“Specifically, with respect to Activision Blizzard video games, there is nothing unique about the video games developed and published by Activision Blizzard that is a ‘must have’ for rival PC and console video game distributors that could give rise to a foreclosure concern,” read Microsoft’s response to the New Zealand Commerce Commission, published in a report from June. That means that Microsoft don’t consider their future ownership of Activision Blizzard’s franchises such as Call Of Duty to cause issues that would prevent their rivals – among whom they identify Valve in the PC space – from competing against them.
Okay, jokes apart, I think this is a pretty misleading argument. Even without looking at the massive elephant in the room that is Call of Duty, Activision still does hold several valuable IP that are especially relevant from an antitrust perspective, from Overwatch/World of Warcraft to Candy Crush. Among the brands more core players may care about, Diablo is massive. Not sure this is the argument I would necessarily go with.
This argument is objectively correct. It’s not must play in the sense of “damn I must play that” but quite literally “If I want to play a game of this type, I can only play this”.
Best analogy I can give is imagine the gaming industry as a small town. The small town has 15 pizza shops and two Mexican places. The cost of making Mexican food is so expensive, only the Mexican restaurants can make it (it’s stupid, but go with it).
A firm called Phil’s owns 5 of the 15 pizza shops: Angelic Pizza, Doomie’s Pizza, Wolfie’s Pizza, Perfectly Darkened Charcoal Grilled Pizza and Radioactive Pizza. However, by far the most successful in town is Stars and Stripes Pizza. If Phil’s was to buy Stars and Stripes Pizza, they’d own 6 of the 15 shops and make a good amount of money, but there is nothing stopping competing firm Jim’s from buying Bungie’s Pizza for example or starting their own.
They also own one of the mexican places. If Phil’s bought the other Mexican place and said “Only people who eat at Phil’s restaurants can eat Mexican food” there would be a problem because then there would be no direct competition, but nothing of the sort is happening here.
In short, FPS fans can still enjoy a plethora of genre titles on PlayStation even with Bethesda off the table and if CoD was to go exclusive.
Recent financials show that making Call of Duty exclusive to Xbox platforms will have a significant material impact on earnings and revenues generated by Activision. Microsoft could lose out on over $1 billion in revenues, and Sony in turn could lose out on some $500 million every year. That’s not a whole lot of loss for Sony, who has made $10.2 billion in FY21 so far, but it’s not nothing either.
MS already said that, at least for COD, nothing will change (well, SONY will lose marketing deals but I dont see why regulators would have a problem with that) and according to his analisis well, it is technically true that COD is not fundamental to playstation’s life and that they very well could compete without having its marketing (becasue, again, thats the only thing MS will take from them)
The totals for 2021’s revenues from customers, for example, were as follows:
Apple - $1.496 bn
Google - $1.496 bn
Sony - $1.320 bn
Microsoft - <$880 m
Total - $5,192 from top customers (does not include Nintendo, or retailers like Best Buy, Walmart, etc)
So we know that Activision made $1.320 billion from Sony in 2021. That’s after the revenue split that Sony takes.
A bit of math reveals how much Sony kept. While it’s likely Sony gives Activision-Blizzard a negotiated cut of revenues, let’s just say that Sony applies the standard 70-30 split, with Sony keeping 30% of revenues.
Activision received $1.320 billion from Sony in 2021. That means the actual value was about $1885.71 billion.
Based on this, Sony kept roughly $565.71 million for itself. If Microsoft makes Call of Duty exclusive to Xbox, Sony will not get these kinds of revenues. We don’t know how much of this is from Call of Duty, but a good portion of it likely is.
Again, this is not going to happen.
Most of Activision-Blizzard’s 2021 console revenues were from the Activision segment, which made $2.502 billion in the year. Blizzard, on the other hand, made up $135 million.
While we don’t know how much Sony made just from Call of Duty, we do know other data, Activision says that 3 of its top franchises, Call of Duty, Candy Crush, and Warcraft, made up 82% of its consolidated 2021 net revenues. This equals to roughly $7.22 billion.
Only 1 of Activision’s top 3 franchises are available on Sony platforms–Call of Duty. Since we don’t know the % split between these franchises, we can’t extrapolate proper relation data (remember, I am referring to Activision’s segment, which does not include Blizzard games).
But it is fair to say that most of Sony’s paid-out revenues were from Call of Duty, especially since other franchises like Overwatch and Diablo made less than 10% of net revenues.
Seeing those Blizzard numbers…I dont think MS is wrong in saying Blizzard’s ips are not important in the grand scheme of things or at least they arent this gigantic monster that will prevent others competing in the same space.
PlayStation Plus would lose millions of subscribers if COD went exclusive to Xbox. It would actually be a zero sum situation because every lost PS+ Subscriber would be a gained Xbox live subscriber.
Xbox would love to do this but US regulators have forced Xbox’s hand and made Microsoft promise to keep Activision games multiplatform. Microsoft could challenge the US government, but I think Microsoft wants to stay on the government’s good side. Day1 Gamepass is a compromise since exclusivity was a government redline.
We will honor all pre-existing contracts which is a given since Microsoft did the same for Bethesda, Obsidian and InXile.
We will not remove or pull or delist any already existing games on PlayStation so all previously released COD games, Diablo IV, etc. will remain as is and for those like Warzone 2, Overwatch 2 and Diablo IV, just like TESO and Fallout 76, PlayStation will still get all the future updates and whatnot.
Of course, I was mainly replying to where you said U.S. regulators have forced Microsoft’s hand. They haven’t and they won’t.
But like with Bethesda, my prediction remains the same. Once contracts are done, Sony and PlayStation fans can kiss COD and everything else goodbye.
That would certainly be the smart thing to do. I really hope you end up being right. Sure I interpret Xbox’s comments differently but I’d love to be wrong on this one. Xbox should make it all exclusive.
I disagree with this for one reason. If you’re a hardcore COD gamer and are the type to where you only play two or three games a year (similar to sports gamers who only play sports games year round), you’re not spending $300/$500 on an Xbox Series S/X just for free online multi-player and Game Pass because the initial cost is much more than just paying the $60/$70 for COD on PlayStation. And if the person has friends who only or mostly play on PlayStation in regards to online games, that original person isn’t going anywhere.
Trying to lure a person here and there isn’t changing anything. If Microsoft really wants to change things, you need to get the vast majority of those who play COD on PlayStation to come to Xbox to play it and the only way to do that successfully is by making it exclusive.
On a related side note - my prediction is that in June 2024 at the Xbox Showcase, where a new COD game gets revealed, like Starfield in 2021, they will say it’s Xbox Exclusive and this is where I believe they eliminate Gold. Those who have Gold will be rolled into GP Ultimate for the duration of their subscription and in general, will make co-op/multi-player completely free.
Outside of GTA being fully exclusive to Xbox, the above would be the best combo that Microsoft could ever have in getting a paradigm shift because when COD is selling 30m every year or whatever the hell it is and PlayStation accounts for about 18-20m or so of those sales and you can get just half of that, well, you’ve already made a shift. And of course, a lot of those people will at the very least look into Game Pass and those who aren’t the type to play only a few games year round would most likely subscribe.
Yep. Even the FTC documentation uses the word “withdraw” software, not “continue to release”…its relating to existing games. Regardless of reason, once the deal goes through Microsoft can legally, remove all AB software off digital stores, they’re just saying they won’t. This is identical wording to their Zenimax proposal BTW.
You’re right they don’t need to, but it still negatively affects Xbox in ways no different then…releasing Halo and Forza on Playstation would. And Microsoft deems that, unsustainable. Luckily we literally had the same situation with the last 18 studios MS bought and regardless of how well they sold on Playstation, they were straight up canned.
It’s kind of convenient. Warzone was introduced in 2017 and is being retired in 2022.
Warzone 2 is being introduced in 2022, so by 2026 (the time when mainlines can go Xbox exclusive) it will be at the end of its life. Will there be a Warzone 3? Who knows, but it likely won’t release outside of Microsoft hardware.
For anyone who plays mostly multiplayer games on PS4, when Microsoft kills off Xbox Live Gold for multiplayer games it’s almost a no brainer to transition to Xbox Series S. That console pays for itself after 5 years ($60 per year savings * 5). The cost of going with a Series X over that time would only be $200.
All of that assumes Gold Multiplayer is removed and Sony doesn’t increase the cost of their PlayStation Plus Essential tier.
Anecdotally, they’re right that they don’t have any must buy games.
I’ve never played anything from King, never played anything from Blizzard, and stopped buying call of duty after the first Modern Warfare. Haven’t bought or played anything they’ve made since then except a handful of 360 games I got last year used.
Now granted I’m hardly average, but if I or any other gamer can find stuff to play all the time without ABK, it’s the very definition of not being “must buy” - and it’s true of every publisher no matter how big.