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Microsoft Corporation (NASDAQ:MSFT) shares are trading slightly lower on Friday.
The tech giant is reportedly considering a significant shift in its video game sales strategy, contemplating offering the next Call of Duty installment through its subscription service instead of traditional individual sales, The Wall Street Journal reported.
Expected to be unveiled at Microsoft’s annual Xbox showcase next month, the company’s plans represent the most substantial alteration to its gaming division since acquiring Activision Blizzard for $75 billion, the report read, citing people familiar with the matter.
Activision’s Call of Duty franchise is a standout in entertainment, amassing over $30 billion in lifetime revenue.
The company typically launches new editions yearly, with sales averaging around 25 million copies, priced at approximately $70 each in recent times, the report read.
Before the Microsoft acquisition last year, Activision hesitated to fully adopt subscription-based models for a game still sold at a premium price. Microsoft’s Game Pass, priced from $9.99 to $16.99 monthly, offers access to numerous games from various companies, potentially leading to lower revenue for Call of Duty under Microsoft’s new plan, The Wall Street Journal added.
However, Microsoft anticipates attracting new Game Pass users who will contribute more revenue over time.
In September last year, Microsoft’s “Starfield” game launched on Game Pass, attracting a record number of new subscriptions in a day, according to the company, the report read.
Regulators scrutinized Microsoft’s acquisition of Activision, particularly focusing on Call of Duty’s impact. The 21-month review, culminating in October, partly addressed concerns regarding potential unfair advantages in cloud gaming. Microsoft committed not to withhold the series from competitors, The Wall Street Journal noted.
Since its debut in 2003, Call of Duty has amassed over $30 billion in lifetime revenue, surpassing all other shooter series. Bobby Kotick, who led Activision for over three decades and departed shortly after the Microsoft deal, viewed the subscription model for games as detrimental to both the industry and players, according to the report.
“I have a general aversion to the idea of multi-game subscription services,” Kotick said during a court hearing last year over a Federal Trade Commission lawsuit filed against Microsoft to block the Activision deal, the report added. “Maybe part of it is being in Los Angeles and having large, big media companies move their content to these subscription streaming services and the business results have suffered.”
Price Action: MSFT shares are trading lower by 0.34% to $419.55 at last check Friday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Posted In: MSFT
