Microsoft’s pursuit of a dominant position in the gaming industry has involved a series of strategic moves, particularly deals that position the company competitively in the rapidly evolving gaming landscape. However, recent revelations from FTC's hearings with Microsoft as part of its acquisition attempt of Activision Blizzard have shed light on the 'one that got away': a potential acquisition of mobile gaming giant Zynga that didn't materialize.
During the FTC hearings, Phil Spencer, Microsoft Gaming CEO, shared some insights about the company's journey to break into the mobile gaming market.
A core issue, according to Spencer, is that "Xbox has no strategy to win organically in mobile gaming." The traditional Xbox console experience don't seem to resonate with mobile gamers, nor do console gamers crave a mobile experience.
Spencer opened up about Microsoft's previous attempt to acquire Zynga as part of its strategy to solve this issue. Zynga, known for successful franchises such as Farmville and Zynga Poker, has a significant footprint in mobile gaming. However, despite Microsoft's willingness and considerable effort put into a potential deal, Zynga was ultimately acquired by Take-Two Interactive for a record-breaking $12.7 billion in 2022.
Why did Microsoft not secure the Zynga deal? According to Spencer, it was not due to any lack of respect for Zynga or its achievements. Instead, Microsoft believed it needed "something even bigger than what Zynga was" to make a meaningful start in the mobile gaming business, given its limited foothold in the space.
Despite this setback, Microsoft didn't stay idle for long. In November 2021, their attention shifted to another gaming giant: Activision Blizzard.
Known for its popular franchises like Candy Crush through its subsidiary, King, Activision Blizzard is the largest publisher of mobile content outside China. As Spencer noted, the company's portfolio and its established engagement in the mobile space made it an attractive prospect.
The decision to pursue Activision Blizzard wasn't made lightly. Spencer and Amy Hood, the CFO of Microsoft, invested time in assessing the various mobile opportunities available in the market. Comfort with the studios, the teams, and the long history of working together with Activision Blizzard solidified the decision. Notably, this wasn't Microsoft's first attempt to acquire Zynga. The company reportedly considered buying Zynga back in 2010, when Don Mattrick was still running the Xbox business.
At present, Microsoft maintains a limited presence in the mobile gaming sector, but that will change as soon as Activision Blizzard, which once asked Microsoft to pay a premium to release Call of Duty on the Xbox, gets the legal green light to join the fold.
As for Zynga, Take-Two Interactive has since acquired the mobile gaming company as part of its own endeavors within the said space.
The gaming landscape is changing, and Microsoft, despite some missed opportunities, is clearly committed to adapting and evolving. As they look towards a future of gaming that increasingly blends the lines between console and mobile, this openness to change, backed by strategic thinking, may well position them as a significant force in the world of mobile gaming.