Microsoft (NASDAQ: MSFT) goes for gaming industry jugular with plan to send latest ‘Call of Duty’ straight to subscription service

Microsoft (NASDAQ: MSFT), the maker of the Xbox, is taking a big step to grab more control of the $347 billion global video game industry with a reported plan to send the latest installment of the blockbuster “Call of Duty” franchise straight to its Game Pass subscription service. The move challenges the prevailing distribution model and could ultimately set up Microsoft as one of a few large tech players that can dictate how new gaming content is monetized at the expense of smaller firms like Electronic Arts (NASDAQ: EA), Take-Two Interactive Software (NASDAQ: TTWO) and Ubisoft (CBOE: UBI).

Traditionally, so-called “triple-A” games like “Grand Theft Auto” and “Madden NFL” are first sold to users for around $70 upon initial release in an effort by developers to quickly recoup costs that can easily run into the hundreds of millions of dollars per title. Microsoft, since it acquired Activision Blizzard last year, has been moving to change that in a bet that it can attract new users to its subscription platform by providing immediate access to the newest titles without requiring a separate purchase.

The move will accelerate the shift away from the expensive consoles, cartridges and discs that characterized decades of game play further into the cloud, which tech behemoths like Microsoft and Twitch-owner Amazon (NASDAQ: AMZN) already dominate, and it could pressure studios that will have little choice but to adapt to the norms dictated by those who control the platforms. Indeed, shares of Electronic Arts, Take-Two Interactive Software and Ubisoft have all declined this year, while Microsoft and Amazon have surged.

Microsoft’s strategy may still face some resistance. Larian Studios has said that it will keep its games completely off subscription services, while PlayStation developer Sony (NYSE: SNE) indicated it will take a more balanced approach for now and maintain some traditional sales. Both companies may want to carefully consider what’s happened in the music and film industries that have been drastically remade over the past two decades, with the rise of Netflix (NASDAQ: NFLX) decimating competitors that have been slower to adapt. Those who control the platforms usually end up winning, and Microsoft knows this.