Xbox Head Phil Spencer once acknowledged that for Microsoft to succeed in mobile gaming, it would require shutting down its console division and establishing a mobile company within the organization. This revelation was part of the extensive disclosures made in Microsoft's legal battle with the FTC regarding its acquisition of Activision Blizzard.
While much of the public discussion surrounding the case has focused on the potential exclusivity of Call of Duty on Xbox, Microsoft's lawyers consistently argued that the $68.7 billion deal's primary motivation is centered around mobile gaming. The confidential documents unveiled during the five-day hearing in a federal court in San Francisco in June provided substantial evidence in support of this claim. These documents also revealed that Microsoft had even attempted to acquire one of the world's largest mobile developers just before turning its attention to Activision Blizzard in early 2022.
But years before, the company had already begun exploring its mobile ambitions, as revealed in a February 2019 email exchange between Spencer and Catherine Gluckstein, the Head of Product for Xbox Cloud Gaming. The correspondence, which came to light during the trial, exposed Spencer's candid admission that Microsoft lacked a strategy to organically conquer the mobile gaming market. To delve further into his point, the Xbox executive suggested that the company would only have a chance at becoming a major player in this industry segment if it made the bold decision to shutter its console division entirely and redirect its resources towards establishing an in-house mobile business.
The email context implies that Spencer's remark was not meant as a serious proposal, but as a way to demonstrate Microsoft's reliance on aggressive acquisitions for growth in the mobile gaming industry. Two years later, Microsoft entered negotiations for the purchase of Zynga but ultimately abandoned the idea. According to Spencer's recent testimony, the discussions were discontinued because Microsoft determined that it needed to acquire a larger company than Zynga to support its ambitions in mobile gaming.
During the trial, another email exchange revealed that Microsoft had previously explored the option of acquiring Niantic, the developer of Pokemon GO, along with other mobile studios. However, Microsoft ultimately chose to pursue Activision Blizzard due to its ownership of King, the creator of Candy Crush, and the ongoing success of Call of Duty Mobile.
The company is determined to compete in both the mobile and console markets, but it lags behind its competitors in the gaming hardware business. This was evident at the 2023 BIG Festival in Brazil when Microsoft finally disclosed the sales figures for the Xbox Series X/S, ending almost ten years of silence on the matter.
