March 14, 2019 / 3:11 PM / 6 months ago

Microsoft targets video game developers, in challenge to Amazon's cloud dominance

Phil Spencer, Microsoft Corp's Executive Vice President of Gaming, speaks at one of the company's Xbox events in this undated photo released from Microsoft Corporation in Redmond, Washington, U.S. on March 14, 2019. Courtesy Microsoft Corp./Handout via REUTERS

(Reuters) - Microsoft Corp on Thursday said it is combining elements of its video gaming and Azure cloud computing businesses to court game developers, an action designed to use the strength of its Xbox gaming franchise to gain ground on cloud services leader Amazon.com.

Microsoft said it will start rolling out “Microsoft Game Stack,” a group of services that lets game developers do things like host multiplayer games and match players of similar skill levels. The services are designed to work for titles played on any device - including those with operating systems from Microsoft’s onetime rivals like Apple and Google.

Microsoft competes against Amazon Web Services division to sell those cloud services. But it has been in the console gaming business with its Xbox device since 2001 and had 64 million users for its XBox Live online gaming service. Microsoft also owns titles such as the “Halo,” the sci-fi action franchise for the Xbox and Windows, as well as “Minecraft,” a game that is popular on mobile devices with operating systems from Apple Inc and Google Inc.

On “any device you’re going to pick up today, consumer gaming is almost surely one of the top engagement and monetization businesses on that device,” Phil Spencer, Microsoft’s executive vice president for gaming, told Reuters. “As we were looking at our place in the gaming business and our place and things like Azure and the other services that Microsoft offers, we were seeing more and more synergy.”

Microsoft faces competition in the game space from Amazon, which acquired gaming video service Twitch to let gamers watch each other battle online and GameSparks to provide back-end services to game makers. Piers Harding-Rolls, head of games research at IHSMarkit, said Amazon has a lead right now over Microsoft in cloud services for game makers. But Microsoft’s moves on Thursday, many based on its acquisition last year of a company called PlayFab, could help it gain ground.

“Microsoft intends to be as agnostic as possible – even supporting other cloud service providers and all platforms – but you have to think that these tools will end with more companies using Azure as a result,” Harding-Rolls said.

An example of where Microsoft hopes its own gaming experience will pay off is in matching players of equal skill online, said Mark Russinovich, chief technical officer of Azure. The service requires a technology called machine learning, which Microsoft has refined through its Xbox Live service over the years, he said.

Reporting by Stephen Nellis; Editing by Steve Orlofsky

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