CLOUD GAMING
With regard to cloud gaming services , such as Google Stadia , Amazon Luna and GeForce Now , this SG/Cade considers that, in the current scenario, the possible difficulties faced by such services in competition with Game Pass are more related to the (still) low popularity of the game streaming model than to the game content exclusive to Microsoft's service.
Indeed, although many point to the streaming of games via the Internet as the likely future trend of the video game industry, the fact is that consumer adherence to cloud gaming services is still relatively low. Furthermore, expert projections do not seem to indicate that streaming games across multiple devices will be able to supplant the current " device-centric" model prevalent in the industry, based on the use of dedicated gaming hardware , in the near future. According to estimates by Omdia, a market research firm specializing in technology, the share of cloud gamingservices in consumer spending on games is expected to increase from 2.1% in 2021 to 6.1% in 2026 – a growth that, despite being quite expressive, still seems insufficient to break the current paradigm of the sector.
The technological challenges to the growth of cloud gaming on a global scale and the still low adherence of consumers to the model are possibly factors that motivated Google to close its exclusive game development studios for Stadia in 2021, and they can also have influenced the decision of Microsoft and Sony to stop offering their Xbox Cloud Gaming and PlayStation Nowcloud gaming services independently to consumers – these services currently integrate the more complete Game Pass and PlayStation Plus subscription modalities , not being marketed separately.
In any case, considering a possible future scenario in which technological difficulties are overcome and the game streaming model becomes popular worldwide, this SG/Cade does not envisage that the acquisition of Activision Blizzard by Microsoft is an impediment to the development of competitors and the entry of new companies in the segment.
It should also be pondered that, among the companies that offer cloud gaming services, there are extremely sophisticated players such as Google (responsible for Stadia ) and Amazon (responsible for Luna ), both global leaders in their respective core businesses and well positioned among the largest companies in the world. The two companies also have easy access to data and statistics on preferences and consumption patterns of millions of players who use their services and platforms, a factor that can contribute to the development of better targeted and assertive products and services. SG/Cade believes that, as the cloud gaming modelbecome more widespread among gamers - and therefore also more profitable for service providers -, such companies will have full financial and technological conditions to produce (or buy) exclusive content and enter the video game market more competitively. . In fact, if there is interest and incentives, companies like Google and Amazon have more than enough resources to invest in hiring talent, creating their own development studios, in partnerships with successful publishers , or even in the incorporation of large game studios or publishers.
It is recognized that, regardless of the size of the company, entering new markets is usually permeated by many obstacles, especially in the case of markets concentrated in a few well-established players . Nevertheless, the challenges imposed on the entry of new providers of subscription services for games and cloud gaming do not seem, in essence, very different from those faced by Microsoft when it launched the first Xbox in 2001, in a console market dominated by Sony and Nintendo; or those faced by Sony at the launch of the first PlayStation in 1994, when the company entered a market divided between Nintendo and SEGA and, shortly afterwards, became the leader in the segment.
For all the reasons set out above, this SG/Cade understands that the execution of the Transaction in question, by itself, would not have the power to cause the closing of access to the game distribution market for subscription service providers competing with Microsoft.