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Merging with Microsoft could substantially disrupt Activision's revenues and/or profitability due to Xbox Game Pass integration.
Microsoft has been very clear on its motivations for wanting to buy Activision Blizzard King for $68.7 billion. The main rationale behind the deal is to bolster Xbox's billion-dollar digital empire through mobile gaming, substantial value boosts in Xbox Game Pass subscriptions, increased revenues from more service-based games and content, and substantially increased monetization potential through the publisher's incredibly popular franchises.
While the bulk of Activision Blizzard King relies heavily on monetization across a fleet of digital-based billion-dollar IPs like Candy Crush, Overwatch, and Warcraft, the Activision segment in particular is still quite reliant on full game sales driven primarily by its annualized Call of Duty franchise (and, to a lesser extent, other titles like the Tony Hawk's Pro Skater remaster).
Sony tells regulators that Xbox Game Pass is "substantially leading" in the multi-game subscription space, indicates that its new higher-priced PlayStation Plus Extra and Premium subscriptions have yet to take off.
In a recent response letter to UK regulators, Sony makes a case against the Microsoft-Activision merger by indicating that Activision's billion-dollar franchises could represent a tipping point in the subscription market.
Sony says that Xbox Game Pass has a big lead over its new PlayStation Plus offering, revealing that total Xbox Game Pass subscribers are in the 29 million mark. Microsoft had previously said Xbox Game Pass had over 25 million subscribers at the end of June 2022.
Microsoft has made Sony a 10-year licensing deal to keep Activision-Blizzard games on PlayStation in an effort to help convince regulators to approve the massive $68.7 billion merger.
Sources tell Reuters that Microsoft is prepared to make pre-emptive concessions in the hopes of getting the Activision merger approved. While the Microsoft-Activision merger has been approved without limitations in Brazil, Saudi Arabia, and Serbia, regulators like the UK's Competition for Markets Authority, the United States' FTC, and the European Commission are heavily scrutinizing the multi-billion deal.
One of the biggest contention points is the fate of the $31 billion shooter franchise Call of Duty, as well as other lucrative Activision titles. Microsoft has publicly said that it intends to keep Call of Duty on PlayStation, and has recently backed up its pledge with a 10-year deal guaranteeing Sony access to Call of Duty on its PlayStation platform.
Activision-Blizzard games will not appear on any subscription services if the merger with Microsoft does not go through.
In a recent 111-page response letter to UK regulators, Microsoft reveals some rather interesting details about Activision's thoughts on subscriptions. According to Microsoft, who cites internal data and sworn testimony from executives, Activision has no plans to bring its big mainline games to a subscription service if the merger is not approved.
This is particularly interesting because of a pre-existing deal that Activision made with Sony. Some time ago Activision had signed a big multi-year marketing and licensing deal with Sony that offered exclusive Call of Duty content on PlayStation. Part of that contract stipulated that Activision could not release Call of Duty on Game Pass. According to Microsoft's recent statements to the CMA, Activision had no plans to release Call of Duty (or any of its big games) to Game Pass anyway.
Microsoft has suggested that Sony disrupt disrupt a business model that has delivered nearly 10 years of success in order to boost the value of PlayStation Plus.
Right now both Sony and Microsoft are going head-to-head with the Activision merger. Sony is arguing against the deal and says it will "threaten the gaming ecosystem," where as Microsoft argues the deal is great for consumers and competition. One of the main arguments is that Sony's PlayStation Plus will have a hard time competing should Activision games become offered exclusively to Game Pass and not available on PS Plus.
So what is Sony to do? Microsoft says that, at minimum, Sony could offer day-and-date releases of key first-party and third-party games on PlayStation Plus. In other words, Microsoft is advising Sony to essentially break the so-called "virtuous cycle" that has helped sustain the multi-billion dollar PlayStation empire.
Neither Sony nor Microsoft are willing to allow either company's competing services on their respective platforms.
Sony's latest response to the Microsoft-Activision merger reveals interesting new information. Sony tells UK regulatory body the CMA that Microsoft will not allow PlayStation Plus on Xbox, which presumably means the company tried to offer its subscription service on Microsoft's ecosystem.
Microsoft had likewise previously offered to bring Game Pass to Sony's platform, suggesting that PlayStation gamers could still access any content that would theoretically be Game Pass-exclusive and thereby circumventing one of the CMA's theories of harm arguments against the Microsoft-Activision merger.
Microsoft's recent comments about Grand Theft Auto 6's release date are based on rumors, not concrete information.
Microsoft recently made a 111-page response arguing why it should be allowed to merge with Activision. That document, which about as long as a novella by Stephen King, outlines a ton of information regarding the games industry, key metrics, and new releases. One of the games mentioned in Microsoft's response is a potential release year for Rockstar Games' massively anticipated GTA 6.
"The highly anticipated Grand Theft Auto VI is expected to be released in 2024," Microsoft wrote. But like everything else in this document, we have to check the sources. As it turns out, Microsoft--more specifically, Microsoft's lawyer--is directly basing this statement on a rumor post from TechRadar. Therefore it can't be taken as fact, or as something that Microsoft believes. Counsel is simply stating that the industry, analysts, and gamers believe it to be the case because of this article--not that Microsoft believes it to be the case.
If Microsoft is allowed to merge with Activision, then Xbox will become a "one stop shop" for shooter video games, Sony has told regulators.
Sony's latest response to the Microsoft-Activision merger has made some new arguments against the deal. Sony's core argument boldly claims the merger would threaten the games industry during a pivotal point, but more specific arguments include Microsoft acquiring a much larger share in the very lucrative shooter genre.
Sony has told the UK's Competition and Markets Authority that Microsoft would essentially hold too many popular FPS franchises following the Activision merger, including Call of Duty, which dominates the premium console shooter space with over $31 billion in revenues generated to date. Other franchises would include Overwatch, which certifiably became a billion-dollar series in 2017, joining other wholly-owned Xbox megahits like Halo.
Sony's latest response letter to UK regulators argues heavily against the Microsoft-Activision merger and uses very expressive language to describe multi-billion franchises like Call of Duty.
Before we delve any deeper, there's something I'd like to make clear in this article: This new document is not Sony's official response to the merger itself, but a direct response to the CMA's Issues Statement that was published on October 14. Sony's response was published on October 28 and is nearly 1 month old. It does not include recent developments or reflect recent statements made by Phil Spencer, e.g. the 10-year Call of Duty offer.
Sony's messaging has become much more specific and targeted in this brief. While Microsoft's tone with Call of Duty is now much more confident and adamantly against exclusivity, Sony's language makes it clear that the deal should not go through at all. There's some holes in Sony's arguments to be sure, and most of the document is re-asserting the CMA's position on the merger, but the platform-holder is making some stark and bold comments regarding the merger.
CD Projekt RED shows its peers how to do a real next-gen upgrade with The Witcher 3's impressively robust update.
New-gen game upgrades should be a lot more than simple visual upgrades--they should be more like The Witcher 3's upcoming re-release. CD Projekt RED has detailed the massive amount of added value that this upgrade brings to the core Witcher 3 experience, and many of the features actually help evolve and adapt the open-world RPG to a more modern day gaming market.
Apart from the significant visual upgrades on PlayStation 5 and Xbox Series X/S, which includes raytraced global illumination, optimized frame rates and FSR 2.0 / DLSS support, there's a bunch of great new additions that will improve gameplay. These big updates include a quick cast feature that will make it so you "never have to go into the radial spell menu ever again," a new dedicated photo mode, and an awesome new map feature that lets you filter out the messy icons. There's also quest fixes that will retroactively unlock across all platforms, and cross-save/progression that will allow PC gamers to pick up and play their old save on a PS5, for example. The console versions even include the HD Reworked mod.