Call of Duty would stay on PlayStation thru 2027 if Sony accepts offer

[Eternal_Wings]

“Microsoft has officially confirmed the existence of the controversial Call of Duty exclusivity deal.
Under the terms, Microsoft says "access to Call of Duty would have been granted through at least to the end of 2027" if Sony had accepted its offer.”


Today Microsoft published a 38-page response to the UK's Competition Markets Authority and made compelling arguments as to why its $70 billion merger should be allowed. Microsoft provided lots of data, figures, and insight on the games industry while also confirming the terms of the controversial Call of Duty deal.

Elsewhere in the document, Microsoft says that it has "no incentive to withdraw Call of Duty." This begs to question why the offer was established in the first place.

This leads one to believe that Microsoft had plans to only make new games exclusive to Xbox platforms (e.g. everywhere besides PlayStation, as Xbox now encompasses consoles, PC, and mobiles).


Whatever the case may be, Sony's Jim Ryan did not accept the terms of the deal. Based on what Microsoft has said in the document, which we have included in this article, it certainly sounds like the company had plans to eventually offer Call of Duty games exclusively on the Xbox platform after the offer expired in 2027.
Elsewhere in Microsoft's response to the CMA, the company says that it has no incentive to remove Call of Duty from PlayStation.

So why did the offer exist in the first place?

There's usage of the words "remove" and "keep", which implies only new COD games would be exclusive.


Tweaktown.com

 

[Gediminas]

They did not even buy it and there is demand already. Arrogance is fucking crazy.

 

[Eternal_Wings]

Full response of Microsoft:

https://assets.publishing.service.gov.uk/media/634e5d3dd3bf7f618d8f88d1/Initial_Phase_2_submission.pdf

 

[Darth Vader]

So... Jimbo was telling the truth and Microsoft lied to the CMA.

Edit: I'm gonna take some time and read the Xbox document, like I did with the CMA one.

 

[Eternal_Wings]

 

[Darth Vader]

Do these guys really think they can so blatantly lie and not be caught?

Page 3

In any event, Microsoft has no intention to take Call of Duty away from gamers and, indeed, it has publicly committed not to do so. The value of Call of Duty depends on its community of gamers, the majority of whom are on PlayStation. Keeping Call of Duty on PlayStation is, therefore, a commercial imperative for the Xbox business and the economics of the Transaction. As such, Microsoft has offered Sony a contractual commitment to continue supplying it with Call of Duty, including new releases with feature and content parity. The Referral Decision fails to explain why, in the CMA’s view, Microsoft would make such commitments publicly and privately, if it had no intention of honouring them. Microsoft would not do this. Foreclosure strategies of the type outlined in the Referral Decision would alienate the Call of Duty gamer base and tarnish both the Call of Duty and Xbox brands, undermining the rationale for the Transaction. Microsoft would place at risk over USD [] in annual revenue from sales of Call of Duty on PlayStation, as well as substantial revenues from other Xbox games distributed via PlayStation. Microsoft has been clear that it is counting on revenues from the distribution of Activision Blizzard games on Sony PlayStation as part of its business case for the acquisition.

Page 15

With access to Call of Duty guaranteed through to at least [] under the existing contract with Activision Blizzard (and through at least the end of 2027 if it were to accept Microsoft’s current contractual offer), Sony has more than sufficient time to ensure that its console platform and content portfolio is competitively positioned to withstand any impact from a hypothetical foreclosure strategy. The fact that the CMA declines to even consider Sony’s competitive response is especially concerning given that it is prepared to speculate regarding Activision Blizzard’s likely approach to subscription services absent the Transaction (see section 4 below) and is at odds with the CMA’s acknowledgment that the gaming industry is dynamic in nature.

So, on one page they try to paint themselves as the good guy, even implying that the economics of removing CoD from PS outweigh the benefits and that they offered Sony what seems like a very good deal. A few pages later, they finally admit that they offered a contract to the end of 2027, which would mean they could take the game away from PS consoles in 4 years time.

So which is it, Microsoft? And let it be noted, if the deal goes through, Microsoft is absolutely entitled to remove CoD (after existing agreements expire) from the Playstation platform, but the above is just dishonest. I'm sure the CMA will see right through this one.

 

[Darth Vader]

We left the arguments and are now in propaganda territory:

Microsoft has been present in the gaming industry for over twenty years, following the launch of the original Xbox console in 2001. With a primary focus on console gaming, Xbox has been the number three player behind Sony and Nintendo in each successive console generation, in what the gaming industry colloquially refers to as the “console wars”. Far from having any market power, Xbox has been a challenger which has consistently had to offer gamers additional value and champion new propositions, such as multi-game subscriptions and cross-platform play, in order to remain competitive.

You mean offer services that existed before, just repackaged under gamepass? As for additional value, how are you providing additional value when your studios are graveyards of content? Where are the exclusive games that offer so much value to those that have invested in your platform? I'd love to know who thought of this argument, since any person can easily pick it apart and outright destroy it by looking at cloud offerings, subscription services and their own release portfolio vs Playstation / Nintendo.

Microsoft’s position on PC is even weaker. While Microsoft developed the Windows operating system (“OS”) for PC, the open nature of the Windows platform has fostered vibrant competition in PC game publishing and distribution. Microsoft has a global share of less than []% in PC game publishing, as well as PC game distribution. The “multi-product ecosystem” alleged by the CMA has not given Microsoft any advantage in PC game distribution, with Microsoft sitting in seventh place globally, well behind leading distributors of PC games.

That's not quite the argument the CMA made.

Given these developments, the need for a diversity of business models and technology remains core to Xbox’s strategy of reaching the world’s 3 billion gamers, regardless of location, socio-economic status, or device ownership. Xbox’s decision to embrace a gamer-centric, device-agnostic approach requires it to introduce innovative ways of accessing and paying for games that reach the maximum number of gamers possible. Xbox also recognises that growing its presence on mobile is critical to growing consumer engagement beyond console and PC games.

Accidentally communist Microsoft, or just lying? You pick.

 

[Darth Vader]

This is a good one. Oh boy.

First, the Transaction gives Microsoft a meaningful presence in mobile gaming. Mobile gaming revenues from the King division and titles such as Call of Duty: Mobile, as well as ancillary revenue, represented more than half of Activision Blizzard’s revenues and in the first half of 2022.11 Mobile customers account for around three-quarters of its MAU. Microsoft currently has no meaningful presence in mobile gaming and the Transaction will bring much needed expertise in mobile game development, marketing and advertising. Activision Blizzard will be able to contribute its learnings from developing and publishing mobile games to Xbox gaming studios.

You don't need to buy a whole 70B publisher to achieve this. You want the market share from day one, that's all. Expertise in mobile game development can be had by actually taking time to set up studios and, you know, having them pump products the people like. You want to buy market share, just say it.

Second, Activision Blizzard is a well-established business with predictable revenues and established communities of gamers around its three main game series, Call of Duty, World of Warcraft and Candy Crush Saga (which account for over three-quarters of its net revenues, and a significantly higher proportion of its operating income).12 Microsoft has consistently voiced its commitment to continue to make games available for purchase on any platform on which they are currently available.13 Microsoft has backed this up, sending Sony a signed contractual offer to keep all existing Activision Blizzard console titles on Sony PlayStation (including future instalments of Call of Duty) with feature and content parity.14 PlayStation is the leading console platform and discontinuing distribution of Activision Blizzard’s titles on other platforms would cost Microsoft around USD [] billion in revenues in 2024 alone, growing to ca. USD [] billion by 2032. The deal valuation does not include increased hardware sales, which do not form part of the deal rationale.

Ok, you said it. You were doing so well on this point, then you lied again. Sad.

Third, Microsoft’s acquisition of Activision Blizzard will support its investments in Game Pass. Game Pass gives gamers an additional way to pay for games, as the same games that are available on Game Pass are also available to purchase and gamers frequently switch between the two payment models. By offering gamers the ability to try new games for a fixed monthly fee, Game Pass encourages gamers to play a broader range of games. The addition of Activision Blizzard titles, such as Call of Duty, to Game Pass is projected to increase the Game Pass subscriber base across console and PC by around [] million subscribers worldwide in FY 2024 and [] million by FY 2032, as compared to the projected base without Activision Blizzard content.15 This represents only a tiny fraction of the global population of console gamers (850 million) and PC gamers (1.45 billion).16

"We want to increase competition as long as people pick our service". The thing is, the value gamepass offers is also provided (and exceeded by) a chaper service called Playstation Plus, which has more games, game trials for paid offerings, and other perks. They also admit that the acquisition will inflate gamepass subs, something the CMA called out as well IIRC.

Fourth, the Transaction will improve Microsoft’s ability to create a next generation game store which operates across a range of devices, including mobile as a result of the addition of Activision Blizzard’s content.17 Building on Activision Blizzard’s existing communities of gamers, Xbox will seek to scale the Xbox Store to mobile, attracting gamers to a new Xbox Mobile Platform. Shifting consumers away from the Google Play Store and App Store in mobile devices will, however, require a major shift in consumer behaviour. Microsoft hopes that by offering well-known and popular content, gamers will be more inclined to try something new. The Open App Store Principles announced by Microsoft will apply to the next generation game store.18

Nothing is preventing you from having that next generation game store TODAY. Again, I'm sure the CMA will see right through this one.

Microsoft does not intend to remove Call of Duty from PlayStation or to degrade access to the franchise. The evidence on this is clear and includes Microsoft’s public statements20 and correspondence with Sony21, public statements by Sony22, the strategic rationale for the Transaction23, the deal valuation24 and Microsoft’s internal documents in relation to the Transaction.25 There is no evidence that Microsoft has considered withdrawing Call of Duty from PlayStation – because it has not. The CMA cannot simply brush this substantial body of evidence aside.26

You gave them the evidence they needed (and that matches with what Jim Ryan said) on page 14, you knobheads.

 

[kaluas]

Am i the only one here who wants the deal to go through? I wanna see CoD shrink and a return to Killzone and Resistance. Possibly a Medal Of Honor ressurection ? I feel like i've seen like 70 CoD games, there is nothing new...

 

[Darth Vader]

The Referral Decision’s first theory of harm requires the CMA to find evidence that Sony is a competitor capable of being marginalised as a console platform if it loses access to Call of Duty, a single game title. It is implausible that a competitor of Sony’s strength could be caught, surpassed and marginalised by the loss of Call of Duty (or any other Activision Blizzard content). The suggestion that one title could tip a market in favour of one provider does not accord with market reality or evidence from the last 20 years of console competition.

Sony's Market cap - 83B dollars
Microsoft's market cap - 1.78T dollars
Acquisition value - 69B dollars

Yes, I'm sure it's completely implausible that having as much money to invest in your business as the market cap of Sony cannot cause Sony to lose competitivity. They can just go out and spend 80B on a publisher, RIGHT???

 

[Darth Vader]

Am i the only one here who wants the deal to go through? I wanna see CoD shrink and a return to Killzone and Resistance. Possibly a Medal Of Honor ressurection ? I feel like i've seen like 70 CoD games, there is nothing new...

I want to see the deal fail so that Sony themselves don't think about acquiring publishers (albeit smaller ones, Sony can't spend that kind of money). In theory, I'm confident MS would fuck it up somehow, like they usually do, but in practice, it's too big of a move that will shift the console market towards a company that has failed to provide even a GOTY in the past decade.

 

[Eternal_Wings]

I kinda want this deal to go trough tbh. Because after this merger, Microsoft will never be able to buy further publishers.

 

[BigMclargeHuge]

I kinda want this deal to go trough tbh. Because after this merger, Microsoft will never be able to buy further publishers.

I'd accept that outcome. Activision is a scummy company that deserves to go under one way or another.

 

[Yobo]

I kinda want this deal to go trough tbh. Because after this merger, Microsoft will never be able to buy further publishers.

Not true

After this everything is smaller in scope

 

[Eternal_Wings]

Not true

After this everything is smaller in scope

Studios like Asobo yeah. If you really think that Microsoft will be able to buy another publisher(no matter how big), then you’re clearly deluded. No way in hell, after this drama MS will get a further publisher buyout approved.

 

[Yobo]

Studios like Asobo yeah. If you really think that Microsoft will be able to buy another publisher(no matter how big), then you’re clearly deluded. No way in hell, after this drama MS will get a further publisher buyout approved.

Yes. That will be direct approval of their acquisition strategy, and nothing is going to get the same scrutiny as ABK. MS still has more money than they can spend after ABK is bought

If it fails though, that is a signal from regulators that these sort of deals are not going to be approved and MS also cops billions in penalties and millions more in lawyers bills for nothing which might make them rethink acquisitions

 

[Eternal_Wings]

Yes. That will be direct approval of their acquisition strategy, and nothing is going to get the same scrutiny as ABK. MS still has more money than they can spend after ABK is bought

If it fails though, that is a signal from regulators that these sort of deals are not going to be approved and MS also cops billions in penalties and millions more in lawyers bills for nothing which might make them rethink acquisitio

First this deal will be likely approved imo. And after that, where is your evidence that another publisher buyout will go trough?
This deal will just go barely trough, proof for this how CMA and FTC acting now. It's beyond deluded to think MS can do what they want, without to fear legal consequences. To your logic antitrust divisions and laws exist just for fun.

I can see smaller acquisitions in terms of normal studios coming, but definitely not publishers.

 

[Airbus]

 

[Loy310]

So... Jimbo was telling the truth and Microsoft lied to the CMA.

Edit: I'm gonna take some time and read the Xbox document, like I did with the CMA one.

Its really just lies and things painted out of context to make their argument. But go ahead a read it.

 

[Darth Vader]

Its really just lies and things painted out of context to make their argument. But go ahead a read it.

I've read it. Its got a few good points, but mostly it's a "no you" exercise.