbox’s unique offerings that it provides to gamers with game pass and backwards compatibility combined with the expansive Activision-Blizzard library is sure to be a recipe for success. It is also undoubtably a large factor that Microsoft took into consideration when making the decision to lay down this much cash. So much of Xbox’s success has been associated with their game pass subscription model and an infusion of all legacy and new Activision-Blizzard titles coming to their platform is extremely attractive to their customers.

Microsoft has managed to completely overcome their biggest issue in the eyes of gamers as well with their well documented lack of exclusives. Compared to Sony and Nintendo, Microsoft’s offerings in terms of first-party games have been severely inadequate. To put it into perspective, Microsoft hasn’t had a single first-party game even be nominated for game of the year in 10 years. This unholy dry spell can quickly be scoffed at with the induction of Activision-Blizzard and their consistently highly rated titles. Microsoft has certainly been playing catch-up, buying up smaller studios like Ninja Theory and Obsidian Entertainment. Unfortunately they haven’t had the luxury of being able to wait for their internal studios to produce so they can keep up with the output of quality titles that Sony and Nintendo have been providing their players. Exclusively offering all Activision-Blizzard content to Game Pass subscribers will be a huge win for them and their players.

Activision-Blizzard gives them franchises to work with that are already solidified and proven in the eyes of audiences. Of course, which of these titles are going to be truly exclusive still remain somewhat a mystery. Phil Spencer, head of Xbox, has pointed to keeping some titles multi-platform for the time being. However, that may not always be the case. A company doesn’t spend this much money lightly and they are sure to provide their own customers with perks and bonuses of being faithful in their own ecosystem. Not to mention they will be looking into ways to recuperate the massive price of the acquisition as well for the future moving forward. I wouldn’t expect Microsoft to be putting Game Pass on any platform that isn’t their own though. Phil Spencer has come right out and crushed any hopes of playing an Xbox title with Game Pass on Sony or Nintendo in the near future.

The Cost of Doing Business

While there are many positives that will come from this deal being executed, there are also some considerable caveats. The most apparent, aside from the actual money spent, is the cost paid through their exposure while trying to ensure that this deal would go through. Microsoft experienced what can be argued as the largest high-level leak ever seen in the gaming industry. They had their hardware plans, confidential emails, and a multitude of internal business plans unceremoniously exposed for everyone to see. While Phil definitely attempted to backpedal afterwards, the damage had already been done.

When you are in direct competition with other companies for limited market share in the gaming space, having something like this happen can be a huge blow to morale and you lose the advantage of surprise. One such interesting piece was that Xbox has considered completely dropping out of the gaming space if they are unable to meet certain targets by the end of this generation in 2027. For the time being though, Microsoft is staying, and they are now forced to operate with a lot of transparency.

Microsoft has already agreed to allow future Call of Duty titles to come out on PlayStation. How long that is going to last is another question though. The Call of Duty franchise has unbelievable staying power. Regardless of reviews or swings in quality year over year it is consistently in the top 10 best selling games each and every year. This isn’t even taking into consideration the massive number of other titles under the Activision-Blizzard umbrella. Microsoft would be shooting themselves in the foot not to make some of the other series exclusive to their platform going forward to further solidify their place in the market. PlayStation has used exclusivity against Xbox for years, there is no reason they won’t do the same.

Where Do They Go From Here?

Xbox is in an incredibly unique position where they can control the subscription based market to their hearts desire. They have the best offerings and more content than anyone else by a mile. We could very well see Xbox take a page out of Netflix’s book. Continuously increasing prices while cornering the market as they have already been doing. Game pass, as it stands, is arguably the best deal in gaming and no other company has the ability to compete with them currently. That doesn’t mean their competitors haven’t taken notice though. Sony has been snatching up studios just as Microsoft has which is just going to create more consolidation in the market, and consolidation is never a good thing.

Regardless how you feel about the acquisition, it is hard to say that buying your way back into competition doesn’t create issues. Xbox has been sitting at the bottom in the console space for some time and this is sure to change things up. It also promotes other companies to do the same. This very well may be why we have seen so many studios get acquired recently as to prevent them from going to the competition first.

As it stands right now, there seems to be a major push for live service titles in the industry. That is where you can stand to make the most money off a product if it sees success. Sony is just beginning their push for this and has already had troubles transitioning some of their studios to an online model. Microsoft now owns some of the largest live service IP’s like World of Warcraft, Diablo, and CoD. This has created a huge paradigm shift where Xbox now has a major advantage in the industry through buying power alone. Nintendo on the other hand seems to be more than happy to continue doing their own thing because they have cemented their own family friendly niche into the gaming space that neither companies care to seriously challenge them to.

I don’t think it is unrealistic to say that no one could have predicted a world where Sony owns Bungie, the studio that created the Halo franchise, while Microsoft holds the rights to every Call of Duty title. It is highly doubtful Microsoft will make any changes to the creatives behind their newly acquired IP’s as they wouldn’t want to mess with a formula that has, for the most part, been working. This massive deal will have impacts on the industry for years to come and will be interesting to watch how it unfolds. Microsoft may be taking a break from their acquisition spree as this deal has surely made a large dent in their budget. They will need to see some of the fruits of their labor and no doubt have already been cooking up ways to maximize their profits and recoup their losses from our wallets.

The opinions expressed in this article are solely that of the author’s and does not represent the entirety of MP1st and its staff.