It’s been a little over a year since Microsoft announced its intention to acquire Activision Blizzard. Since then, what looked to be another blockbuster acquisition appears far more uncertain as regulators in multiple countries scrutinize a deal that could potentially upend the video game industry.
While legal experts have maintained that the Activision Blizzard acquisition doesn’t constitute a monopoly (more on that later), it still marks a seismic shift in the video game landscape – and warrants an appropriate level of examination. But how did another day in the increasing mergers-focused industry become such a regulatory landmine? Read on for a full breakdown of how we got here.
Xbox announced via its official Xbox Wire site that it would acquire Activision Blizzard for $68.7 billion. All Activision Blizzard studios which include Blizzard but also Call of Duty developers like Infinity Ward and Sledgehammer would report to Xbox head Phil Spencer. The main thrust of the deal is that Xbox announced it would work to bring as many Activision Blizzard games as it can into the Xbox Game Pass subscription service.
The deal was not immediate and Xbox did not provide a timeline for when the acquisition would be completed, but the news easily eclipsed Xbox’s last major acquisition, a purchase of ZeniMax Media in 2020, for what seems now like a paltry $7.5 billion.
Several months after the announcement of the acquisition, four United States senators including Bernie Sanders, Elizabeth Warren, Cory Booker, and Sheldon Whitehouse sent a letter to the Federal Trade Commission. This letter outlined concerns that the deal could disenfranchise current Activision Blizzard employees following allegations of sexual misconduct and other hostile workplace practices.
To spell out the benefits of Xbox’s acquisition of Activision Blizzard to the public, Microsoft launched a website that highlighted its “vision for gaming,” and the positives of what could become the biggest deal in video game history.
According to Xbox, the acquisition will mean more games on more devices, more choices for how to purchase games, and variety for mobile gamers. Xbox also claims that developers will have easier access to customers, a fairer marketplace, and greater flexibility in payment systems.
Spencer made a point to say that new Call of Duty games would still be released on PlayStation on the same day as it launches elsewhere, even if the goal is to eventually debut new Call of Duty, as well as Overwatch and Diablo, on Xbox Game Pass.
In another blog post, Spencer confirmed that PlayStation gamers will receive the new Call of Duty on the same launch day as any other platform, including presumably Xbox Game Pass where first-party Xbox games are released day-and-date as retail.
The first of a series of responses, PlayStation CEO Jim Ryan called the promise of bringing Call of Duty to PlayStation after the acquisition “inadequate.”
In a statement to Gamesindustry.biz, Ryan said that the publicly stated promise to keep Call of Duty on PlayStation for three years after the current agreement is not appealing to PlayStation. “After almost 20 years of Call of Duty on PlayStation, their proposal was inadequate on many levels and failed to take account of the impact on our gamers.”
The UK’s Competition and Markets Authority (CMA) raised concerns over Xbox’s planned acquisition of Activision Blizzard. In response, Xbox said the concerns were unsupported and claimed PlayStation was too big to fail.
“The suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible,” Xbox said in a statement. In addition, Xbox said that even if every Call of Duty player on PlayStation switched to Xbox, “the PlayStation gamer base remaining would be significantly larger than Xbox.”
In ongoing commitments to keeping Call of Duty multiplatform, Phil Spencer said the intent was not to take Call of Duty away from PlayStation gamers and that as long as there is a PlayStation to ship to, Xbox will ship Call of Duty to Sony’s console.
Speaking on the Same Brain YouTube channel, Spencer cited Minecraft, a game that Xbox continued to ship to other platforms even after acquiring developer Mojang.
It was reported by The New York Times that Xbox offered Sony a 10-year deal to keep Call of Duty on PlayStation. While PlayStation did not comment on the offer, this marks a seven-year increase over the current three-year deal in place to keep Call of Duty on PlayStation.
This deal will also come to mirror a similar arrangement made with Nintendo that we will discuss in more detail further down.
In the largest rebuke yet, the Federal Trade Commission (FTC) sued to block Xbox’s acquisition of Activision Blizzard.
In a press release, the FTC said that Xbox could “harm competition in high-performance gaming consoles and subscription services by denying or ‘degrading’ rivals’ access to its popular content.” The FTC cited the acquisition of ZeniMax Media as one example of this, and how games like Redfall and Starfield will not be appearing on rival consoles.
In an internal memo, current Activision Blizzard CEO Bobby Kotick told employees that while the lawsuit “sounds alarming,” the expectation is that the deal will proceed as planned.
In a slight departure of tone, Spencer struck back at PlayStation’s attempts to block the company’s acquisition of Activision Blizzard by saying PlayStation wants to “protect their dominance” by “making Xbox smaller.”
Spencer appeared on the Second Request podcast calling Sony the only “major opposer” to the deal. “They have a very different view of the industry than we do. They don’t ship their games day and date on PC, [and] they don’t put their games in the subscription when they launch their games,” he said.
While Spencer previously spent months talking about how Call of Duty would remain on PlayStation, this was met with Jim Ryan calling these overtures “inadequate.” By hitting back on PlayStation’s dominance, Spencer marked a change in tone as the battle over the acquisition continued to intensify.
Citing the complexity of the case, the CMA announced it would extend its investigation into the acquisition by up to eight weeks to process the amount of evidence it has gathered. Plus, the CMA must also go through the responses it acquired from the public after reaching out for opinions about the acquisition.
The extension means that the final submission date for the CMA’s report on whether Xbox’s acquisition of Activision Blizzard is negative for the industry is now April 26 instead of its original deadline of March 1. However, the CMA also said the report could be completed anytime before that date.
While not an official statement, Activision Blizzard CCO Lulu Cheng Meservey tweeted at the official FTC Twitter account citing the success of HBO’s adaptation of Sony’s The Last of Us on HBO as proof that Sony’s opposition to the acquisition is baseless.
“Sony has an unrivaled warchest of IP, not just in gaming but TV, movies, and music — which can be developed into games, or can market existing games,” Meservey said. “It’s no wonder they also continue to dominate as the market leader for consoles. In gaming, Sony is ‘the first of us’ - and they will be just fine without the FTC’s protection.”
Meservey cited the record-breaking viewership for HBO’s The Last of Us, which is also produced by PlayStation Productions and Sony Pictures Television, as examples of Sony’s wide net.
According to Politico, EU representatives issued a formal warning to Microsoft over its acquisition plans, claiming that Microsoft could be “incentivized” to keep Call of Duty away from rival consoles.
In response, Microsoft said it is “listening carefully to the European Commission’s concerns and are confident we can address them.”
With the EU, the UK, and the US seemingly critical of the acquisition, scrutiny from the world’s top market regulators has only intensified as the deal tries to find a way forward.
The UK’s CMA published a provisional report of its investigation that raised several concerns about Xbox’s plans to acquire Activision Blizzard. This included risk of higher prices for games, fewer choices, and less innovation for UK gamers.
One particular area of concern is cloud gaming. According to the CMA, Microsoft accounts for 60% to 70% of current cloud gaming offerings and making Call of Duty an exclusive could “alter the future of gaming.”
The CMA also said that making games exclusive to Xbox “could substantially reduce the competition between Xbox and PlayStation in the UK,” and “could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time[.]”
Microsoft president Brad Smith confirmed that the company signed a binding 10-year contract to bring Call of Duty games to Nintendo device owners “the same day as Xbox, with full feature and content parity.” This deal is meant to highlight that Xbox’s acquisition would not silo Call of Duty to the Xbox ecosystem, and what better way than bringing Call of Duty to a platform the series has aggressively ignored in the past?
In particular, the promise to deliver Call of Duty games to Nintendo gamers with full content parity feels especially ambitious given Nintendo’s hardware performance issues.
On the same day, Microsoft announced a 10-year deal to bring all of its PC games to Nvidia’s GeForce Now streaming service, including Activision Blizzard titles. This is a direct response to the UK CMA’s concerns regarding cloud gaming as Nvidia is a major rival in the service.
With the agreement, Nvidia dropped its concerns over the acquisition, clearing away at least one major tech company from opposing the deal.
With months before the UK CMA’s final report and still plenty of hurdles left, we will likely have many more episodes before we see any conclusion to Microsoft’s plans to acquire Activision Blizzard.
Matt T.M. Kim is IGN's Senior Features Editor. You can reach him @lawoftd.
Continue reading...
While legal experts have maintained that the Activision Blizzard acquisition doesn’t constitute a monopoly (more on that later), it still marks a seismic shift in the video game landscape – and warrants an appropriate level of examination. But how did another day in the increasing mergers-focused industry become such a regulatory landmine? Read on for a full breakdown of how we got here.
January 18, 2022 - Microsoft Announces It Will Acquire Activision Blizzard.
Xbox announced via its official Xbox Wire site that it would acquire Activision Blizzard for $68.7 billion. All Activision Blizzard studios which include Blizzard but also Call of Duty developers like Infinity Ward and Sledgehammer would report to Xbox head Phil Spencer. The main thrust of the deal is that Xbox announced it would work to bring as many Activision Blizzard games as it can into the Xbox Game Pass subscription service.
The deal was not immediate and Xbox did not provide a timeline for when the acquisition would be completed, but the news easily eclipsed Xbox’s last major acquisition, a purchase of ZeniMax Media in 2020, for what seems now like a paltry $7.5 billion.
April 1, 2022 - U.S. Senators Raise Concerns Over Activision Blizzard Acquisition
Several months after the announcement of the acquisition, four United States senators including Bernie Sanders, Elizabeth Warren, Cory Booker, and Sheldon Whitehouse sent a letter to the Federal Trade Commission. This letter outlined concerns that the deal could disenfranchise current Activision Blizzard employees following allegations of sexual misconduct and other hostile workplace practices.
August 24, 2022 - Xbox Launches Website Outlining Benefits of the Acquisition
To spell out the benefits of Xbox’s acquisition of Activision Blizzard to the public, Microsoft launched a website that highlighted its “vision for gaming,” and the positives of what could become the biggest deal in video game history.
According to Xbox, the acquisition will mean more games on more devices, more choices for how to purchase games, and variety for mobile gamers. Xbox also claims that developers will have easier access to customers, a fairer marketplace, and greater flexibility in payment systems.
September 1, 2022 - Call of Duty Will Still Launch on PlayStation on the Same Day, Also Game Pass
Spencer made a point to say that new Call of Duty games would still be released on PlayStation on the same day as it launches elsewhere, even if the goal is to eventually debut new Call of Duty, as well as Overwatch and Diablo, on Xbox Game Pass.
In another blog post, Spencer confirmed that PlayStation gamers will receive the new Call of Duty on the same launch day as any other platform, including presumably Xbox Game Pass where first-party Xbox games are released day-and-date as retail.
September 7, 2022 - PlayStation’s Jim Ryan Calls Xbox’s Call of Duty Promise ‘Inadequate on Many Levels’
The first of a series of responses, PlayStation CEO Jim Ryan called the promise of bringing Call of Duty to PlayStation after the acquisition “inadequate.”
In a statement to Gamesindustry.biz, Ryan said that the publicly stated promise to keep Call of Duty on PlayStation for three years after the current agreement is not appealing to PlayStation. “After almost 20 years of Call of Duty on PlayStation, their proposal was inadequate on many levels and failed to take account of the impact on our gamers.”
October 12, 2022 - Following Concerns Raised by the UK’s Competition and Markets Authority, Xbox Says PlayStation Is Too Big to Fail
The UK’s Competition and Markets Authority (CMA) raised concerns over Xbox’s planned acquisition of Activision Blizzard. In response, Xbox said the concerns were unsupported and claimed PlayStation was too big to fail.
“The suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible,” Xbox said in a statement. In addition, Xbox said that even if every Call of Duty player on PlayStation switched to Xbox, “the PlayStation gamer base remaining would be significantly larger than Xbox.”
October 31, 2022 - Phil Spencer: Call of Duty Will Continue to Ship on PlayStation ‘As Long as There’s a PlayStation to Ship To’
In ongoing commitments to keeping Call of Duty multiplatform, Phil Spencer said the intent was not to take Call of Duty away from PlayStation gamers and that as long as there is a PlayStation to ship to, Xbox will ship Call of Duty to Sony’s console.
Speaking on the Same Brain YouTube channel, Spencer cited Minecraft, a game that Xbox continued to ship to other platforms even after acquiring developer Mojang.
November 11, 2022 - Xbox Offers PlayStation a 10-year Deal to Keep Call of Duty on the Platform
It was reported by The New York Times that Xbox offered Sony a 10-year deal to keep Call of Duty on PlayStation. While PlayStation did not comment on the offer, this marks a seven-year increase over the current three-year deal in place to keep Call of Duty on PlayStation.
This deal will also come to mirror a similar arrangement made with Nintendo that we will discuss in more detail further down.
December 8, 2022 - The Federal Trade Commission Sues to Block Xbox’s Activision Blizzard Acquisition
In the largest rebuke yet, the Federal Trade Commission (FTC) sued to block Xbox’s acquisition of Activision Blizzard.
In a press release, the FTC said that Xbox could “harm competition in high-performance gaming consoles and subscription services by denying or ‘degrading’ rivals’ access to its popular content.” The FTC cited the acquisition of ZeniMax Media as one example of this, and how games like Redfall and Starfield will not be appearing on rival consoles.
In an internal memo, current Activision Blizzard CEO Bobby Kotick told employees that while the lawsuit “sounds alarming,” the expectation is that the deal will proceed as planned.
December 12, 2022 - Phil Spencer Says Sony Wants to Grow ‘By Making Xbox Smaller’
In a slight departure of tone, Spencer struck back at PlayStation’s attempts to block the company’s acquisition of Activision Blizzard by saying PlayStation wants to “protect their dominance” by “making Xbox smaller.”
Spencer appeared on the Second Request podcast calling Sony the only “major opposer” to the deal. “They have a very different view of the industry than we do. They don’t ship their games day and date on PC, [and] they don’t put their games in the subscription when they launch their games,” he said.
While Spencer previously spent months talking about how Call of Duty would remain on PlayStation, this was met with Jim Ryan calling these overtures “inadequate.” By hitting back on PlayStation’s dominance, Spencer marked a change in tone as the battle over the acquisition continued to intensify.
January 5, 2023 - UK CMA Extends Investigation into Xbox’s Acquisition of Activision Blizzard
Citing the complexity of the case, the CMA announced it would extend its investigation into the acquisition by up to eight weeks to process the amount of evidence it has gathered. Plus, the CMA must also go through the responses it acquired from the public after reaching out for opinions about the acquisition.
The extension means that the final submission date for the CMA’s report on whether Xbox’s acquisition of Activision Blizzard is negative for the industry is now April 26 instead of its original deadline of March 1. However, the CMA also said the report could be completed anytime before that date.
January 30, 2023 - The Last of Us’ Success on HBO Proves Sony’s Merger Opposition Is Baseless
While not an official statement, Activision Blizzard CCO Lulu Cheng Meservey tweeted at the official FTC Twitter account citing the success of HBO’s adaptation of Sony’s The Last of Us on HBO as proof that Sony’s opposition to the acquisition is baseless.
“Sony has an unrivaled warchest of IP, not just in gaming but TV, movies, and music — which can be developed into games, or can market existing games,” Meservey said. “It’s no wonder they also continue to dominate as the market leader for consoles. In gaming, Sony is ‘the first of us’ - and they will be just fine without the FTC’s protection.”
Meservey cited the record-breaking viewership for HBO’s The Last of Us, which is also produced by PlayStation Productions and Sony Pictures Television, as examples of Sony’s wide net.
February 3, 2023 - The European Union Issues Antitrust Warning to Microsoft
According to Politico, EU representatives issued a formal warning to Microsoft over its acquisition plans, claiming that Microsoft could be “incentivized” to keep Call of Duty away from rival consoles.
In response, Microsoft said it is “listening carefully to the European Commission’s concerns and are confident we can address them.”
With the EU, the UK, and the US seemingly critical of the acquisition, scrutiny from the world’s top market regulators has only intensified as the deal tries to find a way forward.
February 8, 2023 - Xbox’s Acquisition of Activision Blizzard Could Harm Gamers, CMA Says
The UK’s CMA published a provisional report of its investigation that raised several concerns about Xbox’s plans to acquire Activision Blizzard. This included risk of higher prices for games, fewer choices, and less innovation for UK gamers.
One particular area of concern is cloud gaming. According to the CMA, Microsoft accounts for 60% to 70% of current cloud gaming offerings and making Call of Duty an exclusive could “alter the future of gaming.”
The CMA also said that making games exclusive to Xbox “could substantially reduce the competition between Xbox and PlayStation in the UK,” and “could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time[.]”
February 21, 2023 - Xbox Signs 10-Year Deal to Bring Call of Duty to Nintendo, Nvidia
Microsoft president Brad Smith confirmed that the company signed a binding 10-year contract to bring Call of Duty games to Nintendo device owners “the same day as Xbox, with full feature and content parity.” This deal is meant to highlight that Xbox’s acquisition would not silo Call of Duty to the Xbox ecosystem, and what better way than bringing Call of Duty to a platform the series has aggressively ignored in the past?
In particular, the promise to deliver Call of Duty games to Nintendo gamers with full content parity feels especially ambitious given Nintendo’s hardware performance issues.
On the same day, Microsoft announced a 10-year deal to bring all of its PC games to Nvidia’s GeForce Now streaming service, including Activision Blizzard titles. This is a direct response to the UK CMA’s concerns regarding cloud gaming as Nvidia is a major rival in the service.
With the agreement, Nvidia dropped its concerns over the acquisition, clearing away at least one major tech company from opposing the deal.
With months before the UK CMA’s final report and still plenty of hurdles left, we will likely have many more episodes before we see any conclusion to Microsoft’s plans to acquire Activision Blizzard.
Matt T.M. Kim is IGN's Senior Features Editor. You can reach him @lawoftd.
Continue reading...
