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Microsoft's (MSFT) Xbox Game Pass Ultimate Includes EA Play

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Microsoft (MSFT - Free Report) recently announced that Electronic Arts’ (EA - Free Report) EA Play service will be available to Xbox Game Pass Ultimate users from Nov 10 at no extra cost. Early in September, Microsoft had collaborated with Electronic Arts to bundle the latter’s subscription service with its Ultimate Game Pass service.

With EA Play, Ultimate Pass subscribers can now access more than 60 popular titles (FIFA 20, The Sims, Battlefield, Mass Effect, Titanfall and Need For Speed) from Electronic Arts’ library on Xbox One as well as the upcoming Xbox Series S and X consoles.

Moreover, Xbox Game Pass PC members can access EA Play on Windows 10 PCs. From December, Ultimate Pass subscribers will also be able to download games on Windows 10 PCs.

Xbox Game Pass Ultimate members will also get access to certain EA titles on Android devices via Microsoft’s cloud service for free. Apart from that the Ultimate subscribers can also get 10 hours of trial play for upcoming and highly-awaited EA titles like FIFA 21 and Madden NFL 21.

Why Microsoft is Betting Big on Game Pass Ultimate?

By integrating EA Play, Microsoft is looking to boost the number of takers for its Ultimate Game Pass service as subscription model ensures a steady revenue stream. At present, the video game subscription service has 15 million users.

Xbox Ultimate Game Pass Service is priced at $14.99 compared with Xbox Game Pass that carries a $9.99 price tag. The Game Pass subscription is priced for $1 for new users for the first month and then it will be available at its usual price per month.

The Ultimate service also includes Xbox Live Gold and was recently integrated with Microsoft’s cloud gaming service. The cloud integration allows gamers to access more than 100 game titles (Minecraft Dungeons, Halo, Sea of Thieves, Gears 5, Destiny 2, and Tell Me Why) as part of their Ultimate subscription on any Android devices anywhere at any time.

The xCloud service is currently available in 22 markets across Americas, Europe and South Korea with launch in Japan scheduled for the first half of 2021.

Also, Microsoft recently announced the acquisition of Bethesda’s parent company ZeniMax for $7.5 billion in cash.

Post the closure of Bethesda acquisition, Microsoft will add popular AAA titles like The Elder Scrolls, DOOM, Quake, Wolfenstein, and Fallout to its Game Pass roster to boost the subscriber base. The company also announced availability of Bethesda’s upcoming Doom Eternal  video game on Game Pass from October 1.

By expanding the library of games available on Xbox, Microsoft is also looking to boost the number of takers for its latest Xbox console over its arch-rival PlayStation.

The company’s next-gen console — Xbox Series X — arrives on retail shelves on Nov 10 followed closely by Sony Corp’s (SNE - Free Report) PlayStation 5, which arrives on Nov 12 in the United States. Both Xbox and PS5 are competitively priced and that is likely to intensify console war.

Moreover, Xbox Series S console will also be available from Nov 10 for $299. The relatively cheaper priced console is aimed at luring casual gamers who do not like spending money on high-end consoles.

Growth in Video Games Market Augurs Well

Per a Grand View Research report, the overall gaming market is expected to witness a CAGR of 12.9% between 2020 and 2027.

The rapid uptake of cloud gaming has emerged as a solid driver for the gaming market. Rapid 5G deployment, and proliferation of innovative technologies like AR/VR will also boost the cloud gaming market.

The cloud gaming market is expected to reach $7.24 billion by 2027, from $0.32 billion in 2019 at a CAGR of 47.9%, according to another Grand View Research report.

Further, the growth in the video game market is being driven by COVID-19 induced stay-at-home trends, rapid uptake of mobile gaming as well as the launch of latest Xbox and PlayStation console devices. Per Fior Markets Data, the connected gaming console market is envisioned to hit $32.99 billion by 2027 at a CAGR of 11.5% between 2020 and 2027.

Per Mordor Intelligence data, mobile gaming is projected to witness a CAGR of 14% between 2020 and 2025. Mobile gaming is increasingly being driven by higher smartphone penetration along with 5G deployment and reduced costs of internet connection. Also, cloud gaming and AR/VR based games are contributing to growth in mobile gaming, added the report.

Likewise, rising interest in esports amid shelter-in-place guidelines is expected to lead to higher gaming spend.

Microsoft has been striving hard to capitalize on the growing opportunities in the video game space. In addition to its multiple endeavours to boost its gaming revenues like Bethesda acquisition and roll out of cloud gaming services, the company is constantly integrating its Azure cloud’s capabilities into the segment.

Also, combining Project xCloud and Xbox Game Pass benefits for Xbox Game Pass Ultimate members, at no additional cost, is likely to be a gamechanger for Microsoft and bolster its competitive position in the cloud gaming space.

This will facilitate it to improve gaming strategies, develop better content and provide players with more immersive experience. This will fortify its competitive stance against peers like Sony and Nintendo (NTDOY - Free Report) as well as drive the segment’s top line.

Microsoft currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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