PlayStation contract made Activision keep Call of Duty off Game Pass

As part of a big multi-year content exclusivity and marketing deal, Activision-Blizzard accepted an offer that required Call of Duty to stay off Game Pass.

PlayStation contract made Activision keep Call of Duty off Game Pass
Published Oct 19, 2022 9:31 AM CDT   |   Updated Mon, Nov 28 2022 4:34 PM CST
4 minute read time

Microsoft confirms that Activision-Blizzard was prohibited from releasing Call of Duty games onto Xbox Game Pass as part of a big multi-year exclusivity contract.

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Sony has been secured exclusive Call of Duty content for two ongoing generations of PlayStation consoles through lucrative, multi-year marketing deals with Activision-Blizzard. By our count, PlayStation enjoyed full and/or timed exclusivity to 14 pieces of Call of Duty content between 2015 and March 2020 alone, not including content from games like Black Ops Cold War (2020), Vanguard (2021), and the upcoming Modern Warfare 2 (2022).

According to Microsoft, these contracts also included a clause on competing services. Microsoft states in its response to the Competition Markets Authority that Sony's contract with Activision restricted the publisher from releasing any Call of Duty games onto Game Pass.

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If the merger goes through, Microsoft has promised to honor all existing contracts that Activision-Blizzard had previously signed, including this one.

Microsoft has essentially confirmed that Call of Duty games won't release onto Game Pass until at least 2024 if the merger is approved.

If Microsoft buys Activision-Blizzard for $70 billion, the franchise won't instantly show up on Game Pass and boost the subscription's value. Microsoft may be able to argue some sort of implied potential loss because of the existing contract, however the company has pledged to uphold it.

Sony is no stranger to exclusivity, and I've said one of the main reasons it is fighting any sort of Call of Duty exclusivity is because the company knows how well the tactic works. Gaming's Big Three--Microsoft, Xbox, and especially Nintendo--benefit tremendously from exclusive games and content, and Sony in particular has had rein on in-game content from one of the most popular video game franchises on the planet.

Perhaps the most interesting part of the contract is that Activision-Blizzard accepted the terms. We'll explore a few reasons why they as a third-party independent publisher might want their games on Xbox Game Pass, and some reasons why they wouldn't.

Why Activision Might Want Call of Duty on Game Pass

Game Pass is typically great for publishers and game developers. The service has been proven to spark full game sales, and also significantly improves discovery.

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We also know that Game Pass can boost in-game revenues. We've seen this with the Grand Theft Auto series, whose revenues shot up to $210 million in Q4 2020 after GTA V was released onto Game Pass.

Make no mistake, though: Activision-Blizzard would not offer day-and-date access to new games on Game Pass. If anything, Call of Duty games on Game Pass would be limited to around 1-month or 3-month timeframes. The whole idea is to use Game Pass as a means to let gamers sample or try your product, invest time, and then eventually commit to buying after the game rotates out.

This has also worked for Grand Theft Auto; GTA V has seen healthy game sales jumps following such tactics.

Why Activision May Not Want to Release Games on Game Pass

Xbox is in last place. Microsoft repeatedly reminds readers that Xbox is behind PlayStation and Nintendo. Activision knows this, and is willing to negotiate strict deals with Sony because Sony is the market leader.

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Microsoft even confirmed that PlayStation's installed base is over 80 million units higher than Xbox. Published data says PlayStation is at 151.4 million, whereas Xbox is at 63.7 million.

As a market leader, Sony has more power and sway over contract terms. Activision-Blizzard needs PlayStation, and PlayStation needs Activision. It's a harmonious billion-dollar union that has created what Jim Ryan calls a "virtuous cycle" of growth that compounds over time.

That these deals take place keeps Sony and Activision-Blizzard at the top of the pile. The two companies help each other.

Another potential reason why Activision-Blizzard wouldn't want its games on Game Pass is simple economics. Microsoft may not have offered enough to sway Activision. The offers may not have been big enough for Activision to make a hardball negotiation against Sony, who owns the platform that is responsible for selling most of Activision's games.

PlayStation contract made Activision keep Call of Duty off Game Pass 2021

After all, Microsoft contributed less than 10% of Activision-Blizzard's 2021 revenues. Xbox is third in line, platform-wise. And releasing a game onto Game Pass could potentially eat into full game sales; in 2021, a so-called loss year because of Vanguard's earnings miss, the Call of Duty franchise still managed to sell 25 million games worldwide--that's 25 million copies sold in 1 year.

Those kinds of sales may not have happened if the games were included on Game Pass.

Furthermore, it's possible that Activision-Blizzard was planning its own subscription service similar to EA Play or Ubisoft+.

No Activision-Blizzard games have shown up on subscription services, and that's likely partly because of the contract mentioned herein. But at the same time, a subscription service is a clear evolution of Activision's new four-part business model.

With a vast library of IP, content, and expansions, Activision is well-suited to offer a subscription service that offers access to its games and content for a monthly or yearly fee.

The reality is we won't ever know the full extent of these deals or the rationales behind them, but the UK's regulators have been provided reams of information on sales figures, earnings, data, and everything else you could possibly want in this kind of deal.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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