Game news Microsoft: Better excluded at PlayStation, “Call of Duty is not unique either” … Xbox’s main arguments for the purchase of Activision
While Sony publicly shows its fear of Microsoft’s takeover of Activision, the latter publishes a 111-page argument to defend itself against a possible monopoly in the market that it is accused of trying to exercise. Here are the three main arguments that come to mind.
Summary
- “Call of Duty is not unique either”
- Mobile first
A year after the announcement, Microsoft’s takeover of Activision for 68.7 billion dollars – Blizzard continues to fuel the tensions in the industry that crystallize at Sony in a particular fear: the future of Call of Duty on PlayStation consoles. For the Japanese manufacturer, it is very clear that placing the star franchise under Microsoft’s executive control would represent an unprecedented advantage for this competitor in terms of content. And to add that consumers like independent developers would suffer if the acquisition was approved. So far, the American’s proposed acquisition is still under review by regulators in 16 countries, with Saudi Arabia and Brazil already having approved it. This week, new elements of response to environmental concerns are made visible in a document submitted by Microsoft in response to the CMA statement published on October 14, 2022, the UK Competition and Markets Authority. It says in black and white that “the merger (with Activision-Blizzard) is in no way intended to exclude any console vendor, but will increase competition in a market long dominated by Sony”. Microsoft’s first argument is therefore clear: Xbox cannot exercise a monopoly in a market that is already largely dominated by Sony.
The suggestion that historic market leader Sony, which has clear and sustained market power, could be squeezed out by the smallest of the console’s three competitors, Xbox, due to the loss of access to a single title is not credible. Sony’s PlayStation has been the largest console platform for over 20 years, with an installed base of consoles and a market share more than double that of the Xbox.
And adding that adding Activision’s content to the Xbox ecosystem will instead increase the machine’s chances of competing more effectively with Sony’s PlayStation. To support its point, Microsoft continues to endorse its competitor’s greatness: “In addition to being the dominant console supplier, Sony is also a strong game publisher. Sony is roughly similar in size to Activision and almost twice the size of Microsoft’s game publishing business”. But it is probably the following quote that will surprise you the most: “Sony has more exclusive games than Microsoft, many of which are of higher quality.”
“Call of Duty is not unique either”
Another notable reasoning advanced by Microsoft to prove that it will not exercise a certain monopoly after the acquisition of Activision: “Call of Duty is also not unique compared to the many other games that are loved“. More than once the box declares to assess that Sony would overestimate the importance of openness in its viability. Arguments cited with a vengeance: Call of Duty is regularly overtaken by other productions in the Metacritic rankings and would not be the engine of conversations on social networks: “There were over 2.4 billion tweets about gaming in 2021, and yet no Call of Duty title entered the top 10 ‘most discussed video games’ on Twitter last year.”. Most console gamers don’t play Call of Duty either, and for the vast majority of them the license will only be a small part of their total gaming spend. Across the pages, the genre’s arguments follow one another. Microsoft also claims that consoles have a number of viable alternatives, including Fortnite, Apex Legends, Tom Clancy’s Rainbow Six Siege, Destiny 2, ARK: Survival Evolved or even Grand Theft Auto VI, which according to the producer, “wantedits chances of coming out in 2024. The giant also depends on the Nintendo model, which thrives without the shadow of a CoD in its machine:
Likewise, successful game platforms such as Nintendo and Steam have thrived without access to Call of Duty. Nintendo’s console business is very successful without a single version of Call of Duty available on its latest console, Nintendo Switch. Another example of a platform that has succeeded without Call of Duty is Steam, which is the largest digital storefront with a 40-50% share of digital sales for PC games in the UK. Steam has not offered new Activision games for the past three years following Activision’s business decision to sell only its PC games on Battle.net. This did not affect Steam’s leadership position.
An argument to which Sony hastened to answer and confirm it Nintendo offers a very different experience than Xbox and PlayStation”because it focuses on family oriented games which are very different from PEGI 18 FPS games like Call of Duty“before you say:In general, Microsoft’s internal documents follow PlayStation more closely than Nintendo, with the latter often absent from any internal assessment of the competition.“. Even worse, for Sony the premise is clear: Microsoft wants PlayStation to be like Nintendo.
Microsoft claims that Nintendo’s differentiated model shows that Sony does not need Call of Duty to compete effectively. But this reveals Microsoft’s true strategy. Microsoft wants the PlayStation to be like Nintendo, so it is a less close and less effective competitor to the Xbox. After the transaction, Xbox would become a one-stop shop for all best-selling console shooter franchises (Call of Duty, Halo, Gears of War, Doom, Overwatch), as explained in the decision, and it would then be freed from any serious competitive pressure.
Mobile first
According to Microsoft, the priority for the Activision acquisition is not so much Call of Duty, but rather the mobile sector, which it hopes to thrive in in the future; a platform where it would currently have no significant presence while Apple and Google exercise their “duopoly”.
Today, mobile is by far the most popular gaming platform with 94% of all players. Xbox currently has no physical presence on mobile, and its ability to reach mobile gamers is hampered by Apple and Google’s effective duopoly in the video game market.
Acquiring Activision will therefore give Xbox new opportunities and content to deliver on mobile that it currently lacks. And to add that more than half of Activision’s revenue in the first half of 2022 “came from King’s mobile games division and titles like Call of Duty: Mobile”. A few weeks earlier, Spencer had already mentioned this firm desire to invest more in mobile: “When you look at ABK (Activision Blizzard King), the majority of their players play their mobile titles. It can be the Candy Crush game that many have on their phones, but also the very good mobile versions of their strong licenses (…) It was really their ability on mobiles that was first and foremost unique in terms of what that could move the Xbox forward.“