Microsoft Wanted to Spend “Sony Out of Business”

Several previously confidential documents and emails have come to light, including Xbox Game Studios head Matt Booty telling CFO Tim Stuart in 2019 that the company was in a “very unique position to be able to go spend Sony out of business.” He also acknowledged Sony as “the only other player who could compete with Game Pass, and we have a 2-year and 10 million subs lead.”

Google at the time was cited as being “3-4 years away from being able to have a studio up and running” (and we know how that turned out) while Amazon had “shown no ability to execute on game content” (harsh but true at the time). The email is argued to be old and referring to “industry trends” that were never pursued or are “unrelated to the acquisition,” but it certainly showcases the mindset back then.

Microsoft Listed Sega, Bungie, Square Enix and More for Acquisition

One bit that wasn’t refuted is how Microsoft had a list of potential other acquisition targets in 2020, which included Sega and Bungie. These were part of a “consideration” set based on Game Pass and Steam data and included studios like Larian, Team Cherry, FromSoftware, CD Projekt, Remedy Entertainment and more. It even listed companies like Nintendo, Sony, DeNA, Square Enix and even Sony for bolstering its “mobile footprint.”

While it did filter out some names, including those with acquisition prices over $20 billion, Square Enix looked to be part of a separate acquisition in 2019. It was internally referred to as “Project Phoenix” and would see the publisher’s Western-developed titles – which eventually went to Embracer – acquired in addition to franchises like Final Fantasy, Kingdom Hearts and so on. It would have strengthened Microsoft’s Japan presence and even kept those titles off of PlayStation, but obviously, it didn’t go through.

Project Dragon Exclusive to Xbox Series X/S and PC

Among the many projects in development at IO Interactive is a new fantasy RPG called Project Dragon. Initially rumored to be exclusive to Xbox Series X/S and PC, it was discovered in emails during the hearing that it’s only coming to Microsoft’s console (at least at launch). Probably not the craziest news, especially since very little has been revealed about the project. However, given that it’s not out until post-April 2025, at the very least, receiving confirmation now without any official announcement is pretty insane.

Indiana Jones was Previously Multi-Platform, Now Exclusive to Xbox and PC

MachineGames’ upcoming Indiana Jones title will also be exclusive to Xbox Series X/S and PC. However, considering its announcement before ZeniMax’s acquisition by Microsoft, something has to give. Sure enough, Bethesda’s SVP of global marketing and communications, Pete Hines, confirmed to the FTC’s lawyers that the original deal with Disney was to release the title on “multiple consoles.”

The deal was amended after Bethesda was acquired, turning it into an Xbox exclusive (also releasing day one on Game Pass). Hines said, in his view, that it was about “reducing risk and trying to get to a degree of certainty. You’re dealing with a licensor who’s going to have a ton of feedback on what you’re making, add a lot of time to your schedule, and you’re required to provide a release window. You immediately have a clock that’s ticking. We liked the idea of bringing it to Game Pass and all the players we could reach there.”

The Outer Worlds 2 on PlayStation Still Undecided

There is a bit of a twist in the exclusivity tale. The Outer Worlds 2, announced by Obsidian Entertainment in 2021 for Xbox Series X/S and PC, is undecided on PlayStation. It follows the FTC asking if a title like The Outer Worlds, which has an existing community on PlayStation, would be exclusive to Xbox. Xbox Game Studios head Matt Booty said that a “decision has not been made” about this but that Microsoft is committed to communities for existing titles on other platforms. So far, as seen with Minecraft, it’s held up that part of the bargain.

Xbox Losing Console Wars Since 2021

Microsoft Gaming CEO Phil Spencer has spoken before about Xbox’s current position in the console wars. However, in Microsoft’s document to the FTC, it outright admitted that it lost the console wars and has been losing since PlayStation and Nintendo consoles outsold the original Xbox in 2001 by a “significant margin.” In terms of current console revenue and installed customer base, Xbox has a 21 percent share. While the shares for PlayStation and Nintendo were redacted, Xbox was established as firmly in third place.

The Last of Us Part 2 and Horizon Forbidden West Budgets Revealed

Sony also revealed some documents and, unfortunately, it didn’t redact them properly. Before being pulled, the documents revealed that The Last of Us Part 2 cost $220 million to develop with 200 employees working full-time. Horizon Forbidden West had over 300 employees and cost $212 million. It also revealed that global marketing costs for triple-A titles were large in addition to the development costs, which makes you wonder about the total money spent.

Next Console Generation Expected to Start in 2028

While rumours have floated about a PS5 Pro coming next year in December, Microsoft believes that the next generation of consoles will begin in 2028. It didn’t confirm that a new Xbox was on the way or that Sony has the PlayStation 6 up its sleeve – just that the “expected starting period” for the next generation is 2028. That would mean an eight-year life cycle for Xbox Series X/S and PS5, which launched in November 2020 – not too shabby.

PlayStation Not Against Starfield’s Xbox Exclusivity

PlayStation has been swearing up and down about the popularity of Call of Duty on its consoles, but it’s not exactly worried about Bethesda’s Starfield being exclusive. Sony Interactive Entertainment president and CEO Jim Ryan testified that he didn’t like Redfall (which makes two of us) or Starfield as exclusives, but also didn’t think it’s “anti-competitive.” Then again, he did expect those titles to be multi-platform since “pretty much every other Bethesda game” fell into that category before Microsoft acquired the studio.

Microsoft Acquired Bethesda to Avoid Starfield Being PS5-Exclusive

Before Microsoft acquired ZeniMax and its studios, Sony was reportedly in talks to make Starfield a timed exclusive for its consoles. Phil Spencer lent some credibility to those reports, stating, “When we acquired ZeniMax, one of the impetus for that is that Sony had done a deal for Deathloop and Ghostwire…to pay Bethesda to not ship those games on Xbox.”

When Microsoft heard that Starfield could also skip Xbox at launch, Spencer said, “We can’t be in a position as a third-place console where we fall further behind on our content ownership, so we’ve had to secure content to remain viable in the business.” So there you have it – part of the reason for acquiring ZeniMax was to ensure Starfield didn’t end up exclusive (timed or otherwise) to PS5, further emphasizing its importance as a title.

The Elder Scrolls 6 is “Five-Plus” Years Away

With Starfield being important to Xbox, it seemed a given that The Elder Scrolls 6 would crop up at some point during the hearings. Microsoft’s Phil Spencer said it’s “many years away”, making it “difficult for us right now to nail down exactly what platforms that game will launch on.” So, for now, there’s still hope that it comes to PlayStation.

Perhaps more interesting is that he expects it’s likely “five-plus” years from release. Of course, that means it could launch in 2028 at the earliest and perhaps even later. So if you expected any news on the title (aside from it potentially being Todd Howard’s last game in the series as director), the wait continues.

Jim Ryan and Bobby Kotick Not in Favor of Game Pass

One thing is for sure – neither Jim Ryan nor Activision Blizzard CEO Bobby Kotick are fans of Game Pass. The former said after speaking to “all publishers,” they “unanimously do not like Game Pass because it’s value-destructive. I talk to publishers all the time, and this is a very commonly held view over many years by the publishers.”

Kotick also doesn’t approve multi-game subscription services but also can’t do anything about it if the acquisition goes through. “I don’t agree with the idea of a multi-game subscription service as a business proposition going forwards.” However, he acknowledged that Activision and Microsoft could “agree to disagree” (perhaps due to the reported $390 million he’ll receive from company shares if the deal goes through).

Kotick Regrets Not Supporting Nintendo Switch

Speaking of Kotick’s other regrets (not including various alleged scandals at Activision Blizzard), he feels bad about not releasing Call of Duty on the Nintendo Switch. It was considered but didn’t happen due to “bad judgement.” “When I saw a prototype of the Switch, it was different. I thought the Wii was the most extraordinary video game system ever created. When I saw Switch prototypes, I was concerned. They were trying to accomplish a lot. I didn’t think it was going to be successful,” said Kotick. But hey, at least he’ll “consider it” in the future if this acquisition doesn’t go through (barring any supposed lack of resources).

Kotick Believes Next Nintendo Console is About as Powerful as Xbox One/PS4

Kotick also revealed “active talks” with Nintendo about its next-generation console. He said it would likely be equivalent to the hardware in the PS4 and Xbox One. Of course, it’s not an outright confirmation that the Switch 2 is real, but just the fact that talks for a new Nintendo console were happening, especially given the years of rumors, is something. Right?

Kotick Demanded Higher Revenue Share for Call of Duty on Xbox

Hilariously, in the early days of the Xbox Series X/S, Kotick threatened to remove Call of Duty from Microsoft’s consoles altogether. The reason? A higher revenue share, as testified by Xbox corporate vice president Sarah Bond. “It was clear that Call of Duty would be on PS5, and that would not have been good if it was not also on Xbox if it was launching at the same time. It was clear if we did not move beyond the standard revenue share, he would not place Call of Duty on Xbox,” said Bond.

This led to Microsoft agreeing to an 80/20 revenue split (the standard practice is 70/30). It only adds more fuel to the rumors that Kotick is out if the acquisition goes through. As always, time will tell.

Microsoft Expects PS5 Slim Later This Year

The next generation of gaming consoles may start after the next five years or so, but Microsoft believes Sony is launching a new PS5 later this year. Recent court documents saw it claim, “PlayStation likewise sells a less expensive Digital Edition for $399.99 and is expected to release a PlayStation Slim later this year at the same reduced price point.” It also believes that its “handheld version of the PlayStation 5”, likely referring to Project Q, is coming this year and costing less than $300.

There have been rumors of a PS5 with a detachable disc drive that will replace the current model. It allegedly entered production last April and will launch in September, while the present model will reportedly cease production by Holiday 2023. Sony hasn’t officially confirmed either of these things, and Microsoft didn’t specify whether this new model is the PS5 Slim they’re talking about, so we’ll have to wait and see.

The game is listed alongside other IO Interactive titles, such as the still unreleased Project 007, as well as the recent Hitman trilogy, and the studio’s older Hitman games dating back to 2000’s Hitman: Codename 47.

Back in September 2022, a financial report by IO Interactive revealed that the studio’s in-development titles, Project Dragon and Project 007, won’t be released until at least April 2025. This means that both games seem to be going through long development cycles, with the company even expecting lower profits during fiscal years 2023/24, and 2024/25, citing “long production phases”.

Project Dragon was first discovered through a report claiming that the studio was working on a fantasy RPG in partnership with the Xbox Game Studios publishing label. Exact details on the game are yet to be revealed.

As per a recent IO Interactive job listing, the studio is working on a game that will feature heavy multiplayer elements. The ad, which is for the position of Monetization Designer, says that the studio is heading “into the world of emergent multi-player on a unique unannounced project that we believe will shape the future for years to come of both our studio and the relationships we’ve built with our players.” IO Interactive is “seeking a game designer with experience in designing the monetization system.”

IO Interactive is, of course, known to be working on untitled James Bond game Project 007, but it’s more than likely that that will be a narrative-driven single player title- not to mention the fact that it isn’t an unannounced project.

It’s possible that the game being referenced in the listing is Project Dragon, which, as per reports, is an online fantasy action RPG in development exclusively for Xbox.

Either way, IO Interactive has said that it’s not going to be releasing any new games until at least 2025, so it’s going to be a while before we get any concrete details on what the developer has in store.

When exactly can we expect to see either of those two games though? It’s not going to be anytime soon, it seems like. As spotted by @DarkDetectiveNL over on Twitter, in its recent financial report, IO Interactive suggests that it doesn’t have any new games coming out for at least the next couple of years.

The developer states that though the launch of Hitman 3 led to strong profits and revenues the last couple of years, it is expecting figures to drop in fiscal years 2023/24 and 2024/25 (which ends on March 31, 2025). That’s due to IO Interactive expecting “long production phases ahead before the next releases hit the market.” The suggestion would be that the studio expects fiscal year 2025/26 (April 2025-March 2026) to see the launch of one of its new titles.

Meanwhile, IO Interactive recently also released a new map for Hitman 3 with Ambrose Island. A roguelike mode, Freelancer, launches later this year.

IO Interactive has published its Annual Report 2021/22 (year ending 31st March 2022).

Revenue came in at DKK 538m (~$72.4m), +7% YoY, more than 2x management expectations. Mostly thanks to a Xbox Game Pass deal.

Looking into mobile dev.

Project 007 scheduled after March 2025? pic.twitter.com/JlnZ5J4kyJ

— DarkDetective (@DarkDetectiveNL) August 31, 2022