Ben Thompson made a good case recently for why it might be premature/misguided to block this deal. Basically, Microsoft is trying to create a completely new business model with Game Pass, which could be a big improvement for consumers if they don't need to buy consoles or gaming rigs any more.
> Microsoft, like Google, is creating a cloud streaming service; Microsoft, though, is not only offering a business model that is uniquely enabled by the cloud, but is spending billions of dollars directly and indirectly (through foregone sales) to get that business model off of the ground (when-and-if Game Pass has a huge subscriber base, then signing up 3rd-parties will be easy — the challenge is getting to scale in the first place). This is the work that Google was never willing to do, and why Stadia was doomed to fail.
> This also explains why I worry the eagerness of regulators to act before markets exist in any meaningful way is a bad idea. One of the acquisitions Microsoft has made in pursuit of this subscription strategy is Activision Blizzard, and I do, for the record, think it is important to scrutinize this deal, and perhaps extract guarantees from Microsoft that some of the titles involved (particularly Call of Duty) remain cross-platform (which as I noted, makes economic sense anyways)...
> This framing suggests that Microsoft is going to unfairly win a cloud gaming market that is inevitable, much like Google once won the inevitable Internet search opportunity. The lesson of the Google cemetery, though, is that inevitable opportunities are the exceptions, not the rule; to that end, I would argue that Stadia’s failure is evidence that absent a Microsoft-level investment the cloud gaming market will never come into being in the first place.
This could be done without an acquisition though, no? There are a bunch of games on Game Pass from non-MS studios. They just need to draft an agreement with Activision, which would be far cheaper and less monopolistic.
Perhaps, it's unclear to me what that would look like though. How would Activision bill Microsoft for N users playing M games? I think they would want $N*M*MSRP (perhaps * <small-bulk-discount>) for that. Which probably isn't viable for Microsoft to bootstrap their platform. Indeed, would Activision even cut a deal here? In some sense Microsoft's Game Pass is a direct competitor to them selling individual game SKUs, so why would they strengthen Microsoft's strategic position with a licensing deal?
Whereas if Microsoft has a large library of first-party titles, they can take a loss on unit sales to grow the platform. At some point if they are successful they hope to get to a size where other AAA third-party publishers like Activision are willing to sign a licensing deal like "Microsoft agrees to pay $Xm / year for unlimited streaming of the CoD franchise".
But it's not obvious to me that there's a viable path to getting Activision content on their streaming platform. (It's not available on GeForce Now, for example). Anyway, on this licensing point I'm not an expert, so I'm interested in others' thoughts here. Particularly what the current licenses for existing GeForce Now / Game Pass games look like.
> How would Activision bill Microsoft for N users playing M games?
Isn't this Microsoft's job in building a valid product out of game subscription/streaming? What's the goal here - Microsoft owns every game developer to have on their subscription service?
It's like saying Spotify must buy all the big labels because how else could they run a streaming business?
Games have been massively devalued by Game Pass, PS Plus, indie bundles, and Steam sales. Plenty of bargains for the consumer, but it's not good news for the majority of developers.
If developers can't make money from selling games outright, well, look at the mobile game market...
I think Gamepass is a factor - it affects suppply, no question - but the raw supply of all games seems as high as it’s ever been. One could argue the latter has led to the former; there are so many titles being released regularly now that Gamepass and perpetual Steam sales can happen.
* The player doesn't actually own anything. I routinely play games I purchased 5+ years ago, which is a fantastic long term entertainment investment.
* The player doesn't have a direct relationship with the game studio. Microsoft injects themselves a middle man, and is essentially rent seeking.
* The player has much more limited rights to run the software the way they want to. I can legally buy a switch cartridge, a switch, and run the switch game on an emulator. Nintendo hates this. My access to Game Pass games is legally limited to ways Microsoft considers appropriate.
That is cool for you, but I would argue you aren’t the “average consumer”. Buying physical games in antiquated for a lot of people. And I think the vast middle ground is where most consumers are. Use GamePass for a majority of games, and buy the physical copy for the ones worth replaying.
There is no indication that physical copies are dead. In fact, for all the impacts of streaming on movies, you can still buy physical copies of almost every movie.
This isn’t about killing “choice”, it is about giving consumers a different choice than the one you would make. But thankfully it isn’t zero-sum so you can still buy a CD custom wrapped in plastic
> There is no indication that physical copies are dead.
Might want to talk to DVD and Netflix. Physical copies are on life support, and you won't be able to buy them anymore except through GamePass or equivalent service.
This is what Microsoft wants, because they can continue to charge a subscription price for decades old games (there's a few selections on GamePass if you want decades-old games).
Are you sure? Because last time I went to Target, they had a literal “bargain bin” of mainstream BluRay disks. i am talking dollars for a mainstream blockbuster. Maybe you should focus on convincing “the masses” that they should pay per game, because if the market is any indication, people prefer a fixed cost subscription service.
It’s okay, it isn’t the first time that the interests of “the market” are in opposition to one’s values and it won’t be the last.
Most people don’t have the same values as you seem to have. That doesn’t mean that either are wrong, but it does mean you might be tilting at the wrong windmill
> That is cool for you, but I would argue you aren’t the “average consumer”.
I think the "average" PC and Steamdeck player is interested in emulation, so it's a good segment of the market but not the largest. If a game was only ever released on Game Pass (and do you really think Microsoft doesn't want a Game Pass Exclusive) then running the game outside of a Microsoft Game pass context is illegal.
But you can buy non-physical DRM-free games too on GOG or itch.io, for example.
So it's not just physical games that stay with you forever. DRM-free digital PC games are even better because you can back them up a lot easier than disk/cartridge-based physical games.
Also, if these companies are selling entertainment, they may have a “gaming monopoly” (which they don’t) these companies need to compete with the ability to get eyeballs from companies like Disney. It seems very myopic to just imagine video gaming is its own little island here unaffected by other entertainment companies.
> Microsoft, like Google, is creating a cloud streaming service; Microsoft, though, is not only offering a business model that is uniquely enabled by the cloud, but is spending billions of dollars directly and indirectly (through foregone sales) to get that business model off of the ground (when-and-if Game Pass has a huge subscriber base, then signing up 3rd-parties will be easy — the challenge is getting to scale in the first place). This is the work that Google was never willing to do, and why Stadia was doomed to fail.
> This also explains why I worry the eagerness of regulators to act before markets exist in any meaningful way is a bad idea. One of the acquisitions Microsoft has made in pursuit of this subscription strategy is Activision Blizzard, and I do, for the record, think it is important to scrutinize this deal, and perhaps extract guarantees from Microsoft that some of the titles involved (particularly Call of Duty) remain cross-platform (which as I noted, makes economic sense anyways)...
> This framing suggests that Microsoft is going to unfairly win a cloud gaming market that is inevitable, much like Google once won the inevitable Internet search opportunity. The lesson of the Google cemetery, though, is that inevitable opportunities are the exceptions, not the rule; to that end, I would argue that Stadia’s failure is evidence that absent a Microsoft-level investment the cloud gaming market will never come into being in the first place.
https://stratechery.com/2022/google-kills-stadia-why-stadia-...