2023-06-26 07:00:00
Context reminder
In charge of controlling anti-competitive business practices in the United States, the Federal Trade Commission (FTC) announced last December its intention to block the proposed acquisition of Activision Blizzard by Microsoft for the record sum of 68.7 billion dollars. With these court hearings, which will continue on Tuesday, Wednesday and Thursday, the FTC’s goal is to impose a preliminary injunction. In which case, Microsoft and Activision Blizzard will not be able to conclude their alliance until the FTC has not finished examining the operation’s compliance with United States antitrust laws. However, time is running out, as Microsoft and Activision Blizzard aim to complete the transaction before July 18, 2023, failing which the parties will have to renegotiate. Note that in case of abandonment of the project (quite improbable at this stage), Microsoft will have to pay 3 billion dollars in termination indemnities to Activision Blizzard.
Determined not to let the Call of Duty question be a hindrance to his plans for conquest, Phil Spencer took the opportunity to recall once once more that the franchise will not become exclusive to the Xbox ecosystem. But this time, it was by raising his right hand in court and not in front of a journalist’s microphone. ” I can raise my hand. I will do whatever it takes. We have no plan. I pledge here not to remove Call of Duty – this is my testimony – from PlayStation “. The FTC lawyer then had the presence of mind to ask if this commitment would apply to the entire Activision Blizzard catalog. Phil Spencer then replied in the negative, explaining that certain titles are only available on PC and mobile. But what regarding the Diablo license, for example, questions the FTC lawyer? Bad luck, it was at this precise moment that Judge Corley saw fit to interrupt the interrogation, offering a nice joker to Phil Spencer.
Nothing decided yet for The Elder Scrolls VI
Phil Spencer kicked in touch on the question of The Elder Scrolls VI. While logic dictates that the successor to Skyrim be exclusive to the Xbox ecosystem, Phil Spencer especially noted that the release of this title will not take place for at least five years and that nothing has been decided regarding a possible PlayStation version… 6? ” It is difficult for us at this time to determine exactly on which platforms this game will be launched. It’s so far away that it’s hard to figure out what the platforms will be at this point. This is the same team that is finishing Starfield, which will be released in September. We are therefore talking regarding a delay of more than five years. »
Faced with the tyrant Sony, a question of survival
A Phil Spencer who, faithful to his line of conduct, took advantage of the lack of knowledge of the FTC lawyers (and the judge) on the video game industry to paint the portrait of a weak and oppressed Microsoft for generations by l’Empire Sony. « If you look at our console market share over the past 20 years, we’re in third place. We stayed in third place for quite a while “, emphasizes Phil Spencer. Drawing attention to console market share for appearing smaller than it really is has been Microsoft’s strategy since it began talks with regulators. In reality, however, Microsoft has been explaining for years that the console war no longer interests it and that the stakes are now larger, hence the series of strong initiatives since 2016: release of all games first-party on PC, launch of Xbox Game Pass, deployment of Xbox Cloud Gaming…
In public, Microsoft likes to puff out its chest smugly, as with this kind of articles put online in the wake of its summer Xbox Games Showcase, where it claims in particular 150 million monthly active users (this is much more than the other two manufacturers) as well as ” the most ambitious range of games ever presented by Xbox. But in front of the regulators, the goal is to be very small. When asked if Xbox is achieving its internal goals, Phil Spencer is quick to answer in the negative. He also explains that the competition has many more exclusive games and even pointed out that Xbox had not made any studio acquisitions since Bethesda in 2021 … unlike Sony.
« Sony has a large catalog of exclusive games. It’s way bigger than what we have on Xbox today. Sony and Nintendo exclusive games are stronger than Xbox ones “says a Phil Spencer who is careful not to draw an objective portrait of the situation, namely that Microsoft already has a greater number of studios than its rival and that the recent acquisitions of PlayStation are essentially nascent studios (Haven , Firewalk Studios, Savage Game Studios) of no significance to Microsoft or the market in general. As for Bungie games, Marathon’s recent announcement only confirmed Sony’s guarantee that the studio’s entire catalog will remain cross-platform, even under the PlayStation flag.
The real highlight of the day is finally this shot of Phil Spencer in a suit and tie ready for the fight. Maybe he can bring it out on the wedding day? Photo by Justin Sullivan/Getty Images.
The acquisition of Bethesda? Sony’s fault once more
As we have understood, in the context of this acquisition project, everything is good to force the story of a powerless and constantly outclassed Microsoft by a Sony using and abusing its dominant position to negotiate exclusivities, a practice that is nevertheless common and common to all market players. In 2020, while manufacturers had so far always been content to strengthen themselves by buying independent studios from time to time, Microsoft opened Pandora’s box by announcing the acquisition of Bethesda for the then record sum of 8 billion. of dollars. Before the judge, Phil Spencer justified this acquisition as being a largely defensive maneuver once morest a Sony which was starting to get a little too close to Bethesda. In addition to the temporary Deathloop and Ghostwire Tokyo exclusives, it does indeed appear that Sony was negotiating to do the same with Starfield. Three years and eight billion dollars later, Microsoft was happy to write off the PS5 from the entire Bethesda catalog. A response that is disproportionate to say the least, made possible thanks to the financial capacities beyond the reach of this rival of which Microsoft nevertheless paints a hegemonic portrait.
« When we acquired ZeniMax, one of the reasons for the acquisition was that Sony made a deal for Deathloop and GhostWire…to pay Bethesda not to ship those games to Xbox. We can’t find ourselves in a position where, as a third-tier console, we fall even further behind on content, and so we’ve had to secure that content to remain viable in the industry. “, pleads the boss of Xbox.
Again, for lack of opposition with sufficient knowledge of the video game industry to contradict him, Phil Spencer had all the freedom to wrongly suggest that these exclusives were final when they are obviously temporary. Just as he had the opportunity to twist reality to his advantage by implying that acquiring huge publishers like Bethesda and Activision Blizzard would be a matter of survival for Xbox in the face of the oppressive methods of PlayStation, which is apparently the only manufacturer able to negotiate agreements with third-party publishers. As they say, the bigger it is, the better it goes.
«Every time we deliver a game on PlayStation […] Sony captures 30% of the revenue we make on their platform and then uses that money among other revenue to try to reduce Xbox’s survival in the market. We try to be competitive, but like I said, over the last 20 years we haven’t been able to do that effectively. […] Once a competitor actively signs third-party games off our platform, it becomes more important for us to secure those third-party games, including Call of Duty. »
Microsoft considered Zynga
Well established on consoles and PCs, Microsoft is now eager to open the doors to the mobile market, like the rest of the industry as a whole. Before setting its sights on Activision Blizzard in November 2021, taking advantage of a period of great internal malaise which might only encourage Bobby Kotick to sell as quickly as possible, Microsoft had indeed placed Zynga on its shortlist of possible acquisitions, before Take-Two Interactive finally won the day. A quick note on this subject: while Microsoft is in a hurry to spend 70 billion dollars largely to find an immediate place in mobile, its all-powerful rival has been struggling for two years to build its own mobile department by recruiting little by little small staff needed.
Finally, it should be noted that part of the hearing was completely closed to journalists, in particular the testimony of financial director Jamie Lawver. The losses and profits of the Xbox brand will therefore remain one of the industry’s best-kept secrets. Another confidential passage, the video deposition left by Jim Ryan, the CEO of Sony Interactive Entertainment. It’s a shame, the message may have had one of those “Ryaneries” that Internet users love.
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