Xbox: Sony is alert after acquiring Activision and Microsoft’s Call of Duty

business news Xbox: Sony is alert after acquiring Activision and Microsoft’s Call of Duty

There is the rhetoric and the reality behind it. At the beginning of the year, Microsoft’s acquisition of Activision Blizzard was a shock wave that Microsoft’s giant competitors inevitably reacted internally to build a strategy aimed at countering such a behemoth. If the interested parties show a phlegm to show their peace, some information tends to prove that the announcement was experienced as an earthquake. And this is not the first time this has happened…

A sense of deja vu

Twenty years ago, when SEGA decided to leave the world of console manufacturers, publishers communicated by welcoming the new publisher with welcome messages. But for some, like Electronic Arts, it’s window dressing. Because once SEGA announced its intention to become one of the leading publishers, new competitors simply organized crisis meetings! And the American publisher went further by writing a salty letter to the attention of the high authorities of Wall Street. It is clear that the displayed smile hides real fear. Now, history is repeating itself with a company that is more powerful than SEGA in its time.

Sony is afraid of the rise of Xbox

This information is far from coming from anywhere. As you know, Microsoft’s acquisition of Activision Blizzard has been confirmed by interested parties, but is still pending before competition regulators around the world. If the transaction is confirmed, Microsoft and Activision Blizzard must wait for the return of various commissions to release the champagne. And it is precisely the Brazilian commission that interests us here. The latter hired the services of a law firm whose purpose was to verify, point by point, the ins and outs of this large-scale acquisition. Through a series of questions / answers organized by the giants of the sector, they established a report in Portuguese that was recently made public. And if we look at the case of Sony, some answers are far from unnoticed. See instead:

Creating a high-end AAA game (like Activision’s Call of Duty) requires a budget of hundreds of millions of dollars and thousands of employees. Microsoft and Activision’s competitors, in terms of 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). However, apart from Activision, there are some 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 heavy followings. And despite big budgets and resources, none of these developers could create a franchise that could compete with Activision’s Call of Duty, which stands as a category of games in its own right.

Through these few lines, we discovered that Sony is very serious about the Call of Duty franchise, which is an important part of its catalog, and is possibly afraid of its future exclusivity on Xbox.

Xbox: Sony is alert after acquiring Activision and Microsoft's Call of Duty

And the sequel is even stronger because it’s part of Xbox Game Pass.

Over the past five years, Microsoft’s Game Pass has grown to represent 60-70% of the global subscription service market. This share is even higher in Brazil, where Game Pass accounts for about 70-80% of the PC subscription service market. When Microsoft announced that it would acquire ZeniMax in 2020, Game Pass had almost 10 million subscribers. Even if every subscriber bought the cheapest subscription ($10 per month), that equates to over $1.2 billion in annual subscription revenue. As shown in the graph below (Editor’s note: in the document presented by the lawyers), when Microsoft announced that it would acquire Activision in 2022, Game Pass had 25 million subscribers – a 38% increasing from January 2021 – doubling the annual Game Pass. subscription revenue of at least $3 billion.

Reading between the lines, we know that Sony is afraid of the rise of Microsoft and the Xbox Game Pass. The manufacturer realizes that the increase in subscribers is pronounced and that it will not decrease. A little more, the report points out that this increase in power coincides with the interest in content made possible by the acquisition of several studios: Double Fine, Obsidian Entertainment, Ninja Theory and even Bethesda. And that with Activision, the content will be greatly improved.

Obviously, the comments were expressed and did not reveal, in appearance, any tension. But like SEGA and the rhetoric of “former partners”, apparently the acquisition of Activision Blizzard was not neglected by Sony – especially when Call of Duty, which is able to sell consoles with whole pallets, joined in Microsoft’s lap in an exclusive way. It will be interesting to see how the Japanese company responds to new challenges in the coming months and years. The first answer is given by the arrival of Extra and Premium subscriptions and the second can bring the mark of a PlayStation VR2.

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