Activision's communications executive Lulu Cheng Meservey delivers an official response to the FTC's decision to attempt to block the $68.7 billion merger with Microsoft.
Yesterday, the Federal Trade Commission announced that it will attempt to block the Microsoft-Activision merger on the grounds that it would harm competition, citing examples of Microsoft making newly-acquired IPs like Redfall, Starfield, and The Elder Scrolls VI exclusive to Xbox. The implication is that Microsoft could degrade or withhold access to other franchises like Call of Duty, Overwatch, and Diablo if the deal were to go through.
Now Activision has published an official public response to the FTC's decision. In the response, the $8 billion company downplays Call of Duty's importance as the best-selling game franchise on both PlayStation and Xbox consoles, and how important the series is for the publisher itself. The statement reiterates key points made by Microsoft's executive team, highlighting the 10-year Call of Duty deals that Microsoft has made to Nintendo, Valve, and Sony (who has yet to respond or agree with the terms).
The response provides very little data or information. Meservey claims that "making Call of Duty exclusive to Xbox doesn't make good business sense," and that "Microsoft would lose billions of dollars in lost sales," which is true to an extent.
But the game faces massive competition and more competition is popping up every day. If Microsoft cut off Call of Duty for PlayStation players, those players would simply move to alternative games instead. There is no good reason for Microsoft to drive customers to competitors in that way.
We've calculated that Microsoft could lose about ~$1.32 billion a year of Call of Duty were kept off PlayStation.
Meservey likely has access to more information than we do, however the point is still somewhat vague and we'd like to see more data to reinforce these points. The FTC, CMA, and European Commission, however, have seen the data. The FTC has likely seen thousands of pages of documents, internal reports, industry figures, revenues, MAUs, etc.
The post also affirms that Call of Duty is not untouchable, and that it faces competition.
The latter point about competition is also true to an extent. No other video game franchise in the industry is able to release a new mainline hit game every year that tops sales charts, sells millions of copies, and makes billions of dollars every year from combined game sales and in-game monetization.
In this way, Call of Duty both does and doesn't face competition.
For example, Apex Legends and Fortnite, two of the major top cornerstone shooter franchises that have made billions of dollars, are indeed huge titles that compete against Call of Duty's live services, but these games do not compete against Call of Duty's full game sales.
For reference, Call of Duty managed to sell 25 million copies in one year, and that was considered a "down year" due to Call of Duty Vanguard's lower-than-expected performance.
2022 will be the best year ever for Call of Duty as Modern Warfare II made $1 billion from game sales alone in just 10 days' time.
Call of Duty is so big that we've predicted the franchise will help Activision generate a record-breaking $9 billion in revenues this year.
The reality is that no other game really does what Call of Duty is able to do. We've highlighted how important Call of Duty is for Activision Blizzard King, and how Call of Duty is so powerful that one single holiday quarter is enough time for Activision segment to make more money than both Blizzard and King, despite King's massively successful Candy Crush mobile game.
Call of Duty is a unique franchise. It has made over $31 billion in lifetime sales thanks to this hybrid business model of annualized game releases and in-game spending.
There is no discussion of other points that regulators worry about, including Game Pass, multi-game subscription services, or cloud gaming.
In short, Activision's statement needs more color and clarity on key concern points in order to be an effective response to the FTC's decision.