There is a war between Sony and Microsoft to acquire some of the largest studios and the parent companies of these game developers. This war is driven by a desire to gain exclusive access to some of the most sought-after titles and franchises in the gaming industry. As these studios and parent companies own the rights to the titles and franchises, whoever acquires them will be able to control the production and distribution of the games, as well as any potential sequels and spin-offs. This will give them an edge over the competition and potentially result in increased profits.
Sony Corporation is a Japanese multinational conglomerate corporation headquartered in Tokyo, Japan, and one of the leading electronics companies in the world. Sony Corporation is renowned for its innovative technological products and services, making it a leader in the global electronics industry. Sony has been able to achieve this through its constant pursuit of cutting-edge technology and its focus on delivering products and services that meet the needs of customers. By continually investing in research and development, Sony has been able to stay ahead of the competition and maintain its position as a leader in the electronics industry.
Sony PlayStation Studios is a video game development studio that is owned by Sony Interactive Entertainment. The studio is responsible for developing some of Sony's most popular video game franchises, such as PlayStation All-Stars Battle Royale, God of War, and Uncharted. Sony PlayStation Studios has experienced a great amount of success due to the quality of their games. They are constantly striving to find new ways to innovate and push the boundaries of what can be done in video games, and their games have become some of the most beloved in the industry.
Microsoft Corporation is an American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses, supports, and sells computer software, consumer electronics, personal computers, and related services. It has become one of the world's largest software makers by revenue, and one of the world's most valuable companies. Microsoft is also the world's third-largest personal computer vendor by unit sales. The company also develops the Windows operating system, which is the most widely used operating system in the world. Microsoft also produces a wide range of other software for desktop and server computing, as well as applications for mobile devices. It also offers cloud computing solutions and Artificial Intelligence (AI) services. Its best known software products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge web browsers.
Microsoft Studios is the video game production wing of Microsoft, responsible for the development and publishing of games for the Xbox, Xbox 360, Xbox One, Games for Windows, Steam, Windows Store, and Windows Phone platforms. It is well known for producing critically acclaimed and commercially successful franchises such as Halo, Gears of War, Age of Empires, and Forza Motorsport. Microsoft Studios has been a major player in the video game industry for nearly two decades and has consistently produced some of the most popular and acclaimed games in history. It continues to develop and publish high-quality titles for a variety of platforms, and its franchises remain some of the most beloved in the gaming world.
Microsoft and Sony are locked in a tug of war within the gaming industry. Both companies are trying to gain a larger share of the gaming console market. Both companies have released new consoles in recent years and have been competing with each other in terms of features, prices and exclusive games. This competition has driven technology and innovation forward, with both companies trying to outdo each other in terms of features, graphics, and more. This competition has also led to more affordable prices for consumers, as both companies are trying to undercut each other in order to entice more customers.
Bungie, the company that developed the "Halo" franchise and the "Destiny" video game, was acquired by Sony. The move was seen as a strategic one by Sony as they looked to expand their portfolio of exclusive games. They also saw an opportunity to tap into Bungie's rich history in the gaming industry and leverage their established fan base. Sony was looking to create a large library of exclusive titles to compete with other gaming platforms. Bungie's games have been some of the most popular and successful titles in the industry, and acquiring them allowed Sony to quickly establish themselves as a major player in the gaming market.
How does Microsoft plan to proceed?
Microsoft has responded by announcing its intent to acquire Activision last year. The merger was seen as an appropriate move by Microsoft to expand its gaming presence in the industry and establish itself as a dominant player in the market. With the acquisition, Microsoft will access Activision Blizzard's extensive game portfolio, including Call of Duty, World of Warcraft, and Overwatch.
Investors were encouraged by Activision Blizzard's better-than-expected revenue, driven by strong digital game sales across several blockbuster franchises. The company also reported strong growth in active monthly users and engagement in its free-to-play games, which further boosted investor confidence. Activision Blizzard has an impressive portfolio of products and services that appeal to gamers. In addition, it has a robust pipeline of original content that will drive future growth. The company's leadership team is also experienced in navigating the video game industry. Activision Blizzard has had several new releases, such as "Call of Duty: Warzone" and "Diablo Immortal", that have succeeded. Additionally, the company has seen a surge in in-game purchases, which have driven revenue.
In a $68.7 billion dollar cash deal, Microsoft is being challenged by EU regulators regarding such a large purchase.
This is because Microsoft is seen as a potential monopolistic force in the gaming industry, and regulators want to ensure competition is maintained. Microsoft's acquisition of Activision Blizzard would give them control over a large portion of the gaming industry, and this could lead to unfair practices. This warning has pressured Microsoft to prove that the acquisition will not hurt European competition.
David Cuddy, a spokesperson for Microsoft, stated, “We are committed to solutions and finding a path forward for this deal. We are listening carefully to the [European Commission’s] concerns and are confident we can address them.”
The Commission's assessment will focus on whether the deal could reduce competition in the European Economic Area markets for video games and related services. The Commission is concerned that the acquisition would give Activision Blizzard the ability to raise prices or reduce quality of services in the EEA markets, leading to reduced consumer welfare. They are also assessing whether the transaction would stifle innovation or create potential barriers to entry for other competitors.
In a statement concerning the November investigation, Margrethe Vestager, the Commission's executive vice president in charge of competition policy, stated, “We must ensure that opportunities remain for future and existing distributors of PC and console video games, as well as for rival suppliers of PC operating systems."
The FTC is concerned that the acquisition would give Microsoft too much power in the cloud computing market and would potentially stifle competition. Microsoft has argued that the acquisition would create more competition in the market, not less. Microsoft has argued that the deal is beneficial for consumers and competition, and will ultimately benefit the public.
Microsoft's argument is that it would help to increase the competition in the market, which would result in lower prices and better products for consumers. Additionally, Microsoft would be able to compete with Sony on the Call of Duty franchise, which would create a more competitive gaming market.
Sony's concern may be understandable, but Microsoft has assured gamers that no matter what, they will always have access to the popular Call of Duty franchise on PlayStation.
As part of this deal, Activision Blizzard has also agreed to release Call of Duty games on Nintendo for a period of ten years, assuming the Activision Blizzard deal is completed. This deal will give Nintendo gamers access to some of the most popular first-person shooter games in the world. This not only shows Microsoft's commitment to ensuring gamers can play the popular franchise on their preferred platform, but also demonstrates the potential for cross-platform play and collaboration between the two companies.
What does Activision think of the situation?
Kotick argues that the acquisition is beneficial for the industry, allowing the two companies to create higher quality games and experiences for gamers. Clearly, Sony's PlayStation has an established customer base and an even more significant share of the gaming market, creating an imbalance of power that could be addressed if the Microsoft deal were approved.
Kotick explained, "I think what we're experiencing right now are regulators who have very little experience with our industry." According to Kotick, "There's probably a lot of consolidation that could happen over time. It's an extremely fragmented industry, and today the dominant players are Japanese and Chinese companies. And so I think as they're starting to learn about the industry, they're realizing that that's an unfounded concern.
"You start with, 'What even is Call of Duty?' It's a military simulation that's based on military experiences through the course of history. There is nothing proprietary about that as an idea. If Sony, for example, wanted to make games based on [the] military, they have a film studio and a library of television programs that are all inspired—like they've just done with The Last of Us, this fantastic new show that's on HBO. But they created this program from the ground up based on a videogame. So there's an enormous amount of competition. I think when regulators start to understand that, they'll actually think about this transaction differently," according to Kotick, Activision's CEO.
The Microsoft-Activision acquisition continued to be discussed by Kotick with Fox Business. In his statement, he stated that Sony has not responded to Activision's telephone calls.
"Sony's not on the phone to us. In fact, they're not returning our phone calls," Kotick stated. "And so I think one of the things that's surprising to us is, this is the time where ordinarily we'd be talking about the future and new opportunities together for partnership, and they just haven't been returning our phone calls. And so I don't know that we're as valuable as maybe they've represented to the regulators that we are."
"People have tried for years to create adaptations of videogames, and they have not done that successfully," Kotick stated. "It's one of Sony's enormous competitive advantages, is that they have a television and film capability, and this rich library of intellectual property. And so they were able to do something that no other company has been able to do. And I think they did it because they have an extraordinarily talented group of people at the developer that made the game, and they were really able to take advantage of the resources of Sony."
"And this is something that we and Microsoft will have to compete against—and Microsoft doesn't have a film studio, they don't have a film library, they don't have a television division, they don't have a market share division of music that I think must be 35 or 40% market share of the music industry. [Sony] can use all of those assets in unique ways that Microsoft doesn't have the ability to do."
In his interview with Fox Business, Kotick raised a noteworthy point in regards to Sony's influence on the media industry at large. Microsoft is preparing for war with Sony, a formidable force to be reckoned with in the gaming sector. To give Microsoft a fighting chance, the deal must be pushed through, according to his position in this matter.
Following the interview, Liz Claman told the CEO, "You kind of just made the case for why it's not negative for competition."
Sony has been expanding its gaming presence over the past few years, and buying Take Two Interactive could be a strategic move to solidify their position in the gaming industry. Additionally, Take Two Interactive has a number of popular franchises, such as Grand Theft Auto and Red Dead Redemption, which could help Sony further expand its reach.
Is Sony considering the purchase of Take-Two Interactive?
What are the chances of acquiring Take-Two Interactive?
Do the American and European regulatory bodies appear to be overreacting in this regard?
Is it appropriate to allow billionaire juggernauts to dominate large parts of the gaming industry?