Microsoft calls cloud gaming 'immature' in Activision deal filing.

Microsoft calls cloud gaming ‘immature’ in Activision deal filing.

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After years of promoting cloud gaming, Microsoft this week presented a much less optimistic outlook on the emerging technology. The company called cloud gaming “immature” and “untested” in a tight, tasty filing as part of its recent effort to push through a $68.7 billion deal to acquire video game maker Activision Blizzard, which is still pending approval from regulators must become.

“Today, cloud gaming is still in its infancy and has not yet proven itself as a consumer proposition,” Microsoft wrote in a reply to the UK’s Competition and Markets Authority (CMA) on Tuesday, adding that the situation is not expected to change will improve in the years to come. The company doesn’t expect cloud gaming to replace consoles or PCs, calling it “a new and immature technology.”

The CMA wrote on September 1 that it would launch a full investigation into whether Microsoft’s purchase of Activision could affect market competition in the UK. The regulator argued that Microsoft could smother its competitors by removing Call of Duty from PlayStation or adding Activision’s games to its cloud gaming service. The deal is under scrutiny by several international regulators and the United States Federal Trade Commission.

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Microsoft has repeatedly presented cloud gaming as a way to enjoy its games and complement console sales that lag behind Sony’s. At the flagship industry E3 show in 2019, one of the industry’s last in-person conferences until events resume in 2022, Microsoft showed gamers its Project xCloud cloud gaming service in flashy demos and said the service could play all 3,500 games the Xbox catalog and another 1,900 games still in development.

“We’re excited to see this space continue to grow and look forward to supporting development studios, our partners and others in the industry who are investing in cloud gaming as it invites more people to experience gaming,” said Xbox Cloud Gaming Vice President Catherine Gluckstein in a statement to the Washington Post Oct. 6.

Gluckstein’s comments came in response to questions about the state of gaming following the shutdown of a rival cloud platform, Google’s Stadia. Google announced on September 29 that Stadia will be closed until January 2023.

Microsoft’s message in its response to CMA Tuesday was more measured, arguing that it would likely take customers a long time to move to cloud gaming and likely stick with most games on PC and consoles. Despite the hype surrounding cloud gaming, Microsoft wrote that gamers don’t care if their games are stored locally or in the cloud. Instead, the technology has to convince them of game content and actual technical data such as graphics and latency.

Even though the cloud gaming landscape has narrowed with Stadia’s closure, brands like Logitech, Ubisoft, and Razer are still bullishly promoting their cloud gaming services.

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The Microsoft filing also contained a host of other facts, some newer than others, that offer a rare glimpse into the notoriously closeted gaming industry.

Xbox has agreed not to bring Call of Duty to Game Pass “for a few years” to honor Activision Blizzard’s ongoing deal with Sony, which gives PlayStation users early access and ends in 2024. Microsoft announced in the filing that it had offered to keep Call of Duty on PlayStation through 2027, but Sony ultimately turned down that offer. Microsoft’s response to concerns about Call of Duty has been to remain adamant that the lucrative franchise will not be removed from PlayStation, as Microsoft has repeatedly told gamers and regulators that it would lose money to the franchise if Call of Duty left the platform would leave from Sony.

Microsoft also detailed in the filing its plans to build a mobile games store for all devices, which the company first announced in February. The mobile store would adapt the pre-existing Xbox store that consumers already know on PC and console to the more portable platform to challenge the Google Play Store and Apple’s App Store.

Microsoft’s filing is significantly more candid about the console wars than some of its blog posts and statements from executives over the years. She fully admits to UK regulators that Sony and Nintendo have beaten the company in terms of the number of consoles sold and the number of monthly active users. Microsoft’s filing even included criticism of Call of Duty, noting that 2021’s Call of Duty: Vanguard was panned upon release by reviewers and that the franchise could fail over time.

In its attempt to convince UK regulators that the acquisition would not harm competition, Microsoft revealed several of its flaws in the filing. The company has never matched Sony’s advantage in exclusive gaming and console sales. It also said Sony has banned Xbox Game Pass on PlayStation. All in all, the filing shows Microsoft pledging to be more David than Goliath when it comes to gaming as it seeks to gain regulatory approval.

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