Microsoft has exceeded expectations for the final quarter of 2021 by recording a profit of $18.8 billion. Lots of people can’t understand how the legacy company continues to stand tall in uncertain times, especially when it doesn’t appear as well-positioned as the likes of Apple, Amazon, and Netflix. However, the latter has underperformed compared to Microsoft, with its share price falling as a result. So, what makes the Washington State-based company consistently successful?
The Shift to Gaming
The days of Microsoft sticking to its roots are over. For around 20 years, the business has been aggressively moving into the gaming industry, and the strategy is integral to the recent profits it has posted. Firstly, Xbox is one of three video game console giants with over 100 million monthly active users for its online gaming service. The number was down at 40 million in 2016, so it’s clear Microsoft is generating significant revenues from the release of the Xbox Series X and Series S alone. Also, Xbox is attempting to embed its gaming experience without the need for extra hardware, highlighted by the Game Pass service that lets customers stream video game titles to their mobile devices.
Not only does this play into the mobile gaming sphere, which is incredibly profitable, but Xbox is transitioning into other lucrative verticals, such as online casino offerings. For example, The Four Kings Casino and Slots game is an MMO that simulates a real-life casino experience. Of course, this leaves the door open for future relationships with market-leading operators as a partnership will cement the strategy.
Offering online slots like Fishin’ Frenzy and Eye of Horus is a savvy move since they are classed as the top slot machines on online casino platforms, along with Slingos and Drops & Wins, meaning Microsoft could easily appeal to a different demographic without too much extra effort, only needing to add a patch to its current API. The acquisition of Activision Blizzard Inc makes the process simpler since it’s a leader in game development across the mobile, PC, console, and cloud sectors.
For now, focusing on purchasing exclusive titles, something it has achieved by buying Activision Blizzard and its library of offerings that includes Warcraft, Call of Duty, and Candy Crush, is keeping the train on the tracks. However, if Microsoft wants to build on its gaming plan, it might need to move into popular sectors with eye-watering potentials, such as online casinos.
Certain services are currently unstoppable. Gaming is one of them, and cloud-based products are another. Microsoft has a firm grip on both, particularly the latter. Firstly, the company absorbed Skype a long time ago, meaning it had control of the number one video-calling software in the world. However, it didn’t stop there, developing Microsoft Teams and including it as an extra for customers to purchase. The strategy was gradually coming into its own – there were 20 million active daily users in November 2019 – yet it suddenly boomed in 2020 and 2021. By the spring of last year, 145 million people used MS Teams daily, which is an active user jump that’s almost hard to comprehend.
As in-home data usage increases year-on-year, it’s hard to see how users won’t continue to download collaboration platforms, which is only good news for Microsoft seeing as it owns one of the two main services, the other being Zoom. Microsoft 365 seamlessly integrates with the approach, too, because it now uses a cloud-based platform that hosts legacy programs such as Word, Excel, and PowerPoint online. There’s no reason to rely on the desktop version any longer if you don’t want to since you get 1TB of storage when you register.
This has led outlets like The Guardian and Al Jazeera to report that Microsoft’s cloud-based services are mainly why the business has recorded a profit that no one saw coming. The statement is backed up by data, with one enlightening statistic its flagship cloud offering rose 26% during Q4 of 2021. A separate sector that’s home to Microsoft 365 also secured a rise (19%).
Microsoft isn’t out of the woods, not least since its share price has tanked by 5%. So, shareholders are still skeptical about the company’s current and future success. Regardless, a revenue increase of 20% can’t be overlooked. It has the cloud and gaming to thank for that.
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