How Microsoft’s impending ownership of ‘Call of Duty’ may hurt Sony

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How Microsoft’s impending ownership of ‘Call of Duty’ may hurt Sony

Microsoft, the maker of the Xbox, set fire to the video game industry when announced his plan to acquire “Call of Duty” owner Activision Blizzard for $68.7 billion earlier this year.

The deal is still pending approval and is expected to close next year, but public filings courtesy of Brazilian regulator CADE revealed last week how strongly Microsoft and PlayStation owner Sony feel about each other’s competitive strategies. for their respective brands of consoles.

sony reported comments within the Brazilian presentations are not surprising. The Japanese company highlighted how crucial a “Call of Duty” franchise is to the gaming industry, and that Microsoft owning its publisher would be anti-competitive and influence players’ choice on consoles.

But the translations of most recent submissions saw Microsoft push back against Sony’s memos, claiming that Sony pays for “blocking rights” that prevent companies from making some of their games available on the Xbox Game Pass subscription service. Sony has yet to publicly refute these claims.

The same presentations also saw the technological mammoth confirm final sales for its next-gen Xbox One console, which it said were less than half the PlayStation 4’s lifetime sales.

This reflects the current progression of console sales for the PlayStation 5 and Xbox Series systems. While the supply chain crisis that caused the shortage of semiconductor chips hurt Sony own forecasts and allowed Microsoft to gain a slight edge beyond this 2-to-1 sales split in 2021, analysts have already forecast the previous ratio of PlayStation to Xbox hardware sales to be stay the course in 2022.

And when looking at total spending on consoles, hardware and the PlayStation store remained the clear leader in 2021, with Xbox only gaining 1% in its market share while Nintendo’s share fell 2%.

Does this make Sony’s anti-competitive concerns little more than a knee-jerk urge to defend its gaming turf, or is there something more to it? The answer to that would be easier if Microsoft and Sony were identical companies, but obviously that’s not the case.

The finances of both companies tell very different stories about the role gaming plays in both empires.

As the primary leader in cloud computing, Microsoft’s overall revenue soared during the pandemic era, while Sony had to carefully balance its group of media businesses, which includes Sony Pictures and Sony Music. Both units are major players in Hollywood and the global music industry, areas that were hit hard by the lockdowns in 2020.

This has made Sony Interactive Entertainment, the unit that comprises PlayStation, a central anchor for Sony. SIE has routinely made more money than Xbox, but its role within the broader corporation means it must remain an anchor for the carefully managed business. Whereas Xbox, despite its position in the global gaming market, remains a smaller element of Microsoft’s much larger operation, which currently generates more than double Sony’s revenue.

This has allowed Microsoft to overinvest in the Xbox brand through costly acquisitions, which included the $7.5 billion purchase of Bethesda owner ZeniMax. that was finalized in early 2021 before Activision Blizzard became the main story.

The company has also long presided over Xbox Game Pass, the popularity of which forced Sony to scrap its PlayStation Now cloud and download service and move it over to PlayStation Plus, which itself was revamped into three separate tiers that look more like Game Pass.

But while Xbox is committed to awarding its more than 25 million subscribers Day one access to new games, including many highly anticipated first-party titles like Bethesda’s “Starfield,” PlayStation’s subscription strategy remains much more secretive. Annapurna Interactive’s July release “Stray” was available as a day one download for PS Plus subscribers at the highest levels, but upcoming first-party games like “The Last of Us Part I” and “God of War: Ragnarök” will be excluded.

Sony’s strategy here, along with its more recent push to release older first-party titles on PC, are an important aspect of why Sony leads in gaming revenue as it works to expand its push into live services through acquisition. complete from the owner of “Destiny”, Bungie. and the development of several upcoming games-as-a-service titles at PlayStation Studios.

But neither Sony nor Xbox have ever mastered a console staple like “Call of Duty,” making the franchise’s impending Xbox ownership uncharted territory for the industry. Before 2022 figures pegged “Call of Duty” lifetime sales at 425 million units, the franchise had confirmed it passed the 400 million mark a year before. This means that in just over a year, “Call of Duty” sold 25 million units of its games in addition to its free-to-play title “Warzone” which has more than 125 million players.

“Marvel’s Spider-Man”, PlayStation’s most popular first-party game, and its companion title “Spider-Man: Mile Morales” have sold together over 33 million units since its releases, and the previous game was also released on PC in August.

Microsoft has promised that “Call of Duty” will remain cross-platform when the Activision Blizzard acquisition closes, but its plan for the franchise when it comes to Xbox Game Pass is still unknown. For its competitor to command a franchise for which “Spider-Man” barely equals sales is a terrifying prospect, and it has the potential to give Xbox an unbeatable advantage if none of Sony’s live service games generate massive consumer interest. the consumers.

As gamers stretch their pockets by taking advantage of monthly subscription fees, there is a real threat for new console buyers to side with Xbox if they know that one of the biggest brands in competitive gaming will have more of an advantage there rather than on PlayStation, especially if they have the patience to wait for PlayStation exclusives to hit PC.

But as long as Sony maintains its strong dominance of console sales, this concern is likely to be a tough sell for regulators.

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