Sony tells regulators that it’s not possible to develop a triple-A franchise that can compete with Call of Duty, and that it would take years to compete with Xbox Game Pass, but let’s start from the beginning.

Microsoft is buying Activision Blizzard, which to date is the biggest news in the gaming history of the current console generation. The takeover is supposed to be in the bag by July 2023, and various review processes have already been initiated in various countries.

The regulatory authority in Brazil is particularly open and focuses on transparency. Thus, everything can be viewed, including the companies interviewed and their answers, although confidential details have been blacked out.

Idas, a member of the Resetera forum, has now taken the trouble to gather some interesting information. You can find the full article here.

In doing so, Idas discloses up front, “I have prepared a summary of the questions posed to the third parties and their answers. The original documents are in Portuguese, but I am a native Spanish speaker, so they are easy to understand (Google translator was also very useful). I’ve also been practicing IT law for almost 14 years, including merger and acquisition litigation (so I know these things).”

The report indicates that numerous companies were asked what they thought of the acquisition, and Sony, as a competitor to Microsoft, naturally expressed its concerns in an extensive manner.

Idas has translated Sony’s response in the process:

“SONY: You say that from a development/publishing perspective, game development typically involves an early, platform-neutral phase before the game is adapted for one or more specific platforms.”

“In their view, all games compete for player engagement. Players choose their gaming platform based on price, technical features, and available game types. Available content is the most important factor in choosing a platform.”

“They say there are few barriers to entry when developing and publishing games for the PC. Just one developer can create an indie game and distribute it online, but developing a top-tier AAA game (like Activision’s Call of Duty) requires a budget of hundreds of millions of dollars and thousands of employees.”

“They say that besides Activision, there are only a few developers/publishers capable of producing AAA games, such as EA (FIFA), Take-Two/Rockstar (Grand Theft Auto), and Epic Games (Fortnite). These games tend to be long-lived franchises with big budgets, multi-year development cycles, and large fan bases.”

“Despite all of this, Sony believes that none of these developers can create a franchise that can compete with Activision’s Call of Duty, which stands out as a game category in its own right. That’s why they believe Call of Duty is so popular that it influences console choice. In fact, their network of loyal users is so deeply entrenched that even if a competitor had the budget to create a similar product, they wouldn’t be able to create a rival.”

“You talk about the time, the money, the number of employees, the millions of followers, the revenue, and other data related to Call of Duty to show that it’s a unique franchise that can’t be replaced.”

“They agree that subscription services compete with games that are purchased for a one-time fee. However, they believe that the low upfront cost of subscription services may be anticompetitive compared to publishers who recoup the significant investment in games by selling them for an upfront fee. They also believe this could harm consumers by lowering the quality of games.”

“In the last five years, Game Pass has captured about 60-70% of the global subscription services market (this market share is even larger in Brazil, where Game Pass accounts for about 70-80% of the PC subscription services market).”

“They believe it would take several years for a competitor – even with significant investment – to create effective competition for Game Pass.”

“Call of Duty represents a major revenue stream for PlayStation (data provided but redacted) and is one of SIE’s largest third-party revenue sources.”

How far the statement from Sony – who themselves have just acquired Bungie with Destiny – will have an impact on Activision Blizzard’s acquisition of Microsoft remains to be seen.

Of the other companies, Warner Bros. for example has not expressed any concerns. Ubisoft is also neutral and believes that there is no video game that does not face some form of direct competition. Bandai Namco expressed a similar opinion and added that the competition to Call of Duty is getting stronger and bigger, mentioning games like Valorant, Battlefield and Destiny.

Riot Games added a whole list of Call of Duty competitors: Apex Legends, Rainbow Six, Battlefield and many more. Likewise, even games like Candy Crush have direct competition: Cookie Jam or Bejeweled were listed here.

Obviously, Sony has responded with the most negative response to the survey, while Amazon, Apple, Google and others have not shown much interest, while Warner Bros, Ubisoft and more have no concerns at all.