Netflix to Partner With Microsoft on Ad-Supported Sub Plan

Netflix July 13 announced it will partner with Microsoft on its previously announced ad-supported subscription plan.

“In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard and premium plans,” Greg Peters, Netflix chief operating officer and chief product officer, wrote in a blog post. “Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.”

He wrote that Microsoft “offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.” 

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“We’re thrilled to be named Netflix’s technology and sales partner to help power their first ad-supported subscription offering,” Mikhail Parakhin, Microsoft president of Web Experiences, said in a blog post. “At launch, consumers will have more options to access Netflix’s award-winning content. Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. All ads served on Netflix will be exclusively available through the Microsoft platform. Today’s announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information.

“This is a big day for Netflix and Microsoft. We’re excited to offer new premium value to our ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.”

“It’s very early days and we have much to work through,” wrote Netflix’s Peters. “But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers.”

Microsoft Store Top Streamer in Consumer Satisfaction, Tops Disney+, Netflix

The Microsoft Store has been recognized as the No. 1 video streaming service in the country by the American Customer Satisfaction Index (ACSI) organization.

ACSI sampled 23,000 random customers and evaluated the quality of the app, reliability of the service, ease of experience, performance and stability, and content catalog quality.

Microsoft Store finished first with a score of 79, compared with scores of 78 for Disney+ and Paramount+, 77 for YouTube TV, 75 for Hulu, and 74 for Amazon’s Prime Video and Netflix.

Dametra Johnson-Marletti

Apple TV+ finished near the bottom of the list with a score of 69.

“Today is a glaring reflection of the passion, hard work, and dedication of so many people at Microsoft that work on both the Microsoft Movies & TV service and our Microsoft Store on Windows,” said Dametra Johnson-Marletti, corporate VP of Microsoft Stores Category Management.

“The Microsoft Movies and TV service spans all Windows and Xbox devices, but particularly in our Store on Windows we have had a heightened focus on putting the customer and customer choice at the center of the experience. Thinking about every step in the journey from how new and catalog content is merchandised, to service uptime and quality to unique programs and offers that customers love, we’ve tried to cover all bases for entertainment fans. Together with our engineering team we are elated by the recognition of our collective efforts.”

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Analysis: Video Game Streaming a Fraction of the Market — For Now

The video game market, like much of home entertainment, is transitioning to a subscription-based streaming business. New data from Ampere Analysis finds that 5%, or $3.7 billion, of the North American, European video game market comprised cloud gaming PC subscriptions. That’s up 57% from $2.3 billion in revenue in 2020. That percentage is projected to double by 2027.

Ampere contends the subscription streaming market is being spearheaded by Microsoft’s Xbox Game Pass Ultimate and Sony’s PlayStation Now digital platforms, in addition to Nvidia’s GeForce Now, and telco-based cloud gaming services. Sony and Microsoft already dominate the packaged-media market through the Sony PlayStation 5 and Microsoft Xbox Series S/X consoles, respectively.

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Meanwhile, Ampere suggests streaming video games will top game downloads in the next five years. The report found that while console users represent the core of Microsoft’s game business, converting non-console users via streaming is the future. Game Pass had about 60% market share in digital gaming in 2021. That percentage is expected to grow.

Ampere reportedly expects Microsoft to bring Game Pass to additional mobile-first markets in the near-term, possibly with a mobile-only lower priced subscription. These new gamers will gradually shift the overall usage of the service more towards streaming.

“Eventually, we’ll get one or more big third-party franchise releases going straight into Game Pass; we could see that happen this year,” Ampere wrote in the report.

Sony PlayStation Joins Video Game Industry Boycott, Stops Selling Hardware, Software in Russia

Sony Internactive Entertainment, corporate parent behind the PlayStation franchise, joined a growing boycott by video game companies to stop selling hardware and software in Russia due to President Vladimir Putin’s unprovoked invasion of neighboring Ukraine.

“Sony Interactive Entertainment is participating in the global community to call for peace in Ukraine,” the company said in statement. “We have stopped shipping software, hardware, launching Gran Turismo 7, and operating the PlayStation Store in Russia.”

The Gran Turismo franchise has generated more than $4 billion in sales since launching in 1997.

Sony Corporation said it has sent $2 million to the United Nations High Commissioner for Refugees and Save the Children, an international non-profit to help victims of the tragedy.

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Microsoft on March 4 stopped selling its branded Xbox Series X/S gaming consoles and related software in Russia, a move mirrored by other publishers. Sony joining Microsoft in halting business in Russia has been an objective for Ukraine officials since the hostilities began.

Ukraine’s Deputy Prime Minister Mykhailo Fedorov last month called Microsoft, Sony and the e-sports market to cease operations in Russia.

“In 2022, modern technology is perhaps the best answer to the tanks, multiple rocket launchers and missiles,” Fedorov wrote in a March 2 tweet.

Microsoft Buying Video Game Giant Activision for $69 Billion

Microsoft Jan. 18 announced plans to acquire Activision Blizzard, a leader in video game development and interactive entertainment content publishing, for $68.7 billion in cash.

Activision properties include the “Call of Duty,” “Candy Crush,” “Diablo,” “StarCraft,” “Warcraft” and “Overwatch” franchises. The acquisition aims to accelerate the growth in Microsoft’s Xbox gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse — described as a virtual-reality space in which users can interact with a computer-generated environment and other users.

With 3 billion people actively playing video games, including 200 million Americans, and fueled by a new generation of interactive features, gaming is now the largest and fastest-growing form of home entertainment.

Microsoft will acquire Activision Blizzard for $95 per share, inclusive of Activision Blizzard’s net cash. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition also includes Activision’s global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees.

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Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” Satya Nadella, chairman/CEO of Microsoft, said in a statement. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”

Inclusivity and diversity remain a hot button issue at Activision, which saw thousands of employees reportedly sign an online petition last summer seeking improvements to a company culture that reportedly bordered on operating like a frat house. Activision has denied the claims.

Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment.

“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” said Spencer. “Together we will build a future where people can play the games they want, virtually anywhere they want.”

The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.

“The combination of Activision Blizzard’s extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry,” said Bobby Kotick, CEO of Activision Blizzard.

The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s shareholder approval. The deal is expected to close in fiscal-year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard.

Government approval could be a sticky issue, says Michael Pachter, media analyst with Wedbush Securities in Los Angeles.

‘[The deal] has great potential to hurt PlayStation, and that is likely to be the sticking point with regulators,” Pachter said in an email.

Specifically, the analyst contends consumers could be leery buying a PS5 if they aren’t assured that future Activision games would be available on the platform.

“That is a problem, and I expect regulators to raise it,” Pachter said. “The ultimate solution is likely to issue a consent decree [merger allowed] that requires Microsoft to continue to offer Activision games on PS5 for a number of years, but until the regulators look at this, we won’t know for sure.”

NPD: July Video Game Sales Increased 10% to Record $4.6 Billion

Following a brief downturn in April, sales of video games, hardware and accessories rose 10% in July to a record $4.6 billion, compared with revenue of $4.18 billion in July 2020 at the height of the pandemic, according to new data from The NPD Group.

Spurred by greater availability of new-generation consoles from Microsoft and Sony, hardware sales skyrocketed 98% to $323 million — the best July sales tally since 2008. Hardware sales topped $161 million in the previous-year period. Year-to-date spending on consoles through July is up 50% to $2.7 billion from $1.81 billion in 2020.

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Game software sales rose 6% to $4 billion, from $3.7 billion in 2020. Year-to-date revenue rose 12% to $29.45 billion, from $26.29 last year. The top-selling game in July was Nintendo’s The Legend of Zelda: Skyward Sword, followed by perennial chart topper Call of Duty: Black Ops Cold War from Activision.

Total consumer spending on gaming for seven months reached $33.5 billion, up 14% from $29.38 billion during the same period last year.

DEG Panelists: PVOD Here to Stay

After an accelerated push during the pandemic in 2020, premium VOD is a permanent addition to the home entertainment marketplace, said panelists during a Jan. 27 DEG: The Digital Entertainment Group online presentation.

“We think that PVOD is here to stay, and it really is a big part of our business,” said Fandango SVP Mark Young. Fandango owns transactional VOD services Vudu and FandangoNow.

Microsoft’s Pedro Gutierrez noted that PVOD, debuting in the same window or close to theatrical release, allows for more effective studio marketing. Whereas traditionally a film’s home entertainment marketing would come months after its theatrical push, PVOD has allowed studios to move it up so the title is “fresh in consumers’ minds,” he said.

“You’re able to see the studios able to support the home entertainment releases stronger than previously,” he said, adding “you have that nice consistent message for the title availability.”

For parents like him, family titles are a particular draw during stay-at-home orders, even with a bigger price tag, he said.

“When there is new content that can buy an hour and a half or two hours of silence, we are jumping at the opportunity,” he said.

Aside from first-run films on PVOD, catalog is also getting a boost as folks stay home, Young said, noting that the classic series “The Twilight Zone” has been a strong seller.

“It’s good fodder for cathartic viewing,” he said.

Fandango has also employed TVOD bundling of titles to entice customers.

“We work with the studios’ licensing groups … whether it’s by genre, by actor, by type of movie, whether it’s by demographic,” he said. “We look at our data to be able to bundle things that are interesting for consumers … in some cases across studios.”

Gutierrez agreed that unique marketing is key for TVOD.

“At the end of the day, we all have the same piece of film content, whether it’s from Warner, from Universal, from whichever partner,” he said. “How do we make it unique? We spend a lot of time targeting our customers in a manner that’s appropriate for them [with a title that] shows their interest based on prior search or selections — or we even do a lot of game and movie bundles for our gaming audience on Xbox.”

He said collectors are alive and well in the digital realm, just as with discs.

“We’ve all seen the people who have their wall of DVDs,” he said. “With the digital stuff, people want to show you their library’s bigger than Netflix. They want to buy. [The digital collector] does not want to have to worry about do I need to go to HBO Max, do I need to go to Disney+. Where is my content? My content is right here in my collection.”

“We also see on Vudu in particular a lot of collectors, rabid collectors,” added Fandango’s Young.

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FilmRise’s Fisher touted the growth and appeal of his expanding part of the digital business: free, ad-supported streaming or AVOD.

“In the AVOD space, one does not need a credit card, does not need to log in. All they need is an internet device,” he said. “Not all families in the U.S., let alone around the world, can afford 10 subscriptions. Some can’t even afford one subscription.”

FilmRise has found success with catalog as well, including the recently acquired classic show “The Rifleman.”

“It’s a black-and-white TV show, four by three aspect ratio, over six decades old,” he said. “We identified that the consumer demand was really strong.”

FilmRise uses data algorithms and “proprietary analytics” to find such underutilized content, adding AI machine learning in 2020.

“We don’t care what the industry thinks people want to see, we care what people want to see,” he said, adding that such older shows as “3rd Rock from the Sun,” “21 Jump Street,” and “Lost in Space” are doing well on AVOD. “Unsolved Mysteries” and “Forensic Files,” which attract strong demand for FilmRise, have even been rebooted, he noted.

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Microsoft Bows Xbox Series X and Series S Consoles

Microsoft Nov. 10 announced availability of the next-generation Xbox Series X video game console, priced at $499, and Xbox Series S unit available for $299.

Microsoft will formally launch the new gaming systems in a global livestream at 11 a.m. PT/2 p.m. ET on YouTube, Twitch, and Facebook Gaming.

Microsoft says the Xbox Series X features 12 teraflops of GPU power enabling new technologies and features such as framerates up to 120 fps, hardware-accelerated Direct X raytracing, variable rate shading, and Quick Resume, which enables players to resume exactly where they left off. The Xbox Series S offers similar performance at a more affordable price. The Xbox Series X|S are available in 40 markets around the world today.

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Microsoft claims the Xbox Series X|S are the only next-generation consoles enabling gamers to play thousands of games across four generations.

“We believe that gamers should be able to play all of their games from the past without needing to purchase them again, and they should play better than ever before,” wrote Will Tuttle, editor in chief of Xbox Wire.

This means that all titles should run at enhanced speed and more clarity than they were originally designed for on their original launch platform. Backward compatible games run natively with the full performance of the Xbox Series X|S for each and every backward compatible game.

“These games will look better than ever thanks to improved texture filtering, higher and more consistent frame rates, faster load times and Auto HDR support,” Tuttle wrote.

Redbox Free Live TV Adds Xbox One Distribution, Content Channels

Redbox Free Live TV, the ad-supported VOD sister service to kiosk-based disc rentals, has signed an agreement with Microsoft to make its app available on the pending Xbox One X and Xbox One S video game consoles. Free Live TV is also available on the Roku platform, Apple TV and Android TV, in addition to iOS and Android. It is not yet available on Amazon Fire TV.

Redbox also added music video streamer Vevo, Pocket.watch, featuring children’s programming and Johnny Carson, an OTT video platform streaming the late late night comic’s episodes. The additions bring to more than 75 the number of content channels offered free (with ads) to consumers.

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“Our Free Live TV service continues to grow at a rapid pace and we’re committed to creating a product that our customers love and we know that includes adding awesome channels such as Vevo that we know our audiences will enjoy,” Chris Yates, GM of Redbox On Demand, said in a statement. “Free Live TV is the home for our customers to find and watch great content from their favorite channels, all free.”

GameStop Inks Strategic Partnership With Microsoft

Video game retailer GameStop Oct. 8 announced it has entered into a multiyear strategic partnership agreement with Microsoft to help expand its physical and digital video game offerings in the cloud, as well as enhance the chain’s retail technology infrastructure.

GameStop operates more than 5,000 retail stores worldwide, in addition to an e-commerce platform and the PowerUp Rewards customer loyalty program. Through the partnership, GameStop hopes to standardize its business operations via Microsoft’s cloud solutions and hardware products to deliver enhanced digital “experiences” to customers.

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“This is an exciting day at GameStop as we announce the advancement of an important partnership that capitalizes on the power of our operating platform and significant market share in gaming to accelerate our digital transformation; drive incremental revenue streams; and over time, further monetize the digital world of gaming,” CEO George Sherman said in a statement.

Under the agreement, GameStop will standardize its back-end and in-store operations with Microsoft’s portfolio of cloud-based business applications and customer data. This is to enhance store personnel with integrated business operations, including finance, inventory, e-commerce, retail and point-of-purchase sales.

For example, cloud-based in-store software could enable store personnel to access information on a customer’s gaming preferences and purchase history in real time on product availability, subscriptions, pricing, and promotions in order to provide a differentiated and more personalized in-store shopping experience.

GameStop plans to roll out Microsoft Office 365 and Microsoft Teams to its stores, empowering more than 30,000 store associates with enhanced productivity and collaboration tools.

“By harnessing the power of Dynamics 365 and Microsoft 365, GameStop will be able to modernize its technology infrastructure and support store associates and consumers in new and exciting ways,” said Matt Renner, president of U.S. Enterprise Commercial at Microsoft.

Store associates will be equipped with new Microsoft Surface devices,  enabling them to move freely within the store footprint, meeting the needs of customers faster and more efficiently.

GameStop is also expanding its Xbox family of product offerings to include Xbox All Access, which provides an Xbox console and 24 months of Xbox Game Pass Ultimate to players with no upfront cost. GameStop and Microsoft will both benefit from the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.

“GameStop’s extensive store base, focus on digital transformation in an omni-channel environment and expert gamer associates remain an important part of our gaming ecosystem,” added Phil Spencer, EVP of Gaming at Microsoft.