Netflix has established itself as one of the biggest businesses in its niche since its conception about a decade ago. As such, it is a reference point when it comes to recent success stories in the world of business. Microsoft Corporation (MSFT) also looks to position itself in the same capacity as Netflix though in a different category – the online gambling industry.
Over the past decade, Wall Street has not taken Microsoft’s efforts in the gaming industry seriously. However, things are going to change in the next couple of decades according to Keith Weiss, who is a Morgan Stanley analyst. He points out to the fact that most investors and analysts dwell too much on the sales that Microsoft makes through their Xbox consoles.
Weiss says that Microsoft has a bright future in gaming because the gambling ecosystem is now shifting towards the PC and mobile devices. This represents a shift from the traditional over the counter gaming sales to online subscriptions. The shift also includes mixed-reality, streaming and broadcasting. According to Weiss, Microsoft’s gaming branch could earn the company 38 cents per share by 2021. This figure would translate to a value of over 11 dollars per share for the MSFT stock. He estimates revenue generated from gaming at Microsoft will cross the 10-billion-dollar mark in 2018, an increase of around 11 percent from the previous year.
With more gamers ditching consoles for PC and smartphones, Microsoft has the perfect opportunity to employ a subscription model like that of Netflix. Such a model would give subscribers a wide array of gaming content on a device of their choice at a flat rate.
Weiss says that the first step needed in transitioning into the new model will involve extending Xbox’s Game Pass into smartphones and computers. Current Game Pass users pay 9.99 dollars per month for more than 100 games. In addition, the Mixer streaming service will allow the subscribers to play and spectate at the same time.
Finally, the Morgan Stanley analyst says that changing Game Pass from a download to a streaming service would encourage new players to join the band. The encouraging factor will be the absence of the extra cost of purchasing a gaming console, saving them around 400 dollars. Weiss further adds that with the increased number of gamers, Microsoft is going to have a real shot at hitting the 1-trillion-dollar market cap within a short time. This will represent around a 30 percent increase in Microsoft’s stock.