Sony talks about Microsoft’s acquisition of Activision Blizzard

In January of this year, Microsoft announced that it was entering into an agreement to acquire Activision Blizzard for $68.7 billion, and since then the acquisition has been going well and is expected to be approved within the next 6 months, unless something special happens.

A response document sent by Sony to the Economic Defense Administration Council regarding Microsoft’s acquisition of Activision Blizzard was discovered today.

In this document, you can find various information about Sony’s thoughts on the acquisition, but some of them focus, at certain points in the document, Sony expresses concern about the possible exclusivity of Call of Duty, for example, along with several other answers. which can be found below:

CADE: In your company’s opinion, does Activision Blizzard publish any title(s) that, based on their features or specifications, do not have close competitors published by other companies in the gaming industry? How many)? [OBS: Como “concorrentes próximos”, considere jogos do mesmo gênero (ação, aventura, corrida, RPG, tiro em primeira pessoa, etc.), disponíveis na mesma plataforma (PC, consoles, dispositivos móveis), voltados para o mesmo público jogador (infantil, adulto, casual, hardcore, etc.) e desenvolvidos com base em valores de produção e especificações técnicas semelhantes.]

Sony:

Activision’s Call of Duty is a must-have game: a “blockbuster”, AAA-like game that has no rival. According to a 2019 study: “The importance of Call of Duty to entertainment in general is indescribable. The brand was the only video game IP to rank in the top 10 of all entertainment brands among fanatics, joining such powerhouses as Star Wars, Game of Thrones, Harry Potter and Lord of the Rings.” Call of Duty is so popular that it influences consumers’ choice of console, and its network of loyal users is so embedded that even if a competitor had the budget to create a similar product, it would not be able to compete.
Activision devotes enormous resources to the development of Call of Duty. An annual Call of Duty release takes about 3-5 years in development. Since Activision releases one Call of Duty game per year, this equates to an annual investment of hundreds of millions of dollars.

CADE: Representation of sales of Activision Blizzard titles for your company’s ecosystem in relation to the total number of games sold in 2021, in (i) global and (ii) national scenarios.

Sony:

Activision titles – especially Call of Duty – are a significant revenue stream for PlayStation. In 2021 Activision games were presented [CONFIDENCIAL AO CADE E À SIE]Spending on games and add-ons on PlayStation.[CONFIDENCIAL AO CADE E À SIE]. The new version of Call of Duty: Modern Warfare set the record for the most digital pre-orders on the PlayStation Store in 2019. Together, the games in the Call of Duty franchise represent one of SIE’s largest sources of third-party revenue generated. [CONFIDENCIAL AO CADE E À SIE] in physical and digital consumer spending in 2021 in terms of spending on games and add-ons.

CADE: Please provide us with an estimate of the time required for full entry into force (from the planning stage to the commencement of the entrant’s activities) in order for the entrant to be considered an effective competitor in the digital game distribution market. Consider the following scenario in your answer:

What is the estimated time to enter the digital distribution market for PC games;

Sony:

SIE cannot provide a specific estimate of the time for a complete recording. However, he notes that it would take several years for a competitor — even with significant investment — to create a viable competitor to Xbox Game Pass.

CADE: Based on your company’s practical experience, how relevant is the presence of exclusive titles in the competitive dynamics of the gaming hardware (console) market? In other words, to what extent do exclusive games on a given platform affect the user’s choice process for this or that console? Justify your answer.

Sony:

Exclusive games are the benchmark of competition between Microsoft and SIE, although neither company has developed or acquired an exclusive game that decisively tipped the balance in favor of the console. This is because exclusive proprietary games are less popular and represent less revenue than third-party AAA games previously available on Xbox and PlayStation. [CONFIDENCIAL AO CADE E À SIE].

CADE: In the last 5 (five) years, have there been any relevant entries into the digital game distribution market? If so, list the companies that have recently entered this market, the platform(s) – PC, consoles, mobile devices – and the countries/regions in which each entrant operates.

Sony:

Digital distribution of games can take two forms: users can purchase a digital copy of a game from an online store (such as Xbox’s Game Store, Nintendo’s eShop, and SIE’s PlayStation Store) and download them to their console. , or they can subscribe to a service like Microsoft’s Xbox Game Pass and pay a monthly fee to access their library of games.
Over the past five years, Microsoft’s Xbox Game Pass has grown to capture around 60-70% of the global subscription services market. This share is even higher in Brazil, where Xbox Game Pass represents approximately 70-80% of the PC subscription services market. When Microsoft announced that it would acquire ZeniMax in 2020, Xbox Game Pass had about 10 million subscribers. Even if each subscriber bought the cheapest tier ($10 per month), that equates to more than $1.2 billion in annual revenue. When Microsoft announced it would acquire Activision in 2022, Xbox Game Xbox Pass grew to 25 million subscribers — a 38% increase in January 2021 — doubling its annual Xbox Game Pass subscription revenue to at least $3 billion.

Some interesting questions are unfortunately censored, for example, what was the representation (in %) of Activision Blizzard games in relation to the total revenue received by your company?

Well, those were the questions and answers in this document, if you want to see more, you can go to the source link.

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