Microsoft CEO Satya Nadella speaks to participants during the Viva Technologie show at the Parc des Expositions Porte de Versailles on May 24, 2018 in Paris, France. Viva Technology, the new international event, brings together 5,000 new companies with the main investors, companies to grow businesses and all the actors in the digital transformation that shape the future of the Internet.
Chesnot | fake pictures
Microsoft comes face to face with Amazon in cloud computing and recruiting the best tech talent in the Seattle area. But when it comes to streaming live video games, Microsoft is pulling out of a market Amazon is emerging in.
Four years after purchasing Beam, launching game streaming and then changing its name to Mixer, Microsoft last week said it will stop operating the service in July and encouraged users to adopt a similar Facebook service. Many of the users went to Twitch, the competitor Amazon bought for almost $ 1 billion in 2014 and, according to a recent analyst estimate, is now worth roughly $ 15 billion.
The result represents a stumbling block to Satya Nadella’s Microsoft, whose shares have increased fivefold since Nadella succeeded Steve Ballmer at the helm in 2014. Microsoft is giving up on a growing market at a time when it is promoting other products from games like Xbox consoles and popular online games. Minecraft. Even the Beam co-founder said Nadella was making the right call when considering Microsoft’s bottom line.
“The live video is meaningless from the economic point of view of the unit,” said Matt Salsamendi, who helped start Beam in 2014 and left Microsoft last year, in an interview.
The mixer is an expensive operation. It offers video broadcasts using a protocol called faster than light, or FTL, which promises speed so fast that broadcasters can instantly respond to what audience members tell them in chat messages.
Microsoft tested various tactics to help Mixer grow. He tucked Mixer into the Windows 10 game bar and delivered a Mixer app for Microsoft’s Xbox One console, making it easy for players to stream their gaming sessions. Added support for many languages and developed a way for people to buy games that were watching streamers.
Last year, Microsoft went further, adding a virtual currency called Embers that audience members could buy to display stickers in chat messages. He also paid prominent streamers to join Mixer and Ditch Twitch.
After the coronavirus hit earlier this year, Mixer’s deficit on the market became too difficult to overcome. In April, with offices and schools closed in the U.S. and much of the world, consumers spent 1.5 billion hours watching Twitch, double the time of the same period in 2019, according to a report by the streaming software company. Live StreamElements and Lightstream. Mixer usage, meanwhile, was flat at 37 million hours.
“It became clear that the time to expand our own live streaming community was beyond measure with the vision and experiences that we want to offer players now,” a Microsoft spokesperson told CNBC in a statement. “So we are shifting our focus to fulfill that vision.”
Microsoft plans to promote the Xbox Series X console and xCloud streaming service, which is expected this year, and is still building the all-you-can-eat Xbox Game Pass business, which recently surpassed 10 million subscribers.
Microsoft, in the past, operated unprofitable businesses that were considered important to the company as a whole. For years, Microsoft’s Bing search engine lost money, but in 2015 it became profitable. LinkedIn, which Microsoft acquired for $ 27 billion in 2016, lost money until 2018. As the company’s largest acquisition, it represents a longer-term gamble.
The Beam acquisition was so small that its performance will not contribute much to overall earnings. That makes it much more palatable to investors than the 2007 acquisition of aQuantive and the 2013 purchase of Nokia’s device and service businesses, which cost $ 6.3 billion and $ 9.5 billion, respectively. Both agreements led to substantial amortizations.
In this case, analysts say, Microsoft is making a prudent financial call. Days after announcing the closure of Mixer, Microsoft said it would close its physical stores worldwide. In a note to customers on Friday, Brad Reback and Adam Borg of Stifel said they both make sense.
“Net / net, we believe that this move, coupled with Microsoft’s decision to abandon Mixer (electronic game live streaming platform) earlier this week, continues to demonstrate the company’s commitment not to pursue good money after the bad, “wrote analysts, who have a buy rating on the stock. They added that Microsoft can focus “investments toward greater growth opportunities.”
CLOCK: Sony and Microsoft are waiting to see who blinks first in the price of the console: analyst
.
