In an effort to persuade Sony to maintain Call of Duty on the PlayStation if Microsoft’s massive Activision acquisition is approved, the two companies have been unable to reach an agreement on the specifics of any potential transaction.
Microsoft is plainly frustrated by this and searching for partners to allay regulators’ worries. NVIDIA and Nintendo have both offered assistance to Microsoft in an effort to allay regulator worries.
Microsoft President Brad Smith discussed the purchase during a special press conference in Brussels today. He called Sony a “super dominant company” that outsells Xbox consoles and is opposed to competition in the form of the Activision acquisition.
Microsoft president @BradSmi on not reaching an agreement with Sony over Call of Duty. "I hope we will. I walk around with an envelope that contains the definitive agreement that we sent the Sony two days before Christmas." https://t.co/RxAhmOZ3Av pic.twitter.com/dIzlsddK9G
— Tom Warren (@tomwarren) February 21, 2023
Smith questioned the UK’s Competition and Markets Authority (CMA), who have voiced concerns about game exclusivity and cloud gaming. He was asked:
Do you want to kill a deal and cement Sony’s position and its 80 percent share in the European Economic Area… or do you want to let the future go forward with behavioral guardrails and remedies and bring this title to 150 million more people.
Smith said:
I think that’s the fundamental choice that most regulators are going to need to address.
In a confrontation over Activision and Call of Duty, Smith and other Microsoft executives met with European MPs today. Senior Microsoft executives, including Xbox Chief Phil Spencer, PlayStation Chief Jim Ryan, Activision CEO Bobby Kotick, and representatives from Google, NVIDIA, Valve, Electronic Arts, and the European Games Developer Federation have all been present at meetings today as Microsoft has been making its case. The meetings also drew representatives from six other national competition watchdogs.
Microsoft took the time to announce it had signed a new agreement with NVIDIA, which runs the GeForce Now cloud gaming service, in between calls and meetings to allow the acquisition to go through.
At a press conference in Brussels, Microsoft President Brad Smith just announced ALL Xbox PC games will come to competing cloud service NVIDIA GeForce Now.
— Jez (@JezCorden) February 21, 2023
"NVIDIA now supports this deal." pic.twitter.com/1cx0kIYpKz
It anticipates that the agreement will allay certain worries regarding the future of cloud gaming, Microsoft’s control over Xbox games, and perhaps Activision Blizzard games on competing services. This is another reason why Microsoft and Nintendo today agreed to release Call of Duty on Nintendo hardware on the same day that the franchise’s Xbox games do.
Smith, however, omitted any information from the behind-closed-doors discussions in favour of attempting to present a picture of a dominant Sony that has been grumbling about Call of Duty access.
Even last year, when Sony suffered constraints in its supply chain and it saw its numbers dip, they came back strong.
In the fourth quarter as their supply chain recovered, by our calculation on a global basis, Sony outsold Microsoft in the fourth quarter by a margin of 69 to 31. Pretty much consistent with the global market shares we’ve seen for 20 years.
After a public back-and-forth between the Xbox’s Spencer and the PlayStation’s Ryan, Microsoft stated that “Sony has emerged as the loudest objector” to the Activision acquisition last year. In addition to an existing marketing agreement, Microsoft initially offered Sony a deal to maintain Call of Duty on the PlayStation for “several more years,”.
I hadn’t intended to comment on what I understood to be a private business discussion, but I feel the need to set the record straight because Phil Spencer brought this into the public forum.
Jim Ryan
Although Sony and Microsoft can argue back and forth all day, the decision to approve the merger rests with the regulatory authorities. Microsoft is undoubtedly hoping to avoid going to court to defend its deal in both the US and Europe. It remains to be seen whether its deals with Nintendo and NVIDIA will be enough to persuade regulators.
The deadline for making a final determination regarding Microsoft’s proposed acquisition of Activision is April 11th, according to EU officials. So, we’re waiting to see how US, UK, and EU regulators react to Microsoft’s new partnerships today.
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