This Week in Payments: Buying Microsoft

What were the three biggest stories of the week? “Microsoft and Activision, Microsoft and Activision, and Microsoft and Activision.”

So said Seth Gerson, CEO of Survios, who joined Karen Webster of PYMNTS to discuss the events of This Week in Payments.

They also talked about other things, including Amazon’s plan to open physical clothing stores paired with innovative technology, and the Ford and Stripe deal that will turn cars into mobile wallets.

Microsoft buys an incredible library

First on the agenda, however, was the Tuesday, January 18 announcement that Microsoft had agreed to buy Activision Blizzard for $75 billion.

Read more: Microsoft to Buy Activision Blizzard for $75 Billion, CEO Expected to Step Down

The main reason Microsoft bought Activision Blizzard is because it needs content for its gaming service, Game Pass. Any all-you-can-eat service like this needs to generate titles, which entice people to sign up, and filler titles, which give subscribers something to play, watch, or do.

“It gave them an amazing library,” Gerson said, pointing to titles like “World of Warcraft,” “Crash,” “Diablo,” “Candy Crush,” and “Call of Duty.” He added that “Call of Duty” is one of the top three titles and can boost console sales.

“By acquiring this, it gives both Xbox and Game Pass, at some point, theoretically, exclusivity on this title, which can be a big, big sub pilot, a big, big pilot of hardware,” Gerson said. “So that’s why you had – apart from the exorbitant price – the first reaction you had.”

A big victory in the content war

There’s a content war going on, Gerson said. The heart of the video game business is the attach rate: the number of software sold for each piece of hardware and the number of subscribers acquired for each piece of content.

“Now what we’ve seen is acquisitions have gotten bigger and they’re looking for huge games to really drive purchases – and this is one of them,” he said.

Most people think Microsoft is a big winner with this deal because it gets exclusive content, a large library of content, reader titles that can get it more subscriptions and hardware sales, and diversification into new new customers. He also secured Activision’s 10,000 employees at a time when the job market is tight.

“I think the biggest slice Microsoft got was 10,000 employees — and a lot of them are highly skilled,” Gerson said.

Amazon aims to make shopping for clothes more enjoyable

During the week, we also learned that Amazon will open stores dedicated to clothing and fashion. Here, shoppers with the Amazon app will be able to scan an item’s barcode and have it delivered to the locker room in their size.

Read more: Magic mirror on the wall, will virtual dressing rooms ever happen?

“For me, it’s, how do you play or make this experience really more entertaining?” Gerson said. “At the end of the day, you go to a dressing room, you put something on, but how do you make it more pleasant, more entertaining?”

Ford and Stripe aim to transform cars

In addition to integrating payments and commerce into experiences, there is a trend to do the same in any connected device, including cars. This week, Ford and Stripe announced plans to turn the car into the ultimate mobile wallet. The technology will authenticate the driver and the vehicle at the points of sale.

Read more: Ford and Stripe partnership aims to turn cars into symbolic wallets

This is another example of friction suppression, Gerson said. For example, someone driving an electric car for a company could plug it into their house overnight and the cost would be billed to the company.

“It removes friction. It makes it easier for businesses, it makes it easier for consumers,” Gerson said. “There is no doubt that this is just the future of payments.”



On:More than half of US consumers believe biometric authentication methods are faster, more convenient and more reliable than passwords or PINs. So why do less than 10% use them? PYMNTS, in collaboration with Mitek, surveyed more than 2,200 consumers to better define this perception in relation to the usage gap and identify ways companies can increase usage.

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