Why Microsoft's next big Xbox acquisition should be in the mobile game space

Xbox Game Pass xCloud
Xbox Game Pass xCloud (Image credit: Jez Corden | Windows Central)

Microsoft has been on a gaming acquisition spree in recent years. Smaller studios like Double Fine, Undead Labs, and inXile joined up with the Xbox stable, alongside larger teams like Bethesda, Playground Games, and more. Microsoft also signaled in its recent investor calls that it intends to make more gaming acquisitions in the future, in part to bolster the attractiveness of Xbox Game Pass, its all-you-can-eat gaming subscription service.

Many of us in the Xbox community and podcast circuit (check out my podcast by the way) often discuss the topic of acquisitions, as fans and commentators imagine what studios or publishers might fit into Microsoft's strategy. There are always fresh rumors about who may join the troupe, with everyone from EA to Sega and Capcom brought up as a potential acquiree.

While I have no hard information or knowledge about any potential upcoming acquisitions for Xbox, I do have some thoughts about the type of studio Microsoft should perhaps gun for, at least analytically speaking.

Here's why I think Microsoft's next acquisitions should look beyond the TV screen, and towards that smaller device in your pocket.

Why should Xbox buy a mobile game studio?

Mobile Games Market Share Newzoo

Source: Newzoo (Image credit: Source: Newzoo)

Simply put, the mobile gaming industry is absolutely massive, and enjoys the lion's share of recent industry growth. According to Newzoo, the industry stands at roughly $180 billion dollars as of 2021, and 59% of that comes from mobile spend. Most of the growth is also in mobile too, hitting 26%, while consoles and PC hit less than half of that in the same time period. Despite its size, the mobile game industry comes with some significant challenges.

The cost of user acquisition in the mobile game space is similarly enormous. The competition is incredibly aggressive, and curation on storefronts like the iOS store and Google Play means that bigger studios and teams need to pay out literal millions of dollars just to get their apps seen. Outside of unique indie hits that blow up on social media, navigating the market is complex and quite costly, if you don't know what you're doing. Arguably, I'd say Microsoft has shown a lack of expertise in this area — or at least a lack of will.

Minecraft Earth

Source: Matt Brown | Windows Central Minecraft Earth, now shut down. (Image credit: Source: Matt Brown | Windows Central)

Microsoft has dabbled in mobile games to mixed success. Naturally, they acquired Minecraft Pocket Edition, but many of their recent home-grown mobile gaming efforts didn't succeed. Halo: Spartan Strike, Gears POP!, Forza Street, Minecraft Earth, and other mobile games didn't really set the world on fire. Microsoft did acquire a mobile studio when it picked up Bethesda called Alpha Dog, but they don't seem to have a big breakout success as of writing.

Mobile games, especially of the free-to-play variety, require persistent and updates to remain business viable for a bigger company. Of course, Microsoft also owns Minecraft which is dominant on mobile, as well as Fallout Shelter and Microsoft Solitaire, all of which are successful. Microsoft is also competing with some serious heavy hitters in that space, including Tencent, Activision's King division, and many others. I'm not suggesting Microsoft competes head-on with native mobile games, however. My central argument for picking up a mobile studio moves beyond building native mobile experiences.

Mobile-aware experiences for Xbox Game Pass are a must

Source: Zachary Boddy | Windows Central (Image credit: Source: Zachary Boddy | Windows Central)

I don't think Microsoft necessarily needs a mobile studio or publisher to build native mobile games, although that's certainly a potentially lucrative option. Increasingly, as I use Xbox Game Pass on my phone, I realize that most of the games available simply aren't good experiences on a small screen.

Most games built for Xbox Game Pass cloud streaming (also known as Project xCloud) are TV-first, which comes with a bunch of problems for mobile cloud streaming. Sure, some of them do work pretty well. Streets of Rage 4 with its side-scrolling action and bright, comic book-style art really pops on a smaller display. The touch controls also work well, considering you don't need to rotate the camera and so on. The vast majority of games, however, have a litany of small ergonomic problems. Pillars of Eternity, for example, has incredibly fiddly controls even with a regular Xbox controller, let alone with touch. It's also very text-heavy, and the fonts in the menus and dialogue are incredibly hard to read. Other games have similar issues, ranging from overly complex controls that require an Xbox controller phone clip to play properly, or tiny fonts. Even things like lengthy gameplay loops represent a poorer experience on mobile, where you may be called to put your phone away to address a notification pop-up or hide your device from your boss in a meeting at short notice.

There is a light at the end of the tunnel, though. Minecraft Dungeons represents the first truly cloud-aware game on Xbox Game Pass' cloud gaming platform. The menus respond to touch inputs. The touch UI has a bespoke design. You can gun for shorter gameplay loops by selecting smaller maps. The fixed camera perspective helps with video encoding for cloud streaming and gameplay with a touchscreen, too.

Xbox Game Pass Cloud Xcloud Monster Train

Source: Windows Central Monster Train is a great example of a mobile-like game that works on Xbox Game Pass cloud. (Image credit: Source: Windows Central)

The problem with Minecraft Dungeons is that it is the only game on Xbox Game Pass cloud gaming that feels like a truly "cloud aware" mobile experience right now. Every other game there feels shoehorned into your phone. If it's unplayable without a controller or a larger display, I'd argue that the whole point of getting Xbox-quality games on your phone is nullified.

If Microsoft picks up a mobile game studio (or even a publisher), they could help rectify this situation. They could be dedicated to building more Minecraft Dungeons-level cloud-aware games from other Xbox studios. They could focus on games that are designed to be platform-agnostic, like Minecraft Dungeons, and help further the platform too.

If Microsoft wants Xbox Game Pass to grow more rapidly on mobile, building experiences that feel native is an absolute must.

Xbox must grow beyond the console

8bitdo Xbox Controller xCloud

Source: Jez Corden | Windows Central (Image credit: Source: Jez Corden | Windows Central)

Console gaming is growing, but it's growing decidedly slower than mobile gaming is. Sure, you can argue that's because of the more predatory pay-2-win strategies often deployed on mobile, but even still, Microsoft has a responsibility as a platform holder to expand to this potentially lucrative market — both for devs, and the future of their own business. And no, that's not to suggest cloud streaming will replace console gaming. Naturally (and crucially) they complement each other, since the cloud is comprised of console hardware, and a console-first developer environment.

This could help Xbox reach beyond its tens of millions of customers, towards its first billion customers.

And I'm speaking wholly analytically here. I'm by no means a mobile gamer, and like many of you reading this, I'd rather prefer Microsoft picked up some of the great core-focused studios before competitors did. That said, growth on mobile ultimately helps Xbox grow on console too, reaching the next generation of gamers where they are.

Xbox Game Pass cloud streaming is obvious the first, and right, step into this brave new world. Games like Halo Infinite will no doubt help to boost this platform on mobile and tablets too, as will Starfield. There are rumors that Microsoft is working with the likes of Hideo Kojima (and maybe other developers too) on cloud-first games, that will most likely be device-agnostic along with it. No doubt Microsoft is already planning to beef up Xbox Game Pass' mobile-friendly offering, with games like Minecraft Dungeons, Monster Train, and Slay the Spire already leading the charge.

A studio (or several) dedicated to making, or enhancing games for Xbox Game Pass cloud streaming could help boost the platform on mobile devices and the web. This could help Xbox reach beyond its tens of millions of customers, towards its first billion customers.

Jez Corden
Co-Managing Editor

Jez Corden a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!

  • I slightly disagree with this. Their main goal is getting people to sign up for gamepass through cloud on mobile. Providing a product that can easily be played on a mobile device would be counter to their goal. My opinion is they should pick up a dev that makes casual games that are not possible on mobile but would be ideal for a handheld form factor. Like a simulator of some sort or something of the likes. To rope people in.
  • I reread the article and I believe that if they did buy a mobile developer they should turn them into a porting studio of sorts to make more of their current and future lineup into cloud aware like titles. Finding ways to make games more accessible on smaller teams. Many of their current teams simply just don't have the resources or time. Or, let's be honest, it's probably not high on their list of things that can be done for the game as it isn't where a plurality of their players will be playing.
  • Great point. Porting in a way that yields a good playing experience on the smaller screen. That's a tough ask for many console/Windows games, but all the more reason that if a team could do this, it would be quite valuable to leveraging the strengths in their existing catalog.
  • This... this was the entire point of my article.
  • Do you really need a mobile studio if all you're trying to do is port something to mobile? Epic didn't seem to have an issue porting Fortnite over to mobile without having to acquire anyone. If Microsoft instead to go mobile outside of gamepass streaming, What it really needs to do is launch or support it's own app marketplace on Android which is what Epic did, that's how you download Fortnite. The thing is... this isn't possible or allowed on iOS, so it's it really worth to do that. There's a reason why mobile is stuck in this world of F2P and very little premium, and it's because it he stranglehold the app store/compensation has on it
  • i dont mind a dedicated Switch-like design that uses ESim or simcard to connect online to access gamepass. loading up the xbox and on big screen is sometimes a hassle. i just wanna lay in bed and play. Switch gets more of my time nowadays cuz itsj ust easy to pick up and play in bed.
  • A comment on the data, what it's really us, and how MS could leverage this: mobile gaming is bigger in dollars than PC or console gaming because of ads. To me, they're related industries but not competitive or even all that closely related. Like McDonalds and a high end steak house -- yes, both are places you go to eat, but you are rarely choosing between the two for a meal. Just as Salesforce and IBM's businesses are not hurt by the fact that more people are playing casual games on phones, neither is Microsoft's, Sony's, or Nintendo's business hurt. As the article rightly points out, Windows and Console games have grown in absolute numbers during the same period -- evidence that mobile gaming is not stealing those gamers. Mobile gaming is mostly casual gaming (3-5 minute play sessions), where PC and even more so console is more about a dedicated gaming session of 30 minutes or more, often several hours. I think the technical crossover is things like Surface Duo IF they focus on providing a mobile experience for those games. As pointed out in the article, console and Windows games don't translate great to a smaller screen. The bigger crossover is not technical, it's marketing: people who play console and Windows games also play mobile games (but not necessarily the other way around -- hardcore gamers are mostly a subset of casual gamers, with only a small portion that won't play casual games). There's probably a business plan in there somewhere around putting mobile games into GamePass and letting players earn points toward their Gamerscore, which MS seems to have largely abandoned (ironically, they started this with Windows Phone where it could have given a competitive advantage among gamers, and ditched it seemingly as if they didn't want to sully Windows Phone by giving the impression it was targeted in any way toward gamers). The other thing that should be on MS' radar is the appeal of the Steam Deck. That's a straight shot at MS, with only downside to them if it succeeds (by rendering Windows unnecessary for gaming on a PC and defeating that particular consumer appeal of the OS). If Steam Deck really is as appealing to the market as all the press implies, I hope MS puts out its own such device, maybe something like a Surface device targeted at gamers, with a discounted GamePass subscription for the first year.
  • No, Microsoft's mobile endeavors of late have all been microtransaction heavy trash with little to no actual gameplay. The Halo games were fun, but that's it, everything else did whatever possible to make you spend money.
  • You didn't read my article did you lol. I said a mobile game dev studio will help them create mobile-friendly versions of existing Xbox games. SIGH.
  • I read the article, but it's not like Microsoft developed the previous games they released either, they just published them. So if that's the avenue they take for mobile then just because they buy an existing developer doesn't mean their expectation for mobile changes. Unless I completely misunderstood and you mean actual mobile releases of the games, so like Halo Infinite Mobile, or Forza Horizon 5 mobile. I'd be happy to be proven wrong though because I actually really, really enjoyed the Spartan games (although Minecraft Dungeons I find pretty meh, the only thing that I liked about that is how impressive the touch implementation is in that game). And more stuff like that would be fantastic.
  • Ok, I just read your response above and it confirms that I am, indeed, an idiot.
  • It's a weird point to phrase, cus I'm suggesting they should buy a mobile dev ultimately NOT to make mobile games, but to just focus on up-levelling console games to make them better on mobile, like Minecraft Dungeons. It's something nobody in the space has ever done or considered, but I'd argue that there's the real opportunity with Xbox Game Pass cloud. I don't see how Game Pass cloud survives by just shoe-horning console experiences onto a tiny display and hoping for the best. They need experiences that are tailor made for the devices and markets they're targeting. A mobile studio with expertise in that space would be far better placed.
  • I would be worried, if this happened. The design philosophies that run the mobile industry are generally awful. They capitalize on gambling-focused micro transactions and bleeding people of money in a slow, consistent drip. IMO, leaning into that space makes the "traditional" franchises look bad and gives them reason to integrate those crappy business practices to keep up with the wallet-draining goals of mobile giants like Niantic and Tencent. I also think MS has repeatedly shown a lack of adeptness in mobile. Buying Nokia didn't fix it. Multiple OS reboots didn't resolve it. As of now, the Duo hasn't proven MS has learned lessons to succeed. They could very well buy a company and let it be autonomous or release lazy clones of successful games with their own IP, but that's not the kind of thing I want to see out of Xbox. My overall feeling is it would just result in mediocre games that follow the same, harmful business models from their mobile devs. It would be a next loss for consumers in a terrible way.
  • ...because Microsoft always does so well whenever it enters mobile spaces.
  • Microsoft needs a team that can remaster, give an HD makeover & update older PC games to run on Windows 10/11 & even xbox before a mobile team.
  • Here's hoping they do handheld xbox would be amazing especially now steam deck is on the horizon
  • What phone/controller do you have pictured in the last image in your article?
  • Please leave SEGA alone. I want them to thrive, not be bought by Microsoft, Sony or anyone else.
  • I agree with this but I think all they need to do is build a nice gaming device. So like the Nintendo DS.