What is this conflict?

• Microsoft announced its intention to buy Activision Blizzard (Call of Duty, WoW, Diablo) in January 2022
• This purchase must be approved by various regulators around the world. Because with a merger of such large market players, there is a risk that a monopoly is formed, which endangers the free market.
• Brazilian regulators had asked some gaming and tech companies what they thought of the purchase, such as whether it would endanger the diversity of the market
• Almost all the companies had no objections, with only Sony noting that Call of Duty was a unique game and had no competition, nor would it ever have any. This was given as a concern if Microsoft now buys Activision Blizzard

The release of a new Call of Duty is the gaming event of the year for many shooter fans:

If Call of Duty is so unique, the same goes for PlayStation

That’s what Microsoft is saying now: Microsoft has reacted to these reservations from Sony. In a 27-page document they try to refute Sony’s statements (via vgc)

Microsoft argues that Call of Duty is not a “unique game.” Sony would be contradicting itself. If Call of Duty is unique because it has a loyal following, then PlayStation would have to be unique because it also has a loyal following.

Sony’s own PlayStation has an established base of brand loyal gamers. But this finding does not lead to the conclusion that the PlayStation – or any other brand with loyal followers – forms a distinct market from all other consoles.

The idea to deduce from this finding that Call of Duty is a separate genre of games cannot be substantiated – neither under qualitative nor quantitative analysis.

Microsoft thinks it’s about Xbox Game Pass vs. PS Plus

What does Microsoft think is behind this? Microsoft believes Sony is actually not so much about Call of Duty, but about the dominance of Xbox Game Pass over Sony’s subscription model, PS Plus.

Sony doesn’t want new Call of Duty games to be included in Game Pass at release, day 1, because they would be “annoyed at having to compete with Microsoft’s subscription model.”

Sony’s public statements about subscription games and their response to the agency’s letter make it clear: Sony doesn’t want an attractive subscription model to threaten their dominance of the digital distribution market for console games.

In other words, Sony is railing against the introduction of new monetization models capable of challenging their business model.

So, from Microsoft’s point of view, Sony is all about protecting their dominance in the console market through the PS5 and the PS Plus business model.

Xbox Game Pass would become even more attractive with a “free” Call of Duty right at release. Sony apparently wants to prevent that with its objections to the Activision Blizzard takeover.

Microsoft says: Sony fears Game Pass and wants to actively hinder it

Here’s what Microsoft is accusing Sony of: Microsoft says Sony was already actively trying to prevent the growth of Xbox Game Pass by paying some developers not to put certain content from their games on Game Pass (via vgc). Microsoft refers to this as “blocking rights.”

This again shows the fear of an innovative business model that offers players high quality content for low cost. This threatens a reign forged over years by a platform- and exclusivity-driven approach.

Call of Duty exclusive for Xbox would make no business sense, Microsoft says

Will Call of Duty be exclusive to Xbox? In other statements, Microsoft says it has no plans to exclude Call of Duty from PlayStation. That simply wouldn’t make economic sense.

After all, they would then have to earn more from sales of the Xbox than they lose from the loss of Call of Duty sales on the PlayStation (via vgc).

What are the different business models of Sony and Microsoft? There are significant differences in the business model of the two console giants::

• Sony relies heavily on high-quality exclusive titles from their own studios, which are launched as full-price titles. Their subscription service “PS Plus” is necessary to play online on the PS5. In addition, there are some older games or budget titles for free for subscribers every month. Sony rather wants to focus on Free2Play and service games instead of bringing big titles directly to the release on PS Plus.
• Microsoft, on the other hand, has built up the “Xbox Game Pass” in recent years: a kind of “flat rate gaming subscription” based on the Netflix model. Time and again, big new titles appear on Xbox Game Pass on release day.

Microsoft apparently believes that their business model is superior to Sony’s and that the purchase of Activision Blizzard can make Xbox Game Pass even more attractive if titles like Call of Duty or new games from Bethesda like Starfield or a The Elder Scrolls 6 become part of the offering.