Microsoft’s $1 billion edition of Call of Duty.

News Summary:

  • First, some background: After lagging Sony and PlayStation for nearly a decade, Microsoft needs a win in the console market. Historically, PlayStation has still beat Xbox in terms of hardware sales, thanks largely to exclusive releases, while Microsoft beats Sony’s PlayStation Plus in terms of subscribers and revenue with its own separate subscription platform. month for the game, Game Pass. For its part, Sony has gained an advantage over Microsoft in terms of exclusivity by negotiating terms with third-party developers, such as Square Enix and Kojima Productions, but also by outright acquisitions. developers, such as Naughty Dog, to produce unique games in the world. PlayStation, like The Last of Us.

  • It’s hard to overstate the industry-wide shock of announcing 13 months ago that Microsoft would buy Activision Blizzard. The latter publishes Call of Duty, the world’s best-selling first-person shooter franchise. The deal is therefore seen as a huge blow to Microsoft’s Xbox and a serious threat to Sony’s PlayStation – should Microsoft decide to monopolize the game. But more than that, the $69 billion deal is touted as a major disruption to the video game industry and a big bet on the future of the metaverse. A year earlier, Microsoft had bought the video game holding company ZeniMax Media, responsible for titles like Fallout and The Elder Scrolls Online, for $7.5 billion, a staggering price at the time. that point. This latest acquisition will appreciate this transaction almost ten times, but suddenly the deal seems to fall apart. What happened?

In a sense, Microsoft is simply putting out the fire, buying a large company with a proven portfolio of popular games to bolster the Xbox and Game Pass value proposition. The initial backlash from the deal had little to do with antitrust concerns — regarding Microsoft’s ability to make Call of Duty and other popular titles potentially exclusives — and more more about Activision’s mismanagement under outgoing CEO Bobby Kotick, now set to leave the company with a golden parachute worth more than $500 million. Antitrust concerns are palpable in progressive corners. But specifically? This seems inevitable. Sony has been cheated.

Modern Warfare II, the most recent installment, debuted in October and sold more than $1 billion in its first 10 days on the market. It’s the franchise’s fastest-selling game to date, but it’s also the most recent installment to vastly outsell every other game, regardless of genre, releasing around the same time. Even the other high-profile, year-winning hits, like Elden Ring or Horizon Forbidden West, pale in comparison to Call of Duty’s consistent market dominance. Call of Duty perpetually prints money. Since 2003, it has released a brand-new full-priced game almost every year, and each of those games represents a brand-new platform for microtransactions that are worth many, many times the $60 purchase price. The importance of Call of Duty to the future of video games is only growing.

Until it’s gone! In December, the Federal Trade Commission filed a lawsuit to block the deal, citing its case – you guessed it – antitrust concerns. More recently, the European Union and the United Kingdom have threatened to block the deal for the same reason. To summarize the FTC’s 23-page complaint: Sony and Microsoft already control the “high-performance video game console” market, and Microsoft’s control of Activision will only further strengthen the console market and thus which further limits consumer choice. “Activision’s content is extremely important to video game consoles and driving adoption,” the FTC said in its complaint, naming several key titles but also clarifying the mounting point. its multi-billion dollar bundle, Call of Duty.

So even though Microsoft claims it won’t, it is understandable why the company would want to acquire Activision and turn it into an exclusive or at least partially exclusive publisher for the Xbox. And you can understand why Sony might worry that this situation will put it at a competitive disadvantage. Although Xbox is supported by Microsoft, a $2 trillion company willing to outspend Sony, PlayStation may be the larger platform.