The Activision Blizzard and Xbox merger continues to serve as a pivotal turning point for the Xbox brand. Many pundits viewed this acquisition as divisive and could’ve ultimately marked the beginning of the end for Xbox as we once knew it. But according to a new report, Microsoft’s plans for this merger ultimately backfired on them.
There Goes the Money
A new report released by Windows Central’s Jez Corden indicates Microsoft has been using profits from Activision-Blizzard to subsidize the Xbox brand, but after Call of Duty fell short of expectations, it added even more fuel to the fire that Xbox was trying to put out.
“Putting Call of Duty into XBOX Game Pass cannibalized both sides. As players fled the $30 price tag, there was less money for XBOX Game Pass to subsidize Call of Duty’s cannibalized sales for those who remained. The model broke under its own weight and had to be reset back to its lower price, wiping out a year or more of growth,” Corden notes. “With XBOX unable to acquire hardware to sell to find new members in XBOX Game Pass, which has been the pot of money XBOX has been using to subsidize other parts of the business, once again, the model began to break down.”
It became clear to everyone in the gaming industry once the merger went through that Xbox needed Call of Duty to perform, and perform very well, to justify the $69 billion price tag for Activision-Blizzard. And given how the series hasn’t been in a good place lately, with fans ultimately being fed up with the franchise, Xbox clearly needs to switch things up.
In his report, Jez Corden suggested a few methods for Xbox to correct course could include removing some big titles like Forza Horizon 6 from Xbox Game Pass to potentially increase profits from individual sales. He also suggested adding yet another premium tier to the service, where you can have your pick of premium games you’d like added to your account as part of your subscription.
Trying Times
The Activision-Blizzard merger clearly has had a ripple effect on Xbox that is still being felt today. Asha Sharma has been actively trying to correct the course of Xbox, but knows those changes can’t happen overnight, and new, yet unforeseen problems always arise. But it is imperative that Xbox fixes these problems with long-term solutions versus quick fixes; otherwise, we will be having the same conversations about Xbox in the not-so-distant future.
