Microsoft and Activision, what changes after the green light in the US and what has emerged
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In these hours the long journey started more than a year ago that should lead Microsoft to acquire Activision Blizzard King experienced a major upgrade on the home front. After the US Federal Trade Commission had in fact invoked an acquisition freeze on California federal court has given the all clear.
This is not to say that the situation has finally resolved, because the FTC can file an appeal, e the stop given by the British regulator still remains to be resolvedwhich in May had surprisingly blocked the$68.7 billion deal with a number of concerns about a possible monopoly on cloud gaming, but it is undoubtedly another important step.
Also because it is good to remember that while the evidentiary hearing with the FTC is scheduled for August 2, the expiry of the agreement between Microsoft and Activision Blizzard King is July 18th. If a solution is not found by that date, the terms will have to be renegotiated and Microsoft will have to pay a penalty.
But before understanding any future implications, let’s see what happened in these trial days. In fact, these situations are very interesting because they force companies to show, at least partially, their cards, company emails and economic strategies. In short, you can see the knives behind the smiles.
Or, as happened with some documents of sony in which the figures have been badly erased, the money behind the marker strokes.
The backstory
Why are Microsoft and Sony buying all these video game companies?
by Lorenzo Fantoni
The cost of video games
According to the documents exchanged during the proceedings it seems that Horizon: Forbidden West cost $212 million, While The Last of Us Part 2 went for $220 million. Huge amounts for video games but not absurd for a film production high level. The first Marvel film dedicated to the Avengers had similar costs and is not even among the 30 most expensive films in history.
However, what changes between a film and a video game is the whole ecosystem around it, the fact, for example, as in Sony games, that it is sold to a small audience, however vast and that grows very slowly over time, unlike that of those who play on mobile devices. For Sony, first party games, i.e. those produced by studios it owns, would represent around 14% of total sales.
Other interesting numbers are those that concern Call of Duty, which for Sony is considered an essential source of its revenues and its eventual exclusivity under Microsoft was one of the main accusations by the Japanese leaders. From the documents shown in error it seems that in the United States iThe game yields Sony 800 million dollars which becomes 1.5 billion worldwide. The figure does not consider any subscriptions, microtransactions or Battle Passes, which would raise the figure between 15 and 13 billion dollars.
Another interesting fact concerns i players. Apparently, in 2021 14 million people played it and of these six million have spent 70% of their time only on COD, while well one million basically bought the console just to play it.
The acquisition
Microsoft has bought Activision: the reasons for a choice worth 70 billion dollars
by Lorenzo Fantoni
Card sings
Other interesting information is that which emerged from emails, documents and statements that the duelists have brought to light to convince the judges. For example, Microsoft, to minimize its impact on the sector, has admitted that it has lost every “console war” and that since the first Xbox it has always been in third place behind Sony and Nintendo. There has also been much discussion of Nintendo as a subject somehow alien to Sony and Microsoft because it is focused on its market strategy, much less linked to technological advances and cross-platform titles.
The question is linked to the ten-year agreement that Nintendo and Microsoft have made to bring Call of Duty, still him, to the next consoles of the Osaka house. An agreement that will inevitably lead to compromises from a technical point of view, but which will now have to be honoured. On the other hand, Microsoft has also made it known that Bobby Kotick, the controversial head of Activision, has asked for favorable treatment on the division of Call of Duty revenues on Xbox to keep the game on the console. Treatment which was then granted to him.
The various company emails also showed how Microsoft, which publicly adopts a serene, collaborative and friendly face, then moves with far more warlike intentions. So much so that in some correspondence there is talk of having the means to start a war with Sony to make it stop dealing with video games.
Sony, despite direct attacks from its boss Jim Ryan, doesn’t seem to be really that worried about the acquisition. Ryan himself writes to the former CEO of Sony Computer Entertainment Chris Deering that it’s not a matter of exclusivity, it’s a larger move and that Microsoft has the money to make it. He doesn’t even seem too concerned about Call of Duty, although he doesn’t like the idea of the acquisition.
On the other hand, the moves of Microsoft have aroused concern, which in the past has tried in every way to make cloud gaming a sort of “moat”, this word is actually used, beyond which its games should not go, including the Bethesda ones. This position was then revised over time and, in view of possible antitrust objections, completely abandoned.
It was also discovered that Microsoft, while considering acquiring companies such as Sega, Niantic or Zinga, bought Zenymax, the company that owns Bethesda, id Software and other software houses, because it was afraid that some of its games, including Starfield, would become exclusive sony.
Regarding Starfield, Pete Hines, head of global publishing at Bethesda, who in some emails declared himself a bit perplexed by the fact that COD was allowed to remain multiplatform while Starfield was not, stated first of all that the next game dedicated to Indiana Jones will be an exclusive, despite previous agreements with Disney and that Starfield would never have been released in time for September 6th if they had to develop the game for PlayStation as well.
With the release of the sentence, Activision’s stock obviously made a jump on the stock exchange, but July 18 is very close and analysts are wondering what will happen.
The UK’s Competition and Markets Authority is currently the only real major obstacle left and now the efforts of Microsoft and Activision are all concentrated on convincing the institution that there is no monopoly in the future of Cloud Gaming. In theory, Microsoft could theoretically close the deal ignoring the CMA’s veto or completely exclude Activision from the UK for now, but it would be more of a rumor being circulated as deals are sought under the table. In fact, the parties would already be at the negotiating table.
The most plausible solution is for Microsoft to negotiate an extension of the agreement beyond July 18th. Activision is fully in agreement to move forward with the transaction and a renegotiation probably won’t be that difficult. Especially today, after the US ruling.
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