Microsoft is a $2 trillion market cap company that is basically printing money via their dominant position in plenty of other industries, and have been using those profits to finance ever larger takeovers to monopolize the nascent game subscription industry, after two decades of burning money getting a third place in the console industry. That’s textbook anti-competitive behavior, and there has to be some point where the regulators put a stop to it.
Sony is a $100 billion company, whose business these days is primarily games. They aren’t using profits from other segments to prop up the gaming segment and drive out the competition. They aren’t making one of the largest acquisitions in the history of the world to try to sow up the new market. (I know y’all love to go “but what about Bungie” here; well, there’s a pretty big difference between a $70 billion deal for one of the giants of the industry and a $3 billion one for a single game studio.)
I really don’t understand why you think there is any similarity here.
I’m done. I’ve said my bit. Carry on with the Sony bashing and how important it is that Microsoft management take over for Activision-Blizzard. It’ll make the gaming future the greatest it could ever be. Microsoft has the most amazing track record after acquiring game studios.
Also - yes, Xbox Cloud exists. By all accounts it’s good, but it isn’t on par with a native experience. The only platforms with a native Game Pass client are the Microsoft Xbox consoles and Microsoft Windows. So the argument that they’re moving away from consoles - while true - doesn’t tell the entire story.
I specifically mentioned they will sell both ways, as that is their current business model. Why would they stop doing that, when they can get money from the people who don’t want to subscribe that way?
But, I don’t know what you are arguing about Microsoft for, this is how literally every live service game works now anyway. You can have a hard copy of the disk, but when the servers are shut down you lose part of, if not all of the game anyway.
I don’t think it is a good thing, but it is certainly the way the entire industry is moving with games as service model. I still like to buy physical copies of most single player games for this reason. I want to have a copy that will still work when the servers are down. I mean, this is how literally every older console will be working with games purchased digitally in the future. Nintendo cut off the e-shop and access to all of the virtual console library you might have purchased. Hope your wii with those games downloaded won’t die. Every digital version of a game you own is beholden to the same rule of the games company deciding when you can and can’t play, regardless of platform. This is the trade-off you have for convenience of digital games.
If consumers don’t like the digital releases of games or subscription to game pass, they won’t buy it. The problem is, they are, and that is where the market Microsoft is chasing.
Sony is doing literally the same thing with PS+, Nintendo moved the virtual console to a subscription service that means you don’t own any of those classic games anymore.
You are arguing with the industry as a whole, not just Microsoft here.
So, to be clear, the point I was making is that exclusives have been critical to every generation of consoles, not just the PS4/XboxOne generation, which is something he ignores entirely. Exclusives don’t just move console hardware, but they help lock consumers into an ecosystem within which they will buy more games – and the console maker will get a piece of every one of those sales. This is why exclusives have been (historically) important.
Furthermore, while I completely agree that Microsoft is trying to move away from the console hardware side of things (see: the five billion Samsung TV commercials advertising Gamepass), they can’t do that unless/until Gamepass utterly swamps their traditional console market, and that hasn’t happened yet. While I like Microsoft’s future strategy (gaming anywhere, on any connected device), right now that’s a relatively small part of the pie. Microsoft’s ongoing revenue will come not just from Gamepass, but also on the content that they put out on disc or digitally outside Gamepass. So, for the near term at least, whether games are exclusives may actually be important, since it may help lock consumers into an ecosystem.
The question then is whether Microsoft would make these games – and in particular COD – exclusives. Given they’ve been willing to commit to a decade of releases, I don’t think keeping them exclusive is really their strategy, but the FTC’s arguments seem to hinge on that point.
I mean, that is why I think ultimately this deal will be made. Microsoft will obviously give up any exclusivity the FTC warrants is fair to get this deal done. Exclusivity doesn’t matter if they can get the games on game-pass as it makes their service all that more attractive. Sure you can buy it on the PS5, but why would you? If you get game-pass, you can play on literally every device you could want to, with cross saves and cloud capability. Either way, it is the customer’s choice then, and I don’t think that the FTC will have much of an argument on the anti-competitive nature of this if Microsoft caves on a lot of that stuff.
The future competition between legacy console manufacturers will be platform, and not hardware based, and Microsoft is looking to prepare for that future with this deal.
Sony is effectively doing what the FTC would call anti-competitive, by making a third party studio sign exclusivity deals with them. Nowhere near on the scale of what Microsoft would do with Activision, but if the FTC is trying to argue what Microsoft is trying to do is uniquely anti-competitive, Sony, which is the industry leader in games is doing the same thing with an iconic games franchise (Final Fantasy)
Still, not the same as absorbing Square Enix within Sony, but… that is something that has been rumored for a while. If the FTC blocks Microsoft buying Activision, surely they would block that acquisition too right? Would the FTC step in if Microsoft paid Acitivision the money to make COD exclusive without buying the company?
Again, I think it was stupid for the FTC to focus on exclusivity claims for titles as part of their lawsuit, as this has been the standard business practice for as long as the industry has been around. The focus really needs to be on games-subscription and streaming services, which Microsoft would gain a huge benefit by making the Activision library part of their streaming-subscription portfolio for which there is not really an equal. There is no game-pass competitor (really) and that is not good for consumers, especially if it gets an even larger library.
Square Enix is 1/10th the size of Activision. They’re worth less than what Microsoft paid for Bethesda. (A deal that you might remember was not blocked by regulators). So no, it’s not at all obvious that an attempt by Sony to buy Square Enix would be blocked. And it would not be a sign of some kind of anti-Microsoft conspiracy. Their attempt to buy Activision is extraordinary in many ways, and outside of this bizarre rah rah Microsoft echo chamber of a thread it was never a surprise that this ran into regulatory problems.
Does not seem like 10 times bigger to me, in terms of revenue generating potential.
Keeping in mind that Sony (24B) is also already ahead of Microsoft (16B) in annual revenue.
The Activision/Microsoft merger would make Microsoft games division slightly bigger than Sony is now. According to 2021 revenue figures. Sony buying Square Enix would make the industry leader (console gaming) even bigger
Zenimax’s revenue, before they were bought, wasn’t even in the billion category
This is talking about the companies as a whole, not just the games divisions.
I was very specifically talking about annual revenue in my post. Market cap is a stock valuation metric, annual revenue is a measurement of the actual sales a company is making. There are plenty of companies with inflated market cap and low revenue. I think that looking at Revenue is far more important than market cap, in this case, because it is a direct reflection on the value of the portfolio of IP being purchased. But I guess it is a difference in opinion on how to look at the valuation of each company. Whether you value what the stock price is vs what the actual annual sales are.
In the context of competition, the size in the industry in question is what is relevant. Soiny’s TV business and MS’s office software business don’t matter.
Companies doing similar revenues have similar importance to the industry (in general), but one might be vastly more profitable and therefore have a much higher market cap. But that’s not so relevant from the perspective of how much of the market they control.
That isn’t true when a company can leverage its domination in one line of business to benefit another, but in Microsoft’s case it’s using its massive warchest from office and services to subsidize gaming. That wouldn’t be an issue on the regulatory side, but it does give them a substantial advantage.
Another point, Game Pass is the “Netflix of gaming”, right? But Netflix itself is in a spiral right now so perhaps that dominant position doesn’t matter quite as much as it seemed a year ago.
Look, I don’t like cross subsidy and I don’t like exclusives, but many posters, yourself included, have pointed out that that’s just the way the game is played in this industry. (cf the Epic thread)
It’s funny how suddenly it’s not allowed when its MS doing it. At least there’s an actual business model behind what MS is doing, so the cross subsidy is less odious then in the case of the Epic giveaways.
The Netflix of gaming thing is interesting - Netflix made a lot of sense as a business when there was no big competition, but once there are lots of big streaming services they all start to look less appealing as the content gets spread between them - they started to look more like a media company (because their value offering was based on the content they could provide access to) than a tech company (because their value offering was based on how they provided access to content).
This kind of subscription services represents a good thing for consumers, but competition weirdly potentially makes it less good for consumers. Not sure what should or will happen here.
I find the argument of “Microsoft has an unfair advantage because of a thing they’re doing that Sony just refuses to bother doing” hard to swallow at the end of the day, in regards to Gamepass.
The arguments of Microsoft being Microsoft and being able to leverage that into gaming is a more credible argument to me (not sure I agree with it, but at least it’s a reasonable one to make).
I feel like this deal would be easier to stomach if Xbox was a separate company than Microsoft.
But, then it would be hard to compete with Sony, which sells TVs, phones, cameras, movies, etc.
Both Xbox and Sony have a large parent corporation of which they are part of, which is just the reality we are in. Nintendo and Valve are the only platform holders with no megacorp behind them.
I wasn’t arguing it should be regulated because they’re leveraging their other businesses as they’re largely unrelated. Sony used its profit selling headphones to buy Bungie after all. If Microsoft didn’t allow Steam to run on Windows, for example, that would be a clear violation.
Competition is better for consumers, always. Netflix has tons of competition, that’s awesome. TV shows and movies move around to the highest bidder, and that forced Netflix to commit to building their own content library-- more stuff for us to watch. Yes, you can’t just subscribe to Netflix and Amazon and walk away like 5 years ago, but all those other services? They’re releasing exclusive content too.
There’s no reason why Sony, EA, Ubisoft, etc, couldn’t do the same thing as Microsoft. They simply aren’t willing to burn billions of dollars to purchase subscriptions and bribe developers with guaranteed income. When Microsoft turns off the spigot, finally kills the loophole, and increases Game Pass pricing, then meaningful competition will happen. Will it be an amazing deal like Game Pass Ultimate for $4.19/month? Hells no, son. But MS is not making money on that, it isn’t sustainable.
Note this is very different from purchasing Activision, which gets those studios’ products exclusive forever.
I think ending the Paramount consent decrees warn’t really much of a win, so not too excited about the brave new “competitive” future where every studio* exclusivily distributes through their own subscription service either.
(*I guess it’ll just be Disney in a few more years…?)
