The war of words between Microsoft and Sony continues to escalate over regulatory scrutiny of the former’s acquisition of Activision Blizzard. Much of the verbal skirmishing has involved the fate of the Call of Duty franchise, and dueling perspectives on its importance in the gaming landscape, but statements from Microsoft and Sony have also tackled other issues, such as the position of Game Pass in the games subscription market, and effects that the deal might create in the market.
Sony provided a 22 page response that predictably focuses on their previous attack angles arguing that Activision IP, especially Call of Duty, are such market juggernauts and player draws, that wrapping them up and securing them would allow Microsoft to execute a foreclosure strategy and effectively shut out competition by potentially locking out competitors by controlling access to Activision games.
Microsoft delivered a 111 page response that blasted what it considered to self-serving arguments by Sony against the merger, arguing that it’s offered to keep Activision games such as Call of Duty on Playstation, pointing to MS honoring agreements when it acquired Zenimax Media which saw games like Deathloop and Ghostwire Tokyo release as timed PS exclusives. Microsoft also asserts that Call of Duty, while a draw, is not the industry-dominating juggernaut that Sony asserts it is.
“PlayStation has more than double the MAUs (close to 60 million more) of Xbox. Less than [REDACTED]% of PlayStation’s MAUs play Call of Duty. Even if it were to lose all of its Call of Duty gamers, a highly improbable outcome, the PlayStation gamer base would remain significantly larger than Xbox. Sony would need to lose a substantially higher number of non-Call of Duty gamers than actual Call of Duty gamers for its total MAUs to fall to Xbox’s current level (i.e., [REDACTED] million MAUs). This is not credible, and yet even in such an unrealistic scenario the CMA could not conclude that Sony would be likely to be foreclosed, given that Xbox is a viable competitor today at this same level of MAUs.”
Microsoft also makes a claim that “Game Pass has no market power” which seems a strange claim to make given how its driven headlines and industry conversations.
“In any event, the reality is that Game Pass has no market power, a prerequisite for any hypothetical foreclosure strategy. Game Pass accounted for ca. [0-5]% of digital distribution of gaming content globally. Even just looking at multi-game subscription services alone, it is Sony’s PlayStation Plus which is larger than Game Pass (both in terms of number of subscribers and in revenues). Sony has by far the largest subscriber base of any multi-game subscription service and Sony markets itself as having “built the world’s largest game subscription service”.”
Zero to five percent digital distribution of games seems suspiciously low, but is probably easily explained if you factor in mobile gaming and Apple and Google’s duopoly there, which is also indicative of the mobile angle in the acquisition, something that hasn’t been in the limelight as much due to the higher prestige of standalone consoles in more established markets and the gaming press. It’s also interesting that Sony and Microsoft make dueling claims that their own subscription service is smaller than their rival’s, a hilarious situation of self-negging to advantage.
Sony has fired back at Microsoft’s public offers to keep Call of Duty and Activision IP on the PlayStation by saying that Microsoft’s statements and offers are not to be trusted, pointing out examples of Microsoft’s behavior with its acquisitions of Bethesda, Ninja Theory, and other studios and their moves to make Xbox exclusives even with previous statements about keeping new games on multiple platforms.
There is a lot of self-serving corp speak and legal contortions in both documents, and it’s hard to parse whose word to trust here. In all probability, take both accounts with boulders of salt. Still, the regulatory investigations into Microsoft’s intended acquisition of Activision Blizzard continues to be a gold mine for journalists and gamers interested in the behind the scenes aspects of the greater video games industry. Both Saudi Arabia and Brazil have okayed the deal, while it continues to receive sustained regulatory scrutiny in the UK and other markets.