By merging with Activision, Xbox has the potential to overtake Sony PlayStation in the gaming industry. According to Newzoo’s report, the revenue of the gaming industry will be 184 billion dollars in 2023.
With the merger of Microsoft and Activision, there is a possibility that Xbox’s revenues will surpass Sony PlayStation and take the second place in the gaming industry. This means Sony falls to 3rd place. Microsoft has long been aiming for leadership in the gaming industry, but it has focused its competition on giants such as Apple and Tencent rather than Sony and Nintendo. Tencent is a leader especially in the PC and mobile gaming markets with its investments in companies such as Epic Games. Apple, on the other hand, leaves Microsoft behind with high taxes on app stores.
Microsoft and Activision Merger: The Rise of Xbox and the Change in Market Dynamics
NewzooAccording to ‘s H1 2023 report, the gaming industry will generate $184 billion in revenue in 2023 and reach $205.7 billion by 2026. Mobile games account for 49% of total gaming revenues, while console and PC games account for 29% and 21%. While Tencent maintains its leadership in the industry, with the merger of Microsoft and Activision, Microsoft may surpass Sony and rise to second place. Microsoft’s strategy aims to follow Tencent’s approach to cross-platform service gaming.
Image Source: Newzoo
The EU’s new regulations against Apple and Microsoft’s plans to establish an Xbox mobile game store may change the balance in the industry. However, it is still unclear whether Microsoft will be successful in this field. According to Newzoo, the top 10 companies account for 50% of gaming revenues, and the diversity of business models among these companies is remarkable. While Tencent does not produce hardware, PlayStation and Nintendo are focused on their own hardware ecosystems. With Activision’s mobile portfolio and Microsoft’s growing presence in PC, Microsoft may be the most diversified company.
As hardware sales of the Xbox Series X and S continue to decline, Microsoft’s strategy of releasing games on PC is impacting demand for console hardware. While Sony progresses with technological innovations, Xbox Series X|S has lost some of its features. It is stated that Microsoft has no plans to produce an Xbox handheld. But Xbox’s future looks bright with the breadth of its offerings across all platforms and its combined portfolio. Microsoft is expected to develop more strategies to improve its performance in the hardware ecosystem.