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Without Activision, what does Xbox do now? | Opinion

The missing ingredient in Microsoft’s Xbox business are the games themselves

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Was I the only one hoping that the UK would approve Microsoft's bid to acquire Activision Blizzard?

Not because I had any particular desire – one way or the other – for the deal to complete. But just so this entire ordeal would be over. There is more to come from the EU and FTC, of course, but the CMA was always the regulator most likely to block the acquisition. If they said it was ok, the biggest obstacle would have been overcome.

Instead, here we are. It's been the best part of the year watching the two giants of console gaming trade blows in press quotes and legal documents. Each statement and accusation has been latched upon by the most odious members of both fanbases, and used as fresh weapons in the continuing tedious 'war' over which console is best.

(The irony, in the end, is that the deal being blocked had nothing to do with PlayStation.)

Over the past 12 months, I've spent a bit of time talking (at length) with both Microsoft and Sony, and the pained expressions on their faces told me I'm not the only one wishing for all this to be over. This is going to be a big year for both consoles. But you can't talk about Hi-Fi Rush or Redfall or Starfield or Spider-Man 2 or PlayStation VR 2 or Final Fantasy without someone summoning the miserable spectre that is the Activision Blizzard deal.

This is going to be a big year for both consoles. But you can't talk about [the games] without someone summoning the miserable spectre that is the Activision Blizzard deal

Perhaps I'm over-selling it. But suffice to say, it's not been fun.

Microsoft will appeal. The story will drag on. But the odds have certainly changed. The CMA is not a group that changes its mind easily, as evidenced by Microsoft's failed efforts to do just that over the past three months.

The more interesting questions were always going to come afterwards. If the deal goes through, how will Activision Blizzard be integrated? Will it be the limited integration approach that Microsoft current prefers? Or will it look to bring in Activision's development and marketing expertise?

Xbox has a proven track record of successfully launching games of all sizes that make the most of the latest technology, while Activision has a legacy of developing billion-dollar franchises made up of big games that arrive on time and on budget. It feels like both companies would benefit from some closer alignment.

But if the deal doesn't go through – and this is where we are right now – what does Xbox do? Because it's not been a vintage generation for Xbox so far. This year, as PS5 stock comes flooding into stores and sales are spiking, the Xbox Series platforms are heading in the opposite direction. We haven't had a Game Pass subscriber update in a long time, but analysts have pointed to slowing growth in subscriptions. And as for the games… well we haven't had a major Xbox exclusive for a while.

On one level, the company seems to have done everything right. The power of the Series X console, the affordability of the Series S, the quality of the Game Pass service… Microsoft has got the hardware right, the value proposition right and the services right. It certainly hasn't made any of the mistakes that saw it drop so much market share at the birth of Xbox One (almost ten years ago).

But in this field, winning back market share isn't just about what you do, you need your competitor to make mistakes. And outside of a few minor instances, PlayStation hasn't given Xbox a way back.

And ultimately, when it comes to the biggest and most important part of launching a successful platform – the games – Xbox hasn't got that right. It's unfair to say the console has no games, there's been an array of great, interesting titles on Xbox this generation. There was Hi-Fi Rush in January, and next week's Redfall is getting a lot of positive press. Meanwhile, service-based games such as Sea of Thieves and Grounded continue to put out great things.

But when it comes to those big system shifting blockbusters, that is where Xbox has struggled. Halo: Infinite just didn't do it. It was a great game, but it arrived late with missing features and struggled to maintain an audience, let alone bring in new players.

Xbox's next big hope is Starfield, the major new IP from the makers of Fallout and Skyrim. This one feels good. There's a lot of excitement towards it. And assuming it delivers on the quality (and considering the reputation of Todd Howard and his team, I have little doubt it will), it should drive a lot of attention towards Microsoft's consoles and Game Pass.

Ultimately, when it comes to the biggest and most important part of launching a successful platform – the games – Xbox hasn't got that right

But, by all accounts, it will be going up against Sony's Spider-Man 2. That's being billed as one of PlayStation's first true next-gen games (there has been a few, but this is certainly the biggest). It's one of the most popular brands in entertainment, made by one of Sony's most consistently brilliant developers, and the sequel to one of its most popular games.

Neither title is going head-to-head with one another. They're different genres, different experiences and on completely different platforms. But the point is that even when Xbox has something that could drive interest in its console and services, its rival has something (potentially even bigger) to counter it.

Meanwhile, outside of console, Xbox's PC business is growing, but it could do with a few more PC-centric titles to sit alongside the likes of Microsoft Flight Simulator and Age of Empires. And it has barely any presence on mobile at all.

The Activision Blizzard deal, through IP like Diablo, Warcraft, Candy Crush and, yes, Call of Duty, offered Microsoft all of this. The deal would have unlocked so much of what it is looking for (at least potentially, acquisitions, even those that go through, don't always work out as planned). If Call of Duty couldn't get Game Pass moving, I'm not sure what could.

So what does Microsoft do instead? Set its sights on smaller, more targeted acquisitions? Wait for its teams to catch-up and start delivering games on a more consistent level? There are some promising games coming. Fable, Perfect Dark and Indiana Jones all have a lot of potential, and as a long-time Rare fan, I am excited by the mysterious Everwild. But we've got to wait 18 months at best before we start seeing some of those.

The fear – and this is a classic one that has been whispered about since the dawn of the very first Xbox – is that Microsoft will grow bored of it all. Games are not its core business. It's all about AI these days anyway. If it isn't going as planned, it might just be easier to sell it all off.

Microsoft has never given any indication that it would ever do that. But the pressure is on. Xbox has the platforms, the services and the technology. It has a popular subscription service, a promising streaming solution, powerful hardware and lots of very smart people. It now just needs to deliver on the most important component (which is also the hardest thing): some really good and really big video games.

Activision Blizzard would (and still could) provide those games instantly. Without them, the company will simply have to look elsewhere.

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Christopher Dring avatar
Christopher Dring: Chris is a 17-year media veteran specialising in the business of video games. And, erm, Doctor Who
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