Xbox and Activision: Sony says it fears Call of Duty and the Xbox Game Pass in a document


Xbox and Activision: Sony says it fears Call of Duty and the Xbox Game Pass in a document
Written by madishthestylebar

Occurring at the very beginning of the year, the takeover of Activision Blizzard by Microsoft for 70 billion dollars was a real earthquake in the industry. The transaction now confirmed, many steps are still to be taken before Activision Blizzard is finally under the leadership of Microsoft, and the takeover must in particular be approved by competition regulatory authorities around the world. The results of one of the commissions based in Brazil have just been unveiled and they contain a lot of very interesting information in relation to the opinion of the major groups in the sector on the takeover in question, in particular that of Sony.

For Sony, Microsoft would take a big head start with this acquisition

A Brazilian law firm was responsible for this survey of many tech multinationals, all of which answered a dozen questions. The documents, entirely written in Portuguese, have just been made public and we share with you Sony’s words today.

The Japanese giant, Microsoft’s main competitor, has been at the center of attention for several months following the announcement of this record takeover, but also following other takeover rumors in the video game industry.

First, Sony talks about the difficulty of creating one of the very big budget, AAA games as popular as Call of Duty in the video game industry. Such developments require a colossal budget of several hundred million dollars and according to Sony, no current player in the industry would have the possibility of creating a potential rival to Call of Duty, established for years.

“Making a high-end AAA game (like Activision’s Call of Duty) requires a budget of hundreds of millions of dollars and thousands of employees. »

“Competitors of Microsoft and Activision in game development and publishing include SIE, Nintendo, EA, Ubisoft, Epic Games, Riot Games, Warner Brothers Interactive, Rockstar and Take-Two (owner of Rockstar and 2K). However , apart from Activision, there are few developers/publishers capable of producing AAA games, such as EA (FIFA), Take-Two/Rockstar (Grand Theft Auto) and Epic Games (Fortnite).These games tend to be franchises long-running with big budgets, multi-year development cycles, and fanatical followings. And despite big budgets and resources, none of these developers could create a franchise that would rival Activision’s Call of Duty, which stands out as a game category in its own right.”

Sony therefore claims that the presence and cultural impact of Call of Duty in video games and in popular culture give it a unique and almost impossible place to take in this sector. The license benefits from a loyal and diligent community that would not leave the ship even if another studio had the possibility of offering an FPS equivalent to Call of Duty.

Later in the document, Sony discusses the Xbox Game Pass and the place of subscription services in video games today. This evolution in video game consumption has created real competition with the sale of games purchased complete, at one time and definitively, which is in sharp decline. Sony believes the lower upfront costs of subscription services could be anti-competitive against publishers who recoup large investments in games by selling them for an upfront sum. By extension, Sony considers that this can negatively impact the quality of video game creations.

“Over the past five years, Microsoft’s Game Pass has grown to capture approximately 60-70% of the global subscription services market. This share is even higher in Brazil, where Game Pass accounts for around 70-80% of the PC subscription services market. When Microsoft announced that it would acquire ZeniMax in 2020, Game Pass had around 10 million subscribers. Even if each subscriber purchased the cheapest tier ($10 per month), that equates to over $1.2 billion in annual subscription revenue. As the graph below shows, when Microsoft announced it would acquire Activision in 2022, Game Pass was at 25 million subscribers – a 38% increase since January 2021 – doubling its annual Game subscription revenue. Go to at least $3 billion. »

Finally, Sony attributes the success of Xbox Game Pass to its ability to offer very different games to target a wide audience. The acquisition of studios with varied skills has been very beneficial for Microsoft and the Japanese giant takes the example of Double Fine, Obsidian Entertainment, Ninja Theory and Bethesda. By adding Activision to the equation, Microsoft could potentially create an inflection point in the video game industry and mark a considerable lead over its competitors.

“Content, as the primary driver of purchasing decisions, is the most significant barrier to establishing a digital distribution channel for PC, console and mobile games. A successful digital distribution channel will need to offer a wide range of differentiated content (e.g. different genres and different prices). One of the reasons Microsoft’s Game Pass has grown so quickly is because Microsoft has acquired several third-party studios since 2017, including Double Fine, Obsidian Entertainment, Ninja Theory, and Bethesda, and they’ve added their content in Game Pass. Such acquisitions gave Microsoft a greater mass of content – even without Activision games. Add Activision games to that, and the content would represent an inflection point. »

Today, Sony says it would take a potential Xbox Game Pass competitor several years to become a worthy rival. While Call of Duty still represents an important source of income for Sony, the takeover by Microsoft would be detrimental to Sony’s development.

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