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Microsoft (MSFT) Partners with Bango to Boost Xbox Subscriptions

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Microsoft Corporation (MSFT - Free Report) recently collaborated with Bango to expand the customer reach for its Xbox Game Pass Ultimate subscription and Xbox All Access service.

Based in Cambridge, England, Bango is a mobile commerce platform that assists in expanding consumer reach of online enterprises by connecting them with several payment partners. Bango will enable telecommunications operators to club Xbox Game Pass Ultimate subscription and Xbox All Access service with their own subscriptions.

By enhancing the visibility of its subscription service, Microsoft is trying to boost the number of takers for its next-generation consoles and consolidate its competitive positioning against Sony Corporation (SNE - Free Report) and Nintendo (NTDOY - Free Report) in the lucrative video games’ market.

 

Microsoft launched its highly-awaited consoles — Xbox Series X and Xbox series S — on Nov 10, globally. Meanwhile, Sony’s PlayStation 5 hit retail shelves in North America and Mexico on Nov 12. PlayStation 5 will become available in Europe and United Kingdom from Nov 19.

Both the consoles are competitively priced. Sony’s PlayStation 5 carries a price tag of $499.99 in the United States, while Xbox Series X is priced at $499. Xbox Series S retails for $299.

Microsoft Working on Subscriptions to Boost Console Sales

If we take into consideration the sales of last-generation consoles, Sony’s PlayStation has an edge over Xbox consoles. Per VGChartz data, total lifetime sales Xbox One through October 2020 were 48.5 million units compared with PlayStation 4’s sales of 113.8 million units.

With the launch of next generation Xbox and PlayStation hardware, the competition has heated up in the video game console space.

Apart from a worldwide launch, Microsoft is enhancing its Game Pass subscription service to boost sales of its consoles.

Microsoft’s Xbox Game Pass Ultimate subscription service offers gamers access to more than 100 game titles (including Minecraft Dungeons and Destiny 2) for a lowly $14.99 fee per month. The subscription service has found success and boasts more than 15 million users.

Further, the company integrated its xCloud gaming service with Game Pass subscription. The xCloud integration allows Ultimate Pass subscribers to access more than 100 game titles anywhere at any time on any devices (PC, mobile or console).

Microsoft also teamed up with Electronic Arts (EA - Free Report) to club the latter’s EA Play service with its Xbox Game Pass subscription at no extra cost to the subscribers. With EA Play, Ultimate Pass subscribers can access more than 60 popular EA titles (FIFA 20, Battlefield, and Need For Speed) on Xbox consoles including Xbox One, Series X and Series S.

With the Bethesda buyout, Microsoft will be combining Bethesda’s popular AAA titles to the Game Pass library.

These endeavours are expected to boost subscriber base for Game Pass Ultimate and eventually benefit the sales of Xbox consoles.

Meanwhile, with Xbox All Access, gamers need to shell out $34.99 per month for 24 months to get access to latest Xbox Series X video game console along with a 24-month subscription of Game Pass Ultimate. For Xbox Series S, All Access Plan is priced at $24.99 per month for two years. Gamers do not need to pay any upfront amount under the All Access Plans.

Traction in Global Gaming Activity Augurs Well

The increases in video gaming activity across the globe triggered by coronavirus crisis and ensuing shelter-in-place guidelines are expected to drive sales of newly released consoles.

Per data from The NPD Group, industry consumer spending on video gaming was $11.2 billion in the third quarter of 2020 in the United States alone, representing improvement of 24% on a year over year basis. The fourth quarter of 2020 is also expected to witness robust momentum in consumer spending owing to the launch of new Xbox and PlayStation consoles, added the research firm.

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 Fior Markets Data.

Microsoft’s efforts to boost its market share in the console space are seemingly headed in the right direction. However, it remains to be seen if the company’s efforts yield the desired results.

At present, Microsoft carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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