There is a conflict between Microsoft and Sony. Microsoft has announced its intention to acquire Activision Blizzard. This would give Microsoft ownership of the game series “Call of Duty”, one of the most important franchises in the world. Sony has explained the problems this brings – but Microsoft now says that Sony fears losing its dominance in the console market, which was created through exclusive titles. An Xbox Game Pass with Call of Duty would jeopardize Sony’s business model.
What kind of conflict is this?
- In January 2022, Microsoft announced its intention to acquire Activision Blizzard (Call of Duty, WoW, Diablo)
- This acquisition must be approved by various regulatory authorities worldwide. Because in a merger of such large market participants, there is a risk of creating a monopoly that threatens the free market.
- The Brazilian regulatory authorities had asked several gaming and tech companies what they thought of the acquisition, whether it would endanger the diversity of the market
- Almost all companies had no objections, only Sony noted: Call of Duty is a unique game and has no competition, and will never have any. This was expressed as a concern when Microsoft acquires Activision Blizzard.
The release of a new Call of Duty is the gaming event of the year for many shooter fans:
If Call of Duty is so unique, the same applies to PlayStation
This is what Microsoft says now: Microsoft has responded to Sony’s concerns. In a 27-page document, they attempt to refute Sony’s statements (via vgc)
Microsoft argues that Call of Duty is not a “unique game”. Sony is contradicting itself. Because if Call of Duty is unique due to its loyal followers, then the PlayStation must also be unique, as it has loyal followers as well.
Sony’s own Playstation has an established base of brand-loyal players. This understanding does not lead to the conclusion that the PlayStation – or any other brand with loyal followers – forms its own market compared to all other consoles.
The idea to derive from this understanding that Call of Duty is a genre of its own cannot be substantiated – neither under qualitative nor quantitative analysis.
Microsoft believes it is about Xbox Game Pass vs. PS Plus
What does Microsoft believe is behind this? Microsoft believes that Sony is not so much concerned about Call of Duty, but about the dominance of the Xbox Game Pass compared to Sony’s subscription model, PS Plus.
Sony does not want new “Call of Duty” games to be included in the Game Pass from day one at release, as they would be “annoyed about having to compete with Microsoft’s subscription model.”
Sony’s public statements on subscription games and their response to the authority’s letter make it clear: Sony does not want an attractive subscription model to threaten its dominance in the digital distribution market for console games.
In other words: Sony is opposing the introduction of new monetization models that could challenge their business model.
From Microsoft’s perspective, Sony is thus concerned with protecting its dominance in the console market through the PS5 and the PS Plus business model.
The Xbox Game Pass would become even more attractive with a “free” Call of Duty upon release. Sony apparently wants to prevent this with its concerns about the acquisition of Activision Blizzard.
Microsoft says: Sony fears the Game Pass and wants to actively hinder it
This is what Microsoft accuses Sony of: Microsoft says that Sony has already actively tried to prevent the growth of the Xbox Game Pass by paying some developers not to bring certain content of their games to the Game Pass (via vgc). Microsoft refers to “Blocking Rights”:
This once again shows the fear of an innovative business model that offers players high-quality content for low costs. This threatens a dominance that has been forged over the years by a platform and exclusive-driven approach.
Call of Duty exclusive to Xbox would be economically unwise, says Microsoft
Will Call of Duty be exclusive to Xbox? In further statements, Microsoft says that it does not plan to exclude Call of Duty from PlayStation. That would simply not make economic sense.
Because one would have to earn more from Xbox sales than one would lose from the loss of Call of Duty sales on PlayStation (via vgc).
What are the different business models of Sony and Microsoft? There are significant differences in the business models of the two console giants:
- Sony heavily relies on high-quality exclusive titles from its own studios, which are released as full-price titles. Their subscription service “PS Plus” is necessary to play online on the PS5. In addition, there are some older games or budget titles available for free each month for subscribers. Sony prefers to focus on Free2Play and service games rather than bringing major titles directly to PS Plus at release.
- Microsoft, on the other hand, has developed the “Xbox Game Pass” in recent years: a kind of “flat-rate gaming subscription” modeled after Netflix. Major new titles often appear in the Xbox Game Pass on release day.
Microsoft apparently believes that its business model is superior to Sony’s and that acquiring Activision Blizzard can make the Xbox Game Pass even more attractive when titles like Call of Duty or new games from Bethesda like Starfield or a The Elder Scrolls 6 become part of the offer.
The Xbox Game Pass is a success story:
Game Pass: How an MMO helped Xbox to fundamentally change gaming
