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Part 2: The Battle for Gaming Ecosystem Supremacy

A few weeks ago, I wrote about how Microsoft Xbox pivoted its strategy to compete with the Sony Playstation. Just last week, we got greeted by news that Mixer, Microsoft's video game live streaming platform, will shut down operations on 22 July. It struck an agreement with Facebook to move its streamers to Facebook's streaming platform.


Check this out - Mixer taps out, triple-threat contest begins!

 

But let's first look at the video gaming stream market share

In his article on Wccftech.com, Shaun Williams pointed out about how Twitch has ceded some market share to primarily Facebook Gaming. Google's market share remained stable with YouTube Gaming, but what takes the cake here is Microsoft's Mixer.


0.6% gain in market share after signing high profile streamers (N1nja and Shroud). Mixer spent over $10M acquiring top streaming talent, all to no apparent effect. By contrast, Twitch and Facebook Gaming both saw triple digit percent growth.


Realising the amount of investment and time Microsoft will need to dedicate to Mixer if they want to compete head on with the other three, Xbox boss Phil Spencer had this to say:

"Ultimately, the success on Mixer is dependent on our ability to scale the service for them as quickly and broadly as possible. It became clear that the time needed to grow our own livestreaming community to scale was out of measure with the vision and experiences we want to deliver to gamers now, so we’ve decided to close the operations side of Mixer and teaming up with Facebook to enable the Mixer community to transition to Facebook Gaming." (Spencer, 2020)

This is interesting because Spencer highlighted three reasons that are synonymous with why startups fail. In Microsoft's case, Mixer can be seen as a "start-up" component in its gaming portfolio, trying to disrupt Twitch and YouTube's dominance in streaming.

  1. Inability to scale as quickly --> Microsoft spent four years scaling their operations to compete with the big players, but Facebook Gaming took half the duration, but grabbed significant market share.

  2. Insufficient time to grow community --> They got two high profile streamers on their platform with the intent of acquiring users and viewership. Community grew insignificantly. Microsoft aims to have 2B users on Mixer, but the platform isn't contributing quick enough to that number.

  3. Out-of-measure with vision and experiences --> Microsoft has a huge gaming portfolio that primarily focuses on console, a revamped gaming subscription model, and the highly anticipated "xCloud", Microsoft's Xbox cloud gaming service.

So what exactly was Mixer's value proposition?


As a quick recap, value proposition is defined as a promise of value to be delivered, communicated, and acknowledged. It is also a belief from the customer about how value (benefit) will be delivered, experienced and acquired (Wikipedia).

Let's quickly go through a rudimentary checklist


1 - Mixer offering: ‘Faster-than-Light’ (FTL) streaming protocol - ultra low latency with minimal delay in real-time discussions. More "chill-relax-vibe" community in contrast with other more intense communities on Twitch and YouTube.


2 - Marketplace offerings: Connection not as quick as FTL. Twitch is the gaming dominant platform, YouTube is O.G of video platform.


3 - Customer Needs: Three-fold angle. As a streamer, more users, more views. As a viewer, more interesting content, popular streamers. As a business, the platform that will give me widest reach to consumers.


For the first two points, Mixer is able to differentiate itself with its competitors, and offer technical superiority via FTL. It also differentiates its platform culture by focusing on building a "chill" community where streamers are encouraged to work together, and viewers are more collegial.


However, where I believe Mixer struggled significantly is convincing customers they are different and better than existing competition. This correlates with lacklustre gains in viewership and community size even after signing two flagship streamers. With low viewership, business would also question whether their brands would get a good reach to its targeted audience.


(What is even more interesting is both Shroud and N1nja experienced declining viewership when they moved from Twitch to Mixer. That is certainly something you don't want happening to your two flagship streamers when they just signed a deal with you)

 

What does this mean the Ecosystem battle, and particularly Microsoft's?


Microsoft acquired Mixer in 2016 (known as Beam previously), Microsoft competes with Twitch for four years, Microsoft couldn't compete with the big players, Microsoft concedes and cuts losses with platform closure - an incomplete picture to paint this as a defeat for Microsoft.


Let's start with the competitors - With the Facebook partnership, does Facebook Gaming scoop all the market share? Apparently not.

The above screenshot feels almost like a kid rebelling against parents' wishes. The situation is a little more complex than that. When you have the two flagship streamers under Mixer (N1nja and Shroud) becoming free agents and deliberating on their next platform, you'd have an army of streamers which would also think likewise and not automatically switch to Facebook Gaming. Apparently, Microsoft kept this decision close to its chest and even Mixer Program Managers and partners were taken by surprise by Microsoft's decision. Leaves kind of a bad taste with former Mixer partners doesn't it? There is also concern that Facebook Gaming is seen more as a social media platform with a gaming option rather than a dedicated gaming platform such as Twitch.


By chosing to cut losses early, it is a clear indication as to what Microsoft is prioritising within its gaming ecosystem strategy - Project xCloud.

Mixer was meant to enable users to live stream directly from xCloud and build an ecosystem from bottom-up. But as mentioned earlier, Mixer was taking too much resources to scale and when you're competing with the likes of Google and Amazon, speed is key. Now Microsoft has realigned its strategy and struck a partnership with Facebook Gaming, alliances are starting to form up.


Microsoft Xbox/xCloud - Facebook Gaming

Google Stadia - YouTube Gaming


That leaves you with one remaining pair - Sony Playstation & Amazon Twitch. In my earlier article covering Microsoft vs. Sony, Sony is focused on console and AAA-title development and does not prioritise cloud gaming/streaming as much as Microsoft and Google.


Personally, it makes sense for Sony to pursue a partnership with Amazon to compete with the Microsoft-Facebook alliance. But when you consider both Sony & Microsoft exploring a strategic partnership between both of them, it complicates the competition landscape and makes the navigating of rival partnerships very tricky.


(Not that I'm complaining as a Political Science major and seeing how politics and business play out in an industry I'm totally geeking in!)


I don't have a conclusion because at the end of the day, we can only speculate. The industry were taken by surprise by Mixer's closure, but I'm predicting we're going to see the gaming ecosystem war intensify between big tech. Everyone's holding their cards close to the chest in an industry that has so much growth potential, but little direction on how the trajectory is going to be!

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