CMA Says Microsoft Would Lose 'Substantial' Money By Making Call of Duty Exclusive in 'All Plausible Scenarios'
Among the many findings in the more than 400-page report released by the UK's Competitions and Markets Authority blocking the acquisition of Activision Blizzard by Microsoft, the agency concludes that the fears put forward by Sony regarding Call of Duty exclusivity are unwarranted. In fact, the UK regulator determines that Xbox would lose "substantial" money if it ever tried to keep Call of Duty all to itself.
While the exact numbers have been redacted to protect the privacy of the third-parties involved (Sony, Xbox, and Activision Blizzard), the report specifically models two theoretical scenarios where Microsoft could attempt to remove Call of Duty from PlayStation platforms, before concluding that "it would not be financially profitable for [Microsoft] to engage in a total foreclosure strategy."
The conclusion is drawn from, among other things, the "critical diversion ratio," which is the rate at which PlayStation Call of Duty players would need to switch over to Xbox in order for it to become profitable for Microsoft, and how much those new players are likely to spend on Call of Duty in the five years following a total foreclosure strategy by Microsoft. By analysing the lifetime total value (LTV) of Call of Duty players, the CMA estimates that Microsoft would see a net loss in the billions over those five years.
The CMA's analysis takes a variety of factors into account, from the potential reputational hit to Microsoft were they to go back on their public statements about Call of Duty exclusivity, to the benefits to Microsoft's Game Pass subscription, Microsoft's history of keeping certain exceptionally popular franchises multiplatform (e.g. Minecraft), and more. Ultimately, that told the story to the CMA that any scenario where Microsoft pursued an exclusivity strategy around Call of Duty would result in shortterm and longterm losses that wouldn't incentivize that kind of move.
Previously Sony has claimed that they "cannot protect against the loss of Call of Duty," and said that Microsoft making it exclusive or downgrading its performance on their platform would cause irrepreble damage to their company. Meanwhile, Microsoft has continued to assure regulators that they would ship Call of Duty on PlayStation consoles for as long as they exist.
Despite the CMA's conclusion in regards to Call of Duty, they ultimately decided to block the merger on the mostly unrelated matter of cloud gaming, where they fear Microsoft's cloud infrastructure and subscription service could result in a monopoly that Sony and Nintendo would be unable to compete with.
We've learned a lot more from the CMA's final report, including that the regulator doesn't think Nintendo platforms can run Call of Duty, and how much money major publishers say their games cost to make. For a deeper dive into what's going on with the deal overall, check out our explainer of what's next, and why cloud gaming, not Call of Duty, may kill the acquisition.
Travis Northup is a writer for IGN. You can follow him on Twitter @TieGuyTravis and read his games coverage here.
Source: IGN
