Microsoft is struggling to curry favor for its Activision Blizzard merger, with an offer to share the video game developer’s popular title Call of Duty with other platforms getting the cold shoulder from regulators.
Microsoft’s $68.7 billion push to buy Activision Blizzard, the maker of Call of Duty, World of Warcraft, and mobile game Candy Crush, prompted concerns about competition and consumer choice related to titles becoming exclusive to Xbox and Game Pass, its subscription content and cloud-gaming business. In the US, the Federal Trade Commission (FTC) recently sued to block the deal. Competition watchdogs in the EU and in the UK have both launched probes of their own.
The acquisition would make the Redmond-based software company the third-largest video game maker in the world after Sony and Tencent. But Microsoft has repeatedly said it won’t take the titles off the market. To prove it, the firm even offered to sign a legally-binding consent decree with the FTC to provide Call of Duty games to rivals including Sony, for a decade, Microsoft president Brad Smith said at the annual shareholder meeting yesterday (Dec. 13). But the FTC apparently shot it down.
“I’m disappointed that the FTC didn’t give us the opportunity to even sit down with the staff to even talk about our proposal, to even see if there was a solution there,” Smith said. “…If there’s one thing we all know, whether you’re a government, or a business, or a parent talking to your children, you will never solve a problem if you don’t try.”
Microsoft has forged a 10-year-deal with Nintendo to make Call of Duty available on the Kyoto-based company’s consoles, including Switch, and committed to make the first-person shooter video game franchise available to Valve Software’s online gaming platform Steam. However, these are not key players that derive much traffic from the title. The partner Microsoft needs to bag is Sony.
But Sony has rejected the idea more than once.
Back in September, PlayStation chief Jim Ryan criticized Microsoft’s offer to keep Call of Duty on PlayStation for three years after the current agreement between Activision and Sony ends, calling it “inadequate on many levels.”
The offer of an additional seven years to make the wildly popular game available on Sony’s console, as well as its Game Pass-style subscription service PlayStation Plus, didn’t moved the needle. Sony didn’t accept the proposal.
While Microsoft downplays Call of Duty’s ability to impact the gaming industry’s makeup, Sony argues otherwise. In an Oct. 28 comment to UK’s Competition and Markets Authority (CMA), Sony laid out various reasons why Call of Duty is different to the other games: It has the highest number of monthly active users among the top 10 gaming franchises in 2020 and 2021; it has a relentless release cycle; and it is unique among AAA games because of its popularity, loyalty, and the enormous resources Activision commits to developing the franchise.
“Call of Duty is not replicable. Call of Duty is too entrenched for any rival, no matter how well equipped, to catch up,” the Japanese company said.
425 million: Lifetime unit sales for the Call of Duty franchise.
$30 billion: Call of Duty series’ lifetime revenue.
125 million: Registered players for CoD: Warzone since its launch in March 2020.
650 million: Downloads Call of Duty: Mobile has generated since its launch in 2019.
3,000: People working on the Call of Duty franchise.
3-5 years: How long each release takes to develop
Over $300 million: Budget for each release
“The FTC’s case is really based on a market that they’ve identified that they say has two companies and two products, Sony PlayStation, and Microsoft Xbox. If you look at the global market, Sony has 70% of that market, and we have 30%. So the first thing a judge is going to have to decide is whether the FTC lawsuit is a case that will promote competition or is it really instead of a case that will protect the largest competitor from competition.” —Brad Smith during the Dec. 13 annual shareholder meeting