Microsoft's Activision Blizzard Acquisition Is Inconsequential at Best for India
...unless something actually changes.
Subject to regulatory approval, Microsoft will be the new owner of Call of Duty publisher, Activision. The deal cost Microsoft around $70 billion, making it the most expensive acquisition in the games business ever. And while there’s a tremendous upside to Microsoft that others do a better job of highlighting, it isn’t one which will move the needle much in the world’s second most populous country. Here’s why Microsoft’s purchase Activision Blizzard is inconsequential for the console and PC market in India.
Microsoft India has zero full-time employees on Xbox
While Microsoft does have a huge India presence, it doesn’t have a single employee dedicated to Xbox or gaming. Rather, those in its consumer division step in where needed. End result: Indians are served with late marketing efforts for games like Age of Empires 4 (over two months post-launch) while marquee titles like Halo Infinite are nowhere to be seen.
In fact, outside of a small burst of activity around the Xbox Series X and S release in 2020, the company has remained largely silent. Instead it relies on fans in contact with Redmond through its ambassador program to push information on Twitter rather than utilise its own official Xbox India Twitter account to “see demand”. A far cry from its earlier days.
Microsoft’s distribution is broken
Redington is Microsoft’s India distributor for Xbox. It decides which stores can sell Xbox Series X|S consoles, accessories, and games. A long-time fixture in the space, it has taken to giving preferential treatment to a handful of stores close to its headquarters in Chennai. These in turn scalp Xbox Series X consoles rather than sell at the stipulated market price.
For what its worth, the Xbox Series X is supposed to retail for Rs. 50,000 (with a 10 percent margin) but they sell for Rs. 70,000 or more. Some in the supply chain go as far to allege that Redington staffers get kickbacks on these deals and look the other way when Xbox first-party games like Halo Infinite and Forza Horizon 5 get re-exported to other countries (made possible with a close to 40 percent margin for games, the standard from others is usually 18 to 20 percent). All of this makes it near impossible for gamers to buy an Xbox console in India at a fair price. This approach hurts the Xbox brand and is partially responsible, along with non-existent marketing, for dismal sales in India.
Xbox Game Pass’ future in India will be decided in about eight months
Though Microsoft has touted 25 million Game Pass subscribers, it’ll be interesting to see how many are paying for the service. Adding Activision Blizzard undoubtedly bolsters the line-up. However, it doesn't necessarily mean Indians will pay. Previously, it was estimated that one in every five Xbox Game Pass user in India is content with simply creating a new ID and claiming Game Pass for its introductory price of Rs. 50 rather than pay for the service and have progress carry over.
In October, Microsoft gave existing users eight months for free and new users seven months for free due to changes in how recurring payments work in India.
Perhaps consumer behaviour will change with this long-term offer? This remains to be seen. That said, Apple offered prepaid cards at retail to prevent issues arising from changes in recurring payments while Sony had them since 2018. It makes me wonder what’s stopping Microsoft from doing the same.
Activision’s ignorance of retail hurts Call of Duty
Activision doesn’t have an India presence at all. In fact, the company dragged its heels with choosing a new distributor leading to Call of Duty: Vanguard not releasing in India officially. Keep in mind that India is still a market where around 70 percent of all game sales are on disc rather than digital. Sources in the supply chain tell me that some employees at the company are still fiercely loyal to the previous India distributor, Worldwide CD ROMs and have blocked all attempts at deciding on successor.
End result: Indians had to resort to buying the game via the grey market or parallel imports. While week 1 sales were strong at 15,000, total sales at retail have hit around 20,000 at best right now — two months post-launch. The reason for the slowdown is attributed to the higher purchase prices for the game from the usual import markets like the UAE and a lack of visibility on-ground versus past entries in the series. Warzone being free doesn’t help either.
Blizzard was interested in India too late
Even the Blizzard side of things are equally lethargic with Overwatch hitting the nation over a year after its worldwide release date, resulting in slow sales for most it’s time on the shelves. Approximately 5,000 copies of the game sold between PS4, Xbox One, and PC as per multiple retailers and that too, mainly through stock liquidation schemes. The situation with Diablo and World of Warcraft was equally abysmal. Overall, Rs. 5,000,000 worth of Blizzard games made it to India, and very little of it sold well enough to justify further effort in the market.
Both companies aren’t really interested — or care — about growing the market outside of traditional stomping grounds like the US and UK and there isn’t any shareholder pressure to bother either. Unless something drastically changes at Microsoft, it’s hard to see it making major inroads in India with the addition of Activision Blizzard to its roster.