What you need to know
- The UK regulatory body known as the CMA has thus far not been very positive towards Microsoft’s $69 billion dollar Activision merger.
- The deal would see Microsoft gain control of franchises like Warcraft, Call of Duty, and Candy Crush.
- In a new release, the CMA published 9 responses to the current process, including Activision and Microsoft. 7 of these responses were from third-parties.
- Of the 7 responses, only PlayStation was opposed to the deal.
The drama around the Activision-Blizzard deal continues, with UK regulators, the CMA, publishing a raft of responses to its questions over the deal.
Microsoft is embroiled in a bitter battle to get its $69 billion dollar Activision-Blizzard acquisition through. Regulators worldwide have been approving the deal one by one, with notable outliers in the UK and the United States. As we approach various decision-making deadlines, it ultimately falls to the UK CMA, the European Union, and the United States FTC to decide whether or not the deal will go ahead. As you might guess, the primary detractor against the deal has been Sony PlayStation. Sony seeks to preserve the status quo of the $70 retail games while undermining the possibility that Xbox Game Pass or even its own PS+ could become a primary way gamers acquire access to titles.
Still, Sony and Microsoft aren’t the only players in the industry by a long shot. To that end, the UK CMA has been reaching out (via @EverbornSaga) to publishers and studios across the industry to get their responses to the deal ahead of its final decision. It seems that of all studios asked, almost all of them approve the deal outright. The only detractor is, you guessed it, Sony.
One anonymous publisher stated, “the acquisition will not all of a sudden make Xbox the dominant platform. It’s far more likely that it may help to create a level playing field between Xbox and PlayStation which, at this point in time, is sorely needed.” Another noted the threat from China and Tencent, which wields an unfair advantage in the gaming industry by preventing Western companies from doing business freely in China, while taking advantage of the more open UK market. “Chinese publishers in our industry benefit from an unfair advantage due to the fact the Chinese market is closed to Western companies through various regulations. […] Letting Microsoft and Activision consolidate their business in light of this fast-growing competition would not be against the interest of UK consumers.”
Sony once again responded with claims that Microsoft may seek to raise prices on Xbox Game Pass or Call of Duty as a result, presenting emotional arguments without evidence. Sony claimed that Xbox Game Pass is “far ahead” of PS+ in subscribers and that Microsoft may use the popularity of titles added to Xbox Game Pass as a way to raise prices on consumers — despite the fact Microsoft offered Call of Duty to Sony to include in PS+ as well.
Windows Central’s Take
Microsoft noted in its CMA response that the regulator had made an “obvious” mistake with regard to its position over the deal. The CMA has previously made assumptions that Microsoft could foreclose Call of Duty from competing platforms, wholly misunderstanding the Call of Duty business model. Like Minecraft, engagement is God for Call of Duty, and that dictates that it must be everywhere and anywhere all the time. Opponents of the deal (chiefly Sony right now) are running out of solid arguments in this context, especially as Microsoft doubles down on its blitz to offer Call of Duty to competing platforms. Microsoft has announced several new cloud deals for Call of Duty this week, to prove to regulators that it won’t be making the franchise exclusive to Xbox in any way, shape, or form.
Microsoft is changing the video game industry around PlayStation, which seeks to preserve things the way they are. Sony’s conservative approach won’t help it in the future. Technology moves forward whether Sony likes it or not, and even mega-franchises like Call of Duty itself will die if they don’t adapt to the changing landscape.
Whether it’s cloud services, competition from Chinese publishers with unfair home advantages, or advancements in AI — the industry is evolving very rapidly. For Activision shareholders, the publisher has essentially reached the upper echelon of growth. This is why shareholders overwhelmingly backed the deal. Activision needs to find a future beyond traditional platforms, and that’s only possible as part of a platform holder like Microsoft, Amazon, or Google, the latter two of which have limited interest in core gaming. I’ve argued for Sony to embrace change, for its own sake. Regardless of the outcome of this deal, technology waits for nobody, and Sony could find itself left behind if it doesn’t join Microsoft in gunning for mobile and cloud audiences soon.
