Microsoft CEO Satya Nadella speaks to attendees during the Viva Technologie show at Parc des Expositions Porte de Versailles on May 24, 2018 in Paris, France. Viva Technology, the new international event brings together 5,000 startups with the best investors, companies to grow companies and all the players in the digital transformation that shape the future of the Internet.
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Microsoft is confronting Amazon in cloud computing and recruiting tech talent in the Seattle area. But when it comes to live video games, Microsoft comes out of a market where Amazon is growing.
Four years after purchasing Beam, the game streaming and later renamed Mixer, Microsoft said last week that it will stop the service in July and encouraged users to adopt a similar service from Facebook. Many users have gone to Twitch, the competitor that Amazon bought for nearly $ 1
The result represents an obstacle for Satya Nadella’s Microsoft, whose actions have multiplied five times since Nadella took over from Steve Ballmer in 2014. Microsoft is surrendering on a growing market at a time when it promotes others. gaming products such as Xbox consoles and popular online Minecraft games. Beam’s co-founder also said that Nadella was making the right choice when considering Microsoft’s bottom line.
“Live video makes no sense from a unitary perspective,” said Matt Salsamendi, who helped start Beam in 2014 and left Microsoft last year in an interview.
The mixer is an expensive operation. It provides video streams using a protocol called faster than light or FTL, which promises a speed so fast that streamers can immediately respond to what members of the public say to them in chat messages.
Microsoft has tried various tactics to help Mixer grow. He braided Mixer in the game bar on Windows 10 and delivered a Mixer app for Microsoft’s Xbox One console, making it easy for players to stream their game sessions. He 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 members of the public could purchase to display stickers in chat messages. He also paid prominent streamers to join Mixer and abandon Twitch.
After the coronavirus hit earlier this year, the Mixer deficit on the market has become too much 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, twice as long as in the same period in 2019, according to a software company report. StreamElements and Lightstream live streaming. The use of the mixer, meanwhile, was flat at 37 million hours.
“It became clear that the time to grow our large-scale livestream community was out of proportion with the vision and experiences we want to offer players now,” a Microsoft spokesman told CNBC in a statement. “So we’re shifting our attention to realizing that vision.”
Microsoft plans to promote the Xbox Series X console and xCloud streaming service, expected later this year, and is still developing the Xbox game game you can eat, which has recently passed 10 million subscribers.
In the past, Microsoft has managed unprofitable businesses that are considered important for the whole company. For years, Microsoft’s Bing search engine has lost money, but in 2015 it has become profitable. LinkedIn, which Microsoft acquired for $ 27 billion in 2016, lost money until 2018. Being the company’s largest acquisition, it represents a longer-term bet.
The acquisition of Beam was so small that its performance would not have done much, if anything, on the overall earnings. This makes it much more attractive to investors than the aQuantive acquisition in 2007 and the 2013 purchase of Nokia devices and services, which cost $ 6.3 and $ 9.5 billion respectively. Both of these agreements led to substantial write-downs.
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 around the world. On Friday, in a note to customers, Stifel’s Brad Reback and Adam Borg said that both make sense.
“Net / net, we believe that this move, combined with Microsoft’s decision to abandon Mixer (e-gaming live streaming platform) earlier this week, continues to demonstrate the company’s commitment not to chase after good money after bad, “wrote analysts, who have a purchase rating on the stock. They added that Microsoft can instead focus “investments on more growth opportunities”.
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