Phil Spencer says Microsoft really wants Activision for mobile and PC games

It would be reasonable to assume that Microsoft’s lawsuit against Activision Blizzard was prompted in large measure by Call of Duty. It’s one of the greatest gaming series on the planet, after all, a perennial moneymaker that just doesn’t seem to lose even after more than a decade of annual releases. But in an interview with Bloomberg (opens in a new tab)Xbox boss Phil Spencer said what really piqued Microsoft’s interest were mobile games and, to a lesser extent, PCs.

“The biggest gaming platform on the planet is cell phones. One and a half billion people play on cell phones,” Spencer said. “And I guess, unfortunately as Microsoft, it’s not a place where we have a native platform. As a game, coming from console and PC, we don’t have a lot of creative ability that has built successful mobile games.

“One thing about the video game space is if you’ve been around too long, you know most of the creators. So you kind of know teams that might be suitable for what we’re trying to do. But we We really started discussions, internally at least, at Activision Blizzard around the capability they had on mobile and then PC with Blizzard, and those were the two things that really piqued our interest.

This is an especially interesting point because Call of Duty is generally seen as a major potential obstacle to regulatory approval of Microsoft’s acquisition of Activision Blizzard. Microsoft was recently forced to respond to Sony’s claims that Call of Duty games are so “essential (opens in a new tab)“that they can influence console buying decisions. In light of this, it’s understandable that Microsoft would want to downplay the role Call of Duty played in driving the deal.

Mobile really is where the money is, though. Activision Blizzard revealed in its second quarter 2022 financial report (opens in a new tab) that more than half of the total revenue it made in the quarter came from mobile games, or $831 million in total. That’s more than PC and console revenue combined, and a dramatic jump from the same quarter a year earlier, when mobile phone revenue accounted for 35% of the total. And while PC and console revenues were down in the quarter, mobile phone revenues saw slight growth.

Interestingly, the vast majority of this mobile revenue comes from Activision Blizzard’s silent “K”: King, the mobile developer acquired by Activision in 2016, which reported total quarterly revenue of $684 million, or more than 82% of the total. But the shift to mobile is spreading. Diablo Immortal is a success (opens in a new tab) despite furious reactions from mainstream gamers, Call of Duty Mobile maintains a stable viewership and work continues on the mobile version of Call of Duty: Warzone (opens in a new tab) and Warcraft: Arclight Rumble (opens in a new tab).

Microsoft’s acquisition of Activision Blizzard cleared its first regulatory hurdle earlier this week when Saudi Arabia (opens in a new tab) The General Competition Authority (GAC) has given the official green light to the agreement. However, the deal is still under investigation by larger regulators, including the US Federal Trade Commission. (opens in a new tab) and the UK Competition and Markets Authority. (opens in a new tab) The general consensus is that the deal will eventually be approved, but some US politicians have criticized (opens in a new tab) of the role played by Activision Blizzard CEO Bobby Kotick, who remains under fire for his handling of allegations of widespread misconduct at the studio, and how he will enjoy a “golden parachute” in the words of the OK.

What role Kotick will play at Activision Blizzard if the acquisition is completed, if any, remains an open question for now: Spencer declined to comment on whether Kotick will stay, saying that until the deal closes, he won’t is “not really in a position to say” how the business is run.

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