(Bloomberg) -- After a tough year, Microsoft Corp.’s video-gaming chief is still looking at acquisitions and charting how to compete and partner in the markets for handheld game devices and mobile stores.
Deals that add “geographic diversity,” including in Asia, might be worthwhile, Phil Spencer said in an interview Tuesday at Bloomberg’s offices in New York. Buying another mobile company would add to titles Microsoft picked up in its $69 billion acquisition of Activision Blizzard last year, he said.
“We definitely want to be in the market, and when we can find teams and technology and capability that add to what we’re trying to do in gaming at Microsoft, absolutely we will keep our heads up,” Spencer said. Still, there’s nothing “imminent” and very large deals are probably off the table at present as the company is spending a lot of time absorbing Activision Blizzard employees, he said.
Microsoft wants to diversify the teams working on games by looking more to China, he said. The company developed a new mobile version of Age of Empires, a world-building franchise that first appeared in the 1990s, by partnering with Tencent Holdings Ltd. Microsoft and Tencent released the game globally in October.
“It’s been a good area for us to learn from creative teams that have real unique capability,” Spencer said. “The real opportunity is to partner with creative teams in China for global.”
The executive, who has repeatedly professed his admiration for handheld game devices, said the “expectation is that we would do something” in that category. Although the company is working on prototypes and considering what it might do, Spencer also asked his group to look at the market and develop its vision based on what it learns. Such a device is a few years out, he said.
In the coming months, designers and engineers will focus on making the Xbox app work better on existing portable devices and partnering with hardware makers to make sure their products sync with Xbox games and experiences, he said. The Xbox app right now is good rather than great on some of these gadgets, he said.
“Longer term, I love us building devices,” Spencer said. “And I think our team could do some real innovative work, but we want to be informed by learning and what’s happening now.”
The company’s planned online store for mobile games has been delayed as the group does additional research on the market, Spencer said. Xbox President Sarah Bond had announced the store in May, with a planned release date of July. But staffers are still talking to mobile developers, including those responsible for Microsoft-owned Candy Crush and Call of Duty Mobile, to figure out a plan. As regulatory cases involving Apple Inc.’s iOS and Alphabet Inc.’s Android mobile stores work their way through courts in various countries, Microsoft still doesn’t have an effective way to get its own store on mobile phones.
“So a web store would mean somebody doesn't have to go into the app store to try to install something, but you still have to have a way to find the store,” Spencer said. “If we’re just hoping, like, if we build it, they will come, I’m going to bet that doesn’t work.”
That means Xbox has to make its store unique for players and figure out what will draw content creators. At the same time, it’s preparing for a world where Apple and Google mobile devices are more open to Xbox.
“I think the ball is moving in the right direction,” Spencer said. “I think this idea of open platforms, where users have more choice, creators have more choice, you see the momentum, right?”
After releasing the first batch of Xbox games for Sony Group Corp.’s PlayStation and Nintendo Co.’s Switch, Spencer is pleased with the results. Microsoft will do more of that, he said, and won’t rule out any game in Microsoft’s stable.
“I do not see sort of red lines in our portfolio that say ‘thou must not,’ ” he said. It’s too early to make any sort of decision on the next version of Halo, he said.
Following the Activision acquisition, Xbox cut more than 2,500 jobs and closed three game-design studios. With the company exiting what management calls a difficult year amid a challenging mobile-game market, Spencer feels good about 2025.
“The Xbox business has never been more healthy,” he said, citing growth in cloud and PC gaming as well as console usage. “The business is performing right now, and I think that means a more healthy future for hardware and the games we build.”
Spencer also said he’s optimistic about the growth of mobile games.
“I feel pretty good about where this industry is going,’’ he said. “To reach new players, we need to be creative and adaptive of new business models, new devices, new ways of access. We’re not going to grow the market with $1,000 consoles.”
--With assistance from Vlad Savov.
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