The acquisition comes nearly two years after Microsoft bought Mojang, the Swedish firm behind Minecraft, for $2.5 billion. Minecraft is another game with a big community.
Microsoft looks to be building out its social capabilities on Xbox Live, its online gaming platform. Users can sign up to Xbox Live, play with friends online and share game clips. It's part of Microsoft's efforts to foster an online gaming ecosystem and one that it can monetize.
The Redmond, Washington-based tech titan has been struggling in the gaming business recently. In its fiscal fourth-quarter earnings release, Microsoft said gaming revenue decreased $152 million or 9 percent, due to lower Xbox hardware revenue, but noted that this was offset in part by higher sales from Xbox Live.
Sony's PlayStation 4 meanwhile has charged ahead and the company has its own rival online service. The company has also looked to create a broader ecosystem of products with a TV streaming service called Vue. Microsoft is also trying to fend off the threat coming from non-traditional gaming players like Amazon. The U.S. e-commerce giant bought video game streaming service Twitch in 2014 for around $970 million.
Twitch and Beam are similar in that they both allow users to stream games. But Beam's big difference is the fact that users can interact and influence the game.
Microsoft is releasing a new version of the Xbox this month, called the Xbox One S, a slimmer and more powerful console than the previous iteration. It's aimed at boosting hardware sales as well as laying the foundation for future virtual reality gaming.
Given that Xbox Live was such a bright spot in Microsoft's earnings, the acquisition of Beam should help it foster a larger community to help recurring revenues in its gaming division if hardware sales falter.
Seattle-based Beam is also based in Redmond and will remain there.
"As part of Xbox, we'll be able to scale faster than we've ever been able to before. We're expanding the team, bolstering our infrastructure, and most importantly, continuing to grow and support the amazing community at Beam," Beam Chief Executive Matt Salsamendi, said in a blog post.