Activision/Microsoft: CMA exposes its top 3 concerns

Activision/Microsoft: CMA exposes its top 3 concerns

This will be, without a doubt, the acquisition that we have heard the most about this year. And for good reason, apart from the large sum it represents, it could alter the video game landscape of the next few years at Microsoft. The British authorities are undoubtedly the most fearful in this regard, and have just summarized their concerns.

Games, Xbox Game Pass and the Cloud under study

As you know, the CMA (UK Competition and Markets Authority) has entered its second phase of investigation into Microsoft’s acquisition of Activision Blizzard King. Technically, the British authorities have already detailed their timetable with hearings this winter and a verdict expected no later than March 1, 2023.

We’ve already covered the details of what the CMA fears about this deal, but the organization has broken down a summary into a few bullet points, a chance to catch up on all of this if you haven’t been following the news over the past few weeks on Xboxygen. These are the three key elements that will be studied by the CMA in the coming months.

  • 1. Availability of Activision content and its impact across gaming platforms on competing consoles and UK players. This includes exclusive games, game quality, features and upgrades, and their prices.
  • 2. The impact on subscriptions multigames, where customers pay monthly or annually to access the games. The CMA is obviously targeting Xbox Game Pass here, and will be tasked with determining whether the service could hurt competition by bringing back Activision Blizzard games.
  • 3. The future impact of cloud gaming services. Microsoft already has strong infrastructures in its console or PC world.

Behind the scenes of a landmark deal

Although Europe is now up to study the file, the latter has given us some very interesting elements about the video game market in general and, in particular, the ambitions or fears of each one.

For example, we learned that Xbox Game Pass generated $2.9 billion in revenue in 2021 for Microsoft, or 18% of the company’s gaming revenue.

We also had the opportunity to verify that the company most reluctant to take over was, as expected, Sony, which used several more or less understandable arguments. Sony clearly fears that Call of Duty will eventually slip away from PlayStation, and Microsoft doesn’t really seem ready to guarantee lifetime availability of its competitor’s license. Recently, Microsoft dismantled the arguments of Sony and the CMA by trying to minimize the weight of the Xbox brand in the current video game landscape. The American company continues to confirm that the launch of Call of Duty on PlayStation is a “commercial imperative”.

Microsoft has no intention of removing Call of Duty from players and has made a public commitment not to do so. Call of Duty’s value depends on its community of players, most of whom are on PlayStation. Therefore, keeping Call of Duty on PlayStation is a commercial imperative for the Xbox business and the transaction economy. As such, Microsoft offered Sony a contractual commitment to continue providing Call of Duty to it, including new releases with parity of features and content.

The order for reference does not explain why, according to the CMA, Microsoft would make such commitments in public and in private, which are also reflected in its documents, if it had no intention of complying with them.

The strategies outlined in the firing order would alienate the Call of Duty player base and tarnish the Call of Duty and Xbox brands, thus undermining the logic of the operation. Microsoft would endanger more than [X] dollars in annual revenue from Call of Duty sales on PlayStation, as well as substantial revenue from other Xbox games distributed through PlayStation. Microsoft has made it clear that it relies on revenue from the distribution of Activision Blizzard games on Sony PlayStation.

Microsoft’s response to the CMA

On the Sony side, the fear is not only that Call of Duty could become exclusive to Xbox, but also that Microsoft decides to offer exclusive advantages to its ecosystem. A strange argument when it is known that Sony itself already pays Activision to obtain advantages on PlayStation such as early betas or exclusive brand skins. This story still seems to be far from having revealed all its secrets to us.

The latest information on the Activision Blizzard acquisition

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