As reported by GamesIndustry, the regulator said, “There is a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services, and cloud gaming services.” The “network effect” of the market, which causes a console with more gamers to attract more content and thus more gamers, was cited as a concern with any potential exclusivity.

“The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s – Microsoft’s closest gaming rival – ability to compete as well as that of other existing rivals and potential new entrants who could otherwise bring healthy competition through innovative multi-game subscriptions and cloud gaming services.”

The CMA also feels that Activision-Blizzard titles could have eventually arrived on other subscription services if this deal didn’t go through. “The CMA recognises that ABK’s newest games are not currently available on any subscription service on the day of release but considers that this may change as subscription services continue to grow. After the Merger, Microsoft would gain control of this important input, and could use it to harm the competitiveness of its rivals.” Microsoft’s Azure cloud service, not to mention its dominance with PC operating systems, could result in an “unparalleled advantage” if its acquisition of Activision-Blizzard goes through.

Of course, Microsoft has responded in kind. It noted, “These unsupported theories of harm are not sufficient to justify a reference to Phase 2.” It also said there were numerous reasons why the CMA’s concerns over the deal’s impact on PlayStation were “misplaced.” Some of these include PlayStation having a market-leading position with an install base of 150 million consoles versus Xbox’s 63.7 million consoles. There’s also the fact that Sony’s market leadership allows for raising the PS5’s price “without fear of losing market share.”

Microsoft told GamesIndustry, “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.” It also added that if every Call of Duty player shifted to Xbox, “the PlayStation gamer base would remain significantly larger than Xbox.” It didn’t provide any figures to back this assumption up, however.

It further noted Sony’s acquisitions and the fact that it saw more than 280 first and third-party exclusives on PlayStation in 2021, five times that of Xbox’s offerings. “In short, Sony is not vulnerable to a hypothetical foreclosure strategy, and the Referral Decision incorrectly relies on self-serving statements by Sony, which significantly exaggerate the importance of Call of Duty to it and neglect to account for Sony’s clear ability to competitively respond.

“While Sony may not welcome increased competition, it can adapt and compete. Gamers will ultimately benefit from this increased competition and choice.” Microsoft reiterated that it would keep Call of Duty on PlayStation and that taking it away would “alienate” the console’s fanbase and “tarnish both the Call of Duty and Xbox brands.”

As for the decision to bring Activision-Blizzard titles to Game Pass, Microsoft believes this would offer more choices for gamers. While it didn’t indicate whether it would allow Call of Duty to release on other subscription services, Microsoft noted that Game Pass wasn’t on PlayStation. Thus any concerns from the CMA of it “tipping” subscription services in favor of Xbox were inaccurate. It also pointed to the popularity of “buy to play” and free-to-play models that continue provide ample competition for Game Pass.

In the end, Microsoft says, “Should any consumers decide to switch from a gaming platform that does not give them a choice as to how to pay for new games (PlayStation) to one that does (Xbox), then that is the sort of consumer switching behavior that the CMA should consider welfare enhancing and indeed encouraged. It is not something that the CMA should be trying to prevent.”

Regarding streaming, Microsoft feels the regulator’s concerns are somewhat flawed. It noted that Xbox Cloud Gaming doesn’t use Azure, and also doesn’t stream titles from PC hardware. As a result, Xbox would be facing “significant disadvantages compared to rival providers of infrastructure for game streaming.”

“There is no advantage. Indeed, Xbox considers that it faces many significant disadvantages as compared to rival providers of infrastructure for game streaming.” While the CMA feels that acquiring Activision-Blizzard and using it in conjunction with other services could “foreclose” on cloud gaming rivals, Microsoft said this is counter to its objective.

“Consumer adoption of cloud gaming remains low. Harming or degrading rival services would significantly set back the adoption of this technology – protecting market-leading incumbents (i.e., Sony on console, Apple and Google on mobile, as well as Steam on PC).

“Xbox as a platform which is in last place in console, seventh place in PC and nowhere in mobile game distribution globally, has no incentive to do this. Instead, its incentive is to encourage the widespread adoption of cloud gaming technologies by as many providers as possible to encourage the major shift in consumer behavior required for cloud gaming to succeed.”

Preliminary findings for the investigation’s second phase will be revealed in January 2023, followed by a final report on March 1st, 2023. Stay tuned for more details in the meantime.

“We intend to make Activision Blizzard’s much-loved library of games – including Overwatch, Diablo and Call of Duty – available in Game Pass and to grow those gaming communities. By delivering even more value to players, we hope to continue growing Game Pass, extending its appeal to mobile phones and any connected device.” Spencer also indicated that Activision-Blizzard titles could be playable on other devices via cloud streaming.

He also reiterated the company’s commitment to have the “same version of Call of Duty available on PlayStation on the same day the game launches elsewhere.” It will also continue to enable people to ” play with each other across platforms and devices.”

The blog post comes in the wake of regulators worldwide examining the Activision-Blizzard acquisition by Microsoft. Sony has made several comments to Brazil’s regulatory body on the same, noting that Call of Duty influenced one’s choice of console and how it would take several years for a competitor to rival Game Pass. Microsoft has responded to the acquisition being “anti-competitive,” alleging Sony to be playing “blocking rights” to prevent some developers from releasing games on Game Pass.

Regardless, Spencer said the company would “continue to engage with regulators with a spirit of transparency and openness as they review this acquisition. We respect and welcome the hard questions that are being asked.”

In the meantime, we’ll need to wait for more details on Call of Duty, Overwatch and Diablo coming to Game Pass. Stay tuned in the coming months.

Insider Tom Henderson said on Twitter that he believes that “Sony’s deal lasts for the next three games.” This includes Modern Warfare 2, Call of Duty: Warzone 2 and Treyarch’s next game. “So if Microsoft obligates Sony’s existing deal, which they have said they will, nothing should change until Call of Duty 2025/2026 (depending on when that releases).”

Replying to another user about Call of Duty not being exclusive to Xbox platforms even after that, Henderson replied, “There’s an argument for both sides. I don’t even think Microsoft knows what to do yet.”

Microsoft had previously stated that it intends to honor Sony’s existing deal for Call of Duty. In addition, it has “committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love.” But this could potentially mean future Call of Duty titles launching on day one for Game Pass with other benefits like first beta access.

Then again, Microsoft could simply offer a new deal to Sony that’s even more lucrative than the current one. Time will tell, so stay tuned in the coming months and years.

Sony's deal lasts for the next 3 games I believe.

MWII, Warzone 2, and Treyarch's game. So if Microsoft obligates Sony's existing deal, which they have said they will, nothing should change until CoD 2025/2026 (depending on when that releases). https://t.co/DqMJ1aKJW7

— Tom Henderson (@_Tom_Henderson_) May 26, 2022

There's an argument for both sides. I don't even think Microsoft really knows what to do yet lol

— Tom Henderson (@_Tom_Henderson_) May 26, 2022

“We can’t say much about this due to embargoes, but I can tell you that there are some very exciting things coming soon for Xbox and Xbox Game Pass to be excited about.” The obvious assumption is that Activision-Blizzard titles will be coming to Xbox Game Pass. The entire Call of Duty series would make a strong addition to the catalogue along with Diablo and Overwatch.

There are other far-flung possibilities though, like Xbox players receiving early access to the rumored Overwatch 2 beta or even this year’s Call of Duty (which is developed by Infinity Ward) being available day one on Game Pass. Anything is possible so we’ll need to wait for more details in the coming weeks. In the meantime, Greenberg also confirmed that Gears of War studio The Coalition was working on “several unannounced projects.”

https://twitter.com/XboxStudio/status/1496213287381389322

On The Xbox Two podcast, Rand al Thor 19 spoke Windows Central’s Jez Corden who had previously talked about Blizzard having several unannounced games in development. When asked if he had known that the new survival game was one of them, Corden replied, “No, it wasn’t. I was expecting them to announce a different game last week. I did not know about this one but I did know about another, which I’m not going to talk about because I don’t want to get anyone in trouble.”

“I’ve been told that Blizzard’s roadmap is very strong. That’s what I’ve been told basically.” Corden further added that the company was at the stage of “appeasing the crowd” along with being aware of its numerous mistakes (Warcraft and StarCraft being the examples provided). Though initially skeptical of new head Mike Ybarra making an impact, Corden has heard from his contacts at Blizzard that there’s “a sense of optimism” that “hasn’t been there for years.”

How things will ultimately play out, especially following the acquisition of Activision-Blizzard by Microsoft and concerns about consolidation, remains to be seen. Among its various new projects, Blizzard is still working on Overwatch 2 and Diablo 4 which faced delays. The 2022 season of Overwatch League, which starts in April 2022, will be played on an early build of Overwatch 2 – check out some pro exhibition matches for the game here.

“Tech acquisitions are now under increasing regulatory scrutiny, so getting the biggest deal in tech history past the regulators will increasingly dominate the narrative around Microsoft.” To illustrate how much more scrutiny it could invite, Bicknell provides the example of Nuance, a speech-to-text company that Microsoft had also acquired.

“Although the Nuance deal has been cleared in the EU and US, it has yet to be cleared by the UK’s Competition and Markets Authority, and a decision on a further investigation may not come until March 2022. Microsoft can expect even greater regulatory scrutiny for its massive Activision-Blizzard deal and constant chatter about the possible outcome.

“It will be expected to provide a running commentary on the deal’s progress, just as Nvidia has over its protracted pursuit of Arm.” Of course, given reports of Nvidia planning to abandon the deal due to regulator scrutiny, it does create that much concern for Microsoft’s acquisition of Activision-Blizzard.

The latter is expected to conclude in fiscal year 2023 but Microsoft, specifically Xbox boss Phil Spencer, has already spoken about potential plans for Activision-Blizzard’s studios like working on a “variety of franchises.” Stay tuned for more details in the coming months.

Speaking to “two people familiar with the discussions,” Bloomberg’s Jason Schreier reported that high-level employees have discussed shifting from annual releases for the shooter. Though nothing has been finalized, Schreier said, “There’s a belief among many Call of Duty developers that releasing games at a slower cadence will please players and help bolster the franchise.” With this year’s sequel looking to “redeem the franchise’s fortunes,” he noted that if the change in releases does happen, it won’t be until next year or even later.

Other noteworthy details abound regarding the mood inside of Activision-Blizzard over the week with “lots of cautious optimism” for the merger and CEO Bobby Kotick’s departure that will reportedly occur once the acquisition is complete. While there is excitement for more creative freedom under the Xbox brand, there is also a fear of layoffs. Time will tell though so stay tuned for more details in the coming months.

In the meantime, this year’s Call of Duty is rumored to be a follow-up to 2019’s reboot of Modern Warfare. With a campaign rumored to be set in Latin America, it may also release in October instead of November as per insider Tom Henderson. At the very least, Microsoft has committed to honoring “existing Activision agreements” to have Call of Duty on PlayStation platforms.

Inside Activision Blizzard this week:
– Lots of cautious optimism about the merger and Kotick being gone
– Excitement for more creative freedom under Xbox
– Fear of layoffs
– Call of Duty could ditch the yearly release schedule
New story: https://t.co/QftblHXUzz

— Jason Schreier (@jasonschreier) January 20, 2022

Though Microsoft said it had “changed how we do certain things” with regards to the company, Xbox boss Phil Spencer spoke more about the same to The Washington Post. With the acquisition process starting near the end of last year, Spencer said, “We spent time with the Activision team looking at the incidents, looking at employee polls and then had a good discussion with them about their plan, both the progress they’ve been making and what their plan was.”

Microsoft will stay out of Activision’s legal troubles with Spencer noting that, “We had to look at that forward plan and ensure we had a kind of confidence in that.” He was also asked about unions, which is important considering that the company’s employees don’t have a union and affected Activision-Blizzard workers turned to the same during the ongoing controversies. Spencer responded, “I’m going to be honest, I don’t have a lot of personal experience with unions.

“I’ve been at Microsoft for 33 years. So I’m not going to try to come across as an expert on this, but I’ll say we’ll be having conversations about what empowers them to do their best work, which as you can imagine in a creative industry, is the most important thing for us.” Time will tell how and if things actually improve for the workers so stay tuned for more reports on that front in the coming months.

“Given Xbox’s cross-platform and gamer-friendly narrative, the impact is less likely to be about ‘draconian exclusivities’ and more about ‘enhanced experiences’ on Microsoft-owned assets. The big hits, in particular, produce a significant (and often majority) revenue from the Sony side. It wouldn’t be financially sound to turn that revenue off, particularly because given Microsoft’s mega-portfolio (if the acquisition closes), it doesn’t need to.

“Engaging in hard exclusivity could risk alienating users on the other side, which still remain very valuable. Instead of exclusivity on whole titles, Microsoft can push more softly, e.g. through windowing access (e.g. first month of new CoD only on Xbox, not Sony), discounts, exclusive in-game content, experiences, etc.”

So it’s more likely that Microsoft will have certain features like Xbox Series X/S optimizations, Smart Delivery and Game Pass availability exclusive to Xbox instead. Given Sony that Sony expects the publisher to “abide by contractual agreements” and have Activision games remain multiplatform, it does put a bit of spanner into some exclusives (at least for the time being). But the impact of this acquisition is still a big deal for Sony and even Nintendo to some extent.

“A big response would be great for Sony – very important in slowing down the effects of Microsoft’s acquisition (IF it goes through, which Sony will be monitoring closely, I’d imagine). If it does go through, the sheer difference in company size will make it very difficult for Sony ($124 billion market cap) to come up with an acquisition answer comparable to what Microsoft ($2.3 trillion market cap) just announced.

“A similar dynamic applies to Nintendo at $54 billion market cap. Having said that, more acquisitions are likely. M&A reportedly reached $85 billion in 2021, three times that of 2020. 2022 almost beat that mark already (we’re at $81.4 billion considering Zynga’s deal with Take-Two) and it’s not even the end of January!”

With that in mind, it wouldn’t be surprising if a company like Electronic Arts or Take Two Interactive is next in line for acquisitions. Stay tuned for more details and updates in the coming months.

According to Bloomberg’s sources, specifically a “person familiar with the company’s thinking,” “Microsoft plans to keep making some of Activision’s games for PlayStation consoles but will also keep some content exclusive to Xbox.” This could be interpreted in much the same way as the Bethesda acquisition – titles announced for PlayStation platforms will still be releasing for the same. So fans likely won’t have to worry about Overwatch 2 or Diablo 4 skipping PS4 or Call of Duty: Warzone suddenly being exclusive to Xbox.

However, since neither title was announced for PS5, Microsoft could very well decide to have them available on Xbox Series X/S and not PS5. This, of course, doesn’t include Xbox Game Pass availability, content exclusive to the Xbox versions and so on. It’s also possible that Sony’s marketing and content-exclusivity deal with the Call of Duty franchise could come to an end following this acquisition.

Time will tell but it wouldn’t be surprising to Microsoft announce a new Activision-Blizzard title as exclusive to Xbox in the future. Stay tuned for more details in the coming months – this year is already off to a spicy start.

https://twitter.com/Nibellion/status/1483458263106600964