PlayStation continues to cry over the purchase of Activision but this time it made it clear that negotiating with Microsoft is not an option. The goal is to ruin the acquisition and destroy Xbox’s plans. Will he succeed? Let’s analyze it.
SONY WANTS TO END THE BUY OF ACTIVISION AT ANY COST
In recent days, official documents were made public that account for the presentation of reasons by Sony and Microsoft before the Competition and Markets Authority of the United Kingdom (CMA) held last October. As happened before other organizations, Sony Interactive Entertainment, led by Jim Ryan, expressed its disagreement with the purchase of Activision-Blizzard, but this time it is evident that there is no interest in negotiating and the mission is to throw out the acquisition by presenting a compendium of cons. and explanations that in the world of commercial regulations is known as Theory of Damage.
It all started recently when Phil Spencer, head of Xbox, revealed in a series of interviews that the brand’s plans were not to make Call of Duty exclusive to its gaming ecosystem or to deprive PlayStation, or other platforms, of the franchise. Then, a report from The New York Times leaked information that Xbox approached PlayStation to propose a deal to ensure that Call of Duty would stay on their consoles for the next 10 years.
Although there is no record of what Sony responded, it was enough with the publication of the CMA documents to infer it. In them, the division in charge of Jim Ryan points out that “Call of Duty is the AAA franchise with the most successful annual release model in the video game industry and considers it irreplaceable for any platform”, this in response to Microsoft’s argument that that both the IP and its community are not special or something extraordinary.
Taking advantage of the idea, PlayStation assured that Battlefield is not a parameter to talk about competition in the field of shooters, I reaffirm that there is no way in which you can create your own Call of Duty and closed with a series of tested data on the number of players, expenses and income that allows you to define the FPS as “exceptionally important” for PlayStation, something that inevitably leads to thinking about the little confidence that the brand has in its productions and in the value of its gaming offer.
Subsequently, the Japanese company warns of Microsoft’s tendency to acquire studios and make their franchises exclusive to the Xbox ecosystem. Starting from that base, Sony expresses its fear that, in the event that the Activision acquisition is approved, Call of Duty will become the hook with which Xbox attracts gamers. Basically, Sony considers that an exclusivity of this type would lead users to leave PlayStation 5 and PlayStation Plus to go to Xbox Series X | S and Xbox Game Pass.
Finally, Microsoft was accused of trying to monopolize the best shooters on Xbox because once the purchase was approved it would have Call of Duty, Halo, Gears of War, DOOM, Overwatch in its portfolio as a plus for the entire third-party offer. However, the most controversial and even ridiculous argument came with the victimization of Sony, who assures that Microsoft wants to corner PlayStation, force it to change its business model and turn it into Nintendo, that is, a brand that depends purely on its hardware proposal. and its exclusivities.
XBOX RESPONDS BY REMEMBERING ITS DEFEAT STORY
At this point, the arguments of both companies, although valid, are similar to those that 2 children would give trying to convince an adult who did a mischief. While Sony insists on crying, on belittling PlayStation Studios and shouting that its existence depends on Call of Duty, Microsoft and Xbox appeal to play the role of the tender sheep.
According to the CMA document where the arguments of the North American company are stated, it is based on the reality that it has lived in the video game industry just over 20 years after launching the first Xbox, always under the shadow from PlayStation and Nintendo. The brand recognizes that its offer of original and exclusive franchises is far from what Japanese companies achieve and even accepts that PlayStation Studios games, in many cases, are of higher quality and better products than what they have been able to offer.
“[Xbox] recognizes that its offer of original and exclusive franchises is far from what Japanese companies achieve and even accepts that PlayStation Studios games, in many cases, are of higher quality and better products than what they have been able to offer. “
In that same idea, Xbox takes a look at the data and in an attempt to prove its reasons to the British regulator reveals the poor percentage of sales of its exclusive games compared to the installed base. While on PlayStation there is talk of a 10 to 20% purchase of exclusives with respect to the total number of its users during the 2017-2021 period, on Xbox this is 0 to 10%. Of course, here we must consider the availability of exclusivities in Xbox Game Pass, its promise from day 1, but we must not forget that it is a financed model that has been defined by Phil Spencer as sustainable, and sometimes as profitable without providing figures, but it will not be eternal.
According to Microsoft and Xbox, it is this same story over 2 decades that leads them to consider a strategy on different fronts, firstly, accessibility through a gaming ecosystem that is not limited to consoles, and secondly, an acquisition initiative that would allow it for the first time to be on a par in terms of competition with PlayStation and Nintendo.
As for Call of Duty, Xbox promises that the franchise will continue on Sony consoles even if there is a PlayStation 7. At the same time, he mentions that his main interest is not the FPS but the null presence they have in the mobile gaming sector which could be covered with King, that company that owns Candy Crush that is little talked about but whose income contributes more than 50% of the total billions of dollars that Activision-Blizzard obtains.
While Sony and Microsoft come up with everything, the main regulators continue with their respective processes and this is where the key is found that makes us think that PlayStation will not get away with it, but this decision will have a cost for Microsoft, which will not be able to move forward without it. obstacles.
A few weeks ago, the European Commission reported that it will take the review of the Activision-Blizzard purchase to a second phase because it has doubts about what Microsoft could do once the agreement is approved, fearing monopolistic actions. What actually happens is that the European regulator, as implicitly as possible, is asking Microsoft to make adjustments, transfers and make some commitments that guarantee that there is no harm to competitors, this in order to give the green light to the acquisition. The authority knows that a purchase of $70 MMDD is not a minor thing and will inevitably have an impact on the industry, but what they try to do is reduce it for reasons of competition and the market, not because they are paying much attention to Sony.
For its part, the State Administration for Market Regulation in China confirmed in recent days that it will not review the simplified version and process request in the same modality proposed by Microsoft, that is, it will not approve it immediately. This opens the door to a deeper investigation, but the same Chinese regulator indicated that it will wait to see the resolution of the European Commission to determine the course of its review. In this case, there is no risk to approval and it seems that China just wants someone else to do the work so Microsoft will have no problem.
In the midst of the controversy over what was said before the UK CMA, unexpected information emerged. A report from the Politico site, shared by Reuters, cited internal and undisclosed sources from the United States Federal Trade Commission, the FTC, which indicated that the regulator “could” initiate legal proceedings against Microsoft in its attempt to purchase Ativision-Blizzard in order to prevent an act that affects competition and is considered monopolistic. Beyond the scandal that was made in the headlines, various specialists consider that this is nothing more than the FTC itself warning through a medium that certain concessions must be granted and some compromises made with competitors. Practically, and as Michael Pachter points out,
However, this “leaking” of what is happening at the FTC was not well received by Activision-Blizzard because hours after the publication in the media, Lulu Cheng Meservey, corporate vice president of external affairs, raised her voice warning that the company will fight for to make the purchase a reality and that they are working with the regulators to make it so, responding emphatically to any insinuation from the North American commission, after all the relationship between regulators and companies is always going to be tense.
THE FINANCIAL SECTOR IS CALM AND TAKES THE PURCHASE OF ACTIVISION FOR A DONE
The Activision-Blizzard purchase is not a Microsoft occurrence or a solo venture, you can’t spend $70 million that way. The company that owns Xbox has the prominent firm Goldman Sachs as its financial adviser and Simpson Thacher & Bartlett as legal advisers, authentic sharks in the financial sector who know exactly what they are doing.
Despite the doubts that were generated by the decision of the European Commission, the position of the CMA in the United Kingdom, and the cries of PlayStation, the world of finance rests calm with the prospect of the deal being approved. Despite a steady decline in Activision-Blizzard’s stock price that began in August of this year and reached its nadir on November 7, the success of Modern Warfare II and Microsoft’s staunch defense have led to a rebound. at the most important time of the year.
Large investment firms that have a stake in Activision such as Vanguard Group, Fidelity Investments and BlackRock, as well as corporations specialized in the sector, maintain the shares of the video game company with buy status and a positive rating so there is no panic in the stock market, there is confidence and next year the acquisition will be a fact.
PLAYSTATION WILL NOT GET AWAY WITH IT
In the end, and although the opposition of Sony and PlayStation is valid, despite the fact that some of their arguments border on the ridiculous, the effort will not result in what the company and the brand want. His plan is to convince the regulators to block the purchase, but that will not happen, so the mission from next year will be to restore the lost dignity and the trampled image. For its part, Microsoft will see the green light for its brand new purchase, although it is almost a fact that it will yield in some sections and may have to comply with the PlayStation tantrum regarding Call of Duty. The dispute and its conclusion will be favorable for Microsoft and Xbox, so it will be time to prepare because a new era in gaming is about to begin.