Hugely popular game faces regulatory blitzkrieg
Earlier this year, Microsoft surprised the gaming world by saying it was to buy Call of Duty-maker Activision Blizzard for USD $69bn. If it goes through, it would be Microsoft’s biggest acquisition and one of the largest deals ever made.
The game is so popular it reaches into homes, offices and on smartphones in ways and numbers other media forms could only dream about – boasting around 300m users across its 20-year, multi-title history, with 8m active players who’ve logged in during the last month alone.
More games, less choice?
The US Fair Trade Commission (FTC) has been wringing its hands over the monopoly/antitrust implications of such a deal. Microsoft has its own console, the Xbox, and if it were to also own Activision’s games, it could withhold those titles from competitors, such as Sony’s PlayStation.
Given the vast popularity of Call of Duty, it would be a bleak scenario for Sony to get frozen out of the franchise. The game series has generated $30bn on its own, and the most-recent release, Modern Warfare II, racked up more than $1bn in sales in its first 10 days.
Truce talks
Microsoft claims it offered to make Call of Duty available to rivals for 10 years, but that the FTC “ttshrugged off” the proposal, according to Bloomberg. This supposedly took place prior to the FTC announcing its intention to file a suit against the acquisition.
Even if the FTC isn’t interested in the 10-year offer for Call of Duty across various platforms, Microsoft has already confirmed that it has entered into a commitment to bring the franchise to Nintendo, for its Switch consoles, and digital distribution platform Steam, over the next decade.
Microsoft is attempting to smooth the deal and mollify regulators not just in the US but also around the world. Sixteen national governments have to greenlight its deal for Activision and only a small minority has approved it so far.
But the biggest fight may be on Microsoft’s home turf. Under the Biden administration, regulators have gone full engagement mode in trying to block mergers over antitrust concerns.
The machinations
One of the main concerns from regulators around this deal is the impact subscriptions and streaming may have on the future of gaming, and whether Call of Duty would give Microsoft an unassailable advantage over its competitors in these areas.
Microsoft said it doesn’t view subscriptions as a standalone market in games and that it is just one business model.
Although offering Call of Duty into PS Plus could potentially boost subscriptions as a business model, which fits with Microsoft’s strategy to grow this area of the business.
Sony is more cautious around the subscription business model, and believes putting brand new PlayStation games into a subscription service would result in a drop in revenue.
Our take
One of the leading lights in the gaming trade, Sony, has said it is open to the industry changing and that its plans may change in the future.
“The way our publishing model works right now [putting new games straight into PS Plus] doesn’t make any sense,” PlayStation CEO Jim Ryan said. “But things can change very quickly in this industry.”
The smart investor or observer often is quick to see, or just lucky, to witness a moment when a major disruption occurs in a sector. And with as explosive a product as Call of Duty, Microsoft may well be causing that upheaval.