Phil Spencer, the CEO of Microsoft’s gaming division, declared this week that Microsoft might launch another app retailer on each iOS and Android as quickly as subsequent 12 months if its acquisition of Activision Blizzard is accredited. Spencer’s feedback come because the deal faces aggressive evaluate by a lot of regulatory companies, most notably the UK’s Competitors and Markets Authority (CMA), which is able to subject a call on the matter in late April.
The power to launch another app retailer on iOS will probably be catalyzed and facilitated by the EU’s Digital Markets Act (DMA), which primarily goes into impact subsequent 12 months (I present an summary of the DMA right here). In The DMA and the Content material Fortress-ification of the app financial system, I argue that the DMA is extra more likely to marginally improve the dimensions of the present smartphone content material distribution oligopoly managed completely by Apple and Google, slightly than instigating the blossoming of an open and vibrant market of app shops. From the piece:
A extra seemingly end result of the DMA than various app shops proliferating and gaining traction on both iOS and Android, the place they’re at present allowed, is the accelerated Content material Fortress-ification of the app financial system…The menace to Apple (and to a lesser extent, Google) from the DMA isn’t that apps will sidestep the App Retailer via direct client installs: ATT made certain of that by erecting limitations to reaching related audiences via direct response promoting. What the DMA will do is permit massive social platforms and another scaled companies (eg. Epic Video games) to launch shops that lure builders via decrease processing charges and clients via present relationships.
(Excuse the truth that I take advantage of an incorrect ticker image for Microsoft, which trades as $MSFT, within the tweet above)
Microsoft is clearly invested in becoming a member of this expanded oligopoly, and for good cause: the corporate already possesses the part components for a Content material Fortress throughout id (via XBox authentication and the XBox community), content material (its present portfolio of video games), and AdTech via its acquisition of Xandr. Microsoft has already spoken to the dimensions of its promoting ambitions; from Microsoft’s Xbox promoting ambitions:
That Microsoft would search to introduce advertisements to the Xbox surroundings shouldn’t be altogether shocking: I posited again in January that, if an advert community had been launched to it, Microsoft’s proposed acquisition of Activision might spawn a substantial content material fortress, consisting of a considerable content material portfolio spanning cell, desktop PC, and console, all supported by a premium subscription product on Xbox, the Xbox Sport Move, with 25MM energetic subscribers. Such a big, contextually-homogenous but platform-diverse pool of content material creates the circumstances for environment friendly cross-promotion and augmented monetization effectivity via personalization (eg. gross sales and particular affords) utilizing first-party information. However an promoting platform is required to unlock this performance.
Resistance to Microsoft’s acquisition of Activision Blizzard principally pertains to management of the Name of Obligation franchise, which is seen because the crown jewel of Activision’s content material portfolio. However I’ve contended because the acquisition was introduced that King — the developer behind Sweet Crush, the ATT-resilient, decade-old recreation that celebrated its best-ever quarter in This autumn 2022 — is an neglected asset that would supply Microsoft with a substantial nexus of engagement on cell. Microsoft revealed a set of open app retailer working rules final 12 months that recommended that Microsoft would possibly enter the cell market with an app retailer. The present announcement lays naked the corporate’s business intentions.
If Microsoft’s acquisition of Activision Blizzard passes evaluate, Microsoft would enter the cell house with the advantage of a scaled content material portfolio, an id administration system, and promoting infrastructure. The combination of those belongings, post-acquisition, is definitely not trivial, however the alternative is substantial: a logged-in subscriber base of greater than 25MM via the XBox Sport Move, a portfolio of content material that spans tons of of tens of millions of MAUs, touchpoints throughout quite a few {hardware} type elements, and an promoting expertise platform that may probably serve advertisements throughout the complete portfolio. If that is paired with a cell app retailer, Microsoft can be distinctive in proudly owning all of those elements.
