Good news for anyone rooting for the Microsoft acquisition of Activision Blizzard: On Oct. 5, 2022, Brazil’s Administrative Council for Economic Defense (CADE) announced that it had approved the merger. After reviewing the acquisition, the regulatory body, whose mission is to ensure free competition in the country, had no restrictions. Likewise, in August, the General Authority for Competition in Saudi Arabia stated “no objection” to the proposed video game industry acquisition, making it the first country to approve the acquisition.
The Administrative Council for Economic Defense in Brazil stated, “Considering the huge popularity of Call of Duty, it is reasonable to infer that if Activision Blizzard games were no longer available on Sony consoles, PlayStation users could decide to migrate to Xbox or even a PC, to continue having access to franchise games.”
The regulatory body’s ruling continued, “On the other hand, it is also reasonable to assume that if upcoming Call of Duty games become exclusive to the Microsoft ecosystem, players loyal to the PlayStation brand could simply abandon the series, migrating their demand to other games available on their favorite console.
“Despite this, one cannot rule out the possibility that Microsoft may deem potentially profitable to adopt an exclusivity strategy on Activision games, even if a decision in this direction could result in the sacrifice of a relevant part of sales, users, and even the Call of Duty popularity. This is because, in theory, such a strategy could contribute to boosting Xbox sales, expanding the Game Pass subscriber base, and strengthening the network effects on the Microsoft ecosystem to offset any loss of revenue from the sale of games in the short term.”
Activision Blizzard and Competition in the Console Market
According to a report released on Oct. 4, 2022, the U.S. Federal Trade Commission could potentially rule on Microsoft’s proposed acquisition of the video game company that Bobby Kotick has been the CEO of since 2008 before the end of November. Meanwhile, Brazil’s Administrative Council for Economic Defense concluded that exclusive content, like Activision Blizzard’s Call of Duty, is traditionally “very important” for establishing competition in the console market, which is a major factor in how Nintendo and PlayStation have been positioned as market leaders.
“Exclusive games are a benchmark of competition between Microsoft and SIE [Sony Interactive Entertainment], although no company has so far developed or acquired an exclusive game that has decisively shifted the balance in favor of a console. This is because proprietary exclusive games are less popular and represent less revenue than third-party AAA games, which, until then, are available on Xbox and PlayStation,” stated the council.
In conclusion, it stated, “As already seen, Nintendo does not currently rely on any content from Activision Blizzard to compete in the market. In turn, Sony has several predicates — the strength of the world’s leading brand for more than 20 years, extensive experience in the sector, largest user base, the largest installed base of consoles, robust catalog of exclusive games, partnerships with multiple publishers, brand loyal consumers, etc., which should contribute to maintaining the competitiveness of PlayStation in a possible post-operation scenario, even in the face of possible loss of access to Activision Blizzard content.”
The central objective of the Administrative Council for Economic Defense is to protect competition as a way of promoting the welfare of Brazilian consumers, as opposed to defending the interests of competitors. “In this sense, although it is recognized that part of the users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision games — and especially Call of Duty — become exclusive to the Microsoft ecosystem, SG/CADE does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole,” noted the council findings.
Why Call of Duty Is a Popular Franchise
“There will always be Call of Duty games,” says Kotick. He explained that 1,600 people work in six studios worldwide to create content for Call of Duty on a regular basis. “We continue to increase investment in our development resources in order to meet the demand from our players,” stated Activision Blizzard. “Our teams are making strong progress on a broad pipeline of compelling content for established franchises, which we expect to drive renewed expansion in the business in the fourth quarter and longer form.”
Call of Duty: Vanguard was released in November 2021 for PlayStation 4, Microsoft Windows, PlayStation 5, Xbox One, and Xbox Series X/S. It became the second-highest selling game of 2021, behind FIFA 22. And gamers are still anxiously awaiting the release of Call of Duty: Modern Warfare 2 on Oct. 28, 2022.
