Xbox and Activision: Sony says it fears Call of Duty and Xbox Game Pass in a document | Xbox One

Already at the beginning of the year, Microsoft’s acquisition of Activision Blizzard for 70 billion dollars was a real earthquake in the industry. The transaction now confirmed, there are still many steps to be taken before Activision Blizzard is finally under the management of Microsoft, and in particular the takeover must be approved by competition authorities worldwide. The results of one of the commissions based in Brazil have just been revealed and they contain a lot of very interesting information in relation to the position of the major groups in the sector on the takeover in question, especially Sony’s.

For Sony, Microsoft would take a big lead with this acquisition

A Brazilian law firm was responsible for this survey of many technology multinationals, all of whom answered a dozen questions. The documents, written entirely in Portuguese, have just been published, and we’re sharing Sony’s words with you today.

The Japanese giant, Microsoft’s main competitor, has been in the center of attention for several months after the announcement of this record takeover, but also after other takeover rumors in the video game industry.

First, Sony talks about the difficulty of creating one of the very big budget, AAA games as popular as Call of Duty in the video game industry. Such developments require a colossal budget of several hundred million dollars, and according to Sony, no current player in the industry would have the opportunity to create a potential rival to Call of Duty, which has been established for years.

“Making a high-end AAA game (like Activision’s Call of Duty) requires a budget of hundreds of millions of dollars and thousands of employees.”

“Competitors to Microsoft and Activision in game development and publishing include SIE, Nintendo, EA, Ubisoft, Epic Games, Riot Games, Warner Brothers Interactive, Rockstar and Take-Two (owner of Rockstar and 2K). But apart from Activision, there are 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-running franchises with big budgets, multi-year development cycles, and fanatical followings. And despite big budgets and resources, none of these developers could create a franchise that would rival Activision’s Call of Duty, standing out as a game category in its own right .”

Sony therefore claims that Call of Duty’s presence and cultural impact in video games and popular culture gives it a unique and almost impossible place to take in this sector. The license benefits from a loyal and diligent community that would not abandon ship even if another studio had the opportunity to offer an FPS similar to Call of Duty.

Later in the document, Sony discusses Xbox Game Pass and the place of subscription services in video games today. This development in the consumption of video games has created real competition with the sale of games purchased complete, at once and definitively, which is in sharp decline. Sony believes that the lower upfront cost of subscription services can be anticompetitive to publishers who recoup large investments in games by selling them for an upfront fee. By extension, Sony believes that this may negatively affect the quality of video game creations.

“Over the past five years, Microsoft’s Game Pass has grown to capture approximately 60-70% of the global subscription service market. This share is even higher in Brazil, where Game Pass accounts for around 70-80% of the PC subscription services market. When Microsoft announced it would buy ZeniMax in 2020, Game Pass had about 10 million subscribers. Even if each subscriber purchased the cheapest tier ($10 per month), that equates to over $1.2 billion in annual subscription revenue. As the graph below shows, when Microsoft announced it would buy Activision in 2022, Game Pass had 25 million subscribers – up 38% since January 2021 – and doubled its annual Game subscription revenue. Pass to at least 3 billion USD. »

Finally, Sony attributes the success of Xbox Game Pass to its ability to offer very diverse games to a wide audience. The purchase of studios with varied competences has been very beneficial for Microsoft, and the Japanese giant takes the example of Double Fine, Obsidian Entertainment, Ninja Theory and Bethesda. By adding Activision to the equation, Microsoft could potentially create a pivot in the video game industry and mark a significant lead over its competitors.

“Content, as the primary driver of purchase decisions, is the most significant barrier to establishing a digital distribution channel for PC, console and mobile games. A successful digital distribution channel must offer a wide range of differentiated content (e.g. different genres and different prices).One of the reasons why Microsoft’s Game Pass has grown so quickly is because Microsoft has acquired several third-party studios since 2017, including Double Fine, Obsidian Entertainment, Ninja Theory, and Bethesda, and they have added their content to Game Pass. acquisition gave Microsoft a greater body of content — even without Activision games. Add Activision games to that, and the content will represent a turning point.”

Today, Sony says that it would take a potential Xbox Game Pass competitor several years to become a worthy rival. Although Call of Duty still represents an important source of revenue for Sony, Microsoft’s takeover would hurt Sony’s development.

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