Wedbush Securities Analyst Michael Pachter joined Yahoo Finance Live to talk about Activision Blizzard earnings, the Microsoft-Activision acquisition, declining game engagement, and the future of the gaming business. According to the analyst, Xbox Game Pass will increase from 25 million to 100 million members thanks to the Activision Blizzard acquisition and Xbox Cloud Gaming.
Michael Pachter thinks Microsoft won’t increase console costs or game prices. He also arguably claims that Activision games for the Playstation will continue to be available. In this regard, he gave an example of Disney’s acquisition of Fox to support Disney+. The catalog will eventually be available on Disney+ rather than HBO. Microsoft could create a similar strategy to Activision for PlayStation.
He also thinks the acquisition will be completed in October, nine months after the deal. Reminding that Microsoft previously bought Bethesda Softworks, the analyst said that the company is the fourth largest game publisher in the US.
“They went on a buying spree, and they bought six independent studios, the biggest of which is Obsidian. But then they bought Bethesda, which is a giant studio, and now they’re buying Activision,” Michael Pachter said in the interview. “When they’re done, they are the fourth major game publisher in the US. So they’re going to be giant, and they’re going to be in a position to actually support their subscription.”
Activision makes free-to-play games; Michael Pachter stated that the publisher receives more than half their income from free-to-play. So, Microsoft has a huge chance to use this.
The analyst also emphasized the increase in subscribers to Xbox Game Pass. According to recent analysis, the gaming industry has 3.5 billion potential players. As a result, he doubts Xbox will gain that many subscribers, but they could increase from 25 to 100 million.
The future growth of Game Pass will undoubtedly be significant for Microsoft. And the Activision Blizzard deal and Cloud Gaming should provide it with a much-needed boost.
For now, despite all the criticism from the industry, Xbox Game Pass is showing promising results. With more first party games coming to the service in the future, 100M subscribers mark for Microsoft’s seems quite feasible. We will have to wait and see if Microsoft has enough resources to take Game Pass to that point.