Microsoft game news: Better outcasts at PlayStation, “Call of Duty isn’t unique either”… Xbox’s big arguments for Activision takeover
Published on 27/11/2022 at 10:45
While Sony publicly displays its fears regarding the takeover of Activision by Microsoft, the latter publishes an argument of 111 pages to defend itself from a possible monopoly on the market that it is accused of wanting to exercise. Here are the three main arguments that emerge.
“Call of Duty is also not unique”Mobile first
A year after its announcement, Microsoft’s $68.7 billion takeover of Activision – Blizzard continues to fuel tensions within 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, placing the star franchise under the executive control of Microsoft would constitute an unprecedented advantage for this competitor in terms of content. And to add that consumers as independent developers would suffer damage if the acquisition was approved. For now, the American’s proposed acquisition is still under review by regulators in 16 countries, with Saudi Arabia and Brazil having already approved it. This week, new elements of responses to ambient 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, black on white, that “the merger (with Activision-Blizzard) is in no way intended to exclude any console supplier, 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 already largely dominated by Sony.
The suggestion that historical market leader Sony, which has clear and enduring 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 biggest console platform for over 20 years, with an installed base of consoles and a market share that’s more than double that of Xbox.
Et to add 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 support the greatness of its competitor: “In addition to being the dominant supplier of consoles, Sony is also a powerful publisher of games. Sony is roughly equivalent 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 isn’t unique either”
Another notable reasoning put forward by Microsoft to prove that it will not exercise a particular monopoly following the takeover 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 estimate that Sony would overestimate the importance of the frankness in its viability. Arguments quoted with a vengeance: Call of Duty is regularly overtaken by other productions in the Metacritic rankings and would not constitute the engine of conversations on social networks: “There have been more than 2.4 billion tweets on the games in 2021 and yet no Call of Duty title entered the top 10 “most discussed video games” on Twitter last year”. Also, most console gamers don’t play Call of Duty and for the vast majority of them, the license would only be a small component of their overall game consumption. Over the pages, arguments of the genre follow one another. Microsoft also claims consoles have a slew 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 manufacturer, “would” have its chances of being released in 2024. The giant also relies on the Nintendo model which thrives without the shadow of a CoD in its machine:
Likewise, successful gaming platforms like 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 being available on its latest console, the 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 PC game digital sales in the UK. Steam hasn’t offered new Activision games for the past three years following Activision’s business decision to only sell its PC games on Battle.net. This did not affect Steam’s leadership position.
An argument to which Sony hastened to respond, certifying that Nintendo offers a much different experience than Xbox and PlayStation “because it focuses on family-oriented games that are very different from PEGI 18 FPS games like Call of Duty”before asserting: “In general, Microsoft’s internal documents follow PlayStation more closely than Nintendo, the latter often being absent from any internal assessment of the competition”. Worse still, for Sony, the premise is clear: Microsoft wants PlayStation to become like Nintendo.
Microsoft claims that Nintendo’s differentiated model demonstrates that Sony doesn’t need Call of Duty to compete effectively. But this reveals Microsoft’s true strategy. Microsoft wants PlayStation to become like Nintendo, so that it’s a less close and less effective competitor to Xbox. After the transaction, Xbox would become the one-stop-shop for all top-selling shooter franchises on console (Call of Duty, Halo, Gears of War, Doom, Overwatch), as the decision explains, and would then be free of all serious competitive pressure.
According to Microsoft, the priority of the Activision acquisition is not so much Call of Duty but rather the mobile sector in which it hopes to thrive in the future; a platform on which it would have, for the time being, no material presence while Apple and Google exercise their “duopoly” there.
Today, mobile is by far the most popular gaming platform, with 94% of all gamers. Xbox currently has no physical presence on mobile, and its ability to reach mobile gamers is hampered by the effective duopoly of Apple and Google in the video game market.
Acquiring Activision would therefore provide Xbox with new capabilities and content to deliver on mobile, which it currently lacks. And to add that more than half of Activision’s revenues in the first half of 2022 “came from the King mobile games division and titles such as 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 which could move Xbox forward.”
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