Microsoft’s acquisition of Activision Blizzard sets the path for the largest gaming industry merger. However, the acquisition has seen many complications, with consumer protection bodies rejecting the deal, making the merger seem unlikely.
The FTC recently filed an injunction to halt the acquisition, prompting Microsoft to challenge the decision in court. Following the recent court case, The Verge reports Activision Blizzard forced Microsoft into a new revenue deal, asking for more money to keep Call of Duty on Xbox.
Why It Matters: Call of Duty is one of the biggest gaming IPs of all time. Restricting the game exclusively to a single platform would undoubtedly harm competition, and this has become a massive point of contention for the deal.
In the latest testimony, Sarah Bond revealed that the CEO of Activision wanted Microsoft to sign the deal before they started working on Call of Duty for the new Xbox Series X|S consoles.
The usual share for games on Xbox is 70/30, with Xbox taking the latter half for each sale. However, Activision’s CEO demanded a staggering 80/20 share. Microsoft was forced to agree due to the game’s popularity.
Sarah Bond said:
“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.”
Activision likely demanded a bigger share to justify releasing Call of Duty on Xbox. Over the last decade, Xbox has lost the console market to PlayStation. According to Microsoft, the gaming giant had a 21% share in the industry two years ago.
Activision was likely aware of this fact and used it to its benefit. The Call of Duty Publisher previously had an exceptional relationship with Sony, collaborating with exclusive content and marketing.
Additionally, the testimony revealed that Activision offered Microsoft a marketing deal for Call of Duty. This would allow Xbox to showcase the latest Call of Duty games during their gaming showcase.
Sarah Bond stated that Microsoft was previously not allowed to showcase Call of Duty Vanguard’s Xbox release on their YouTube channel.
Microsoft has likely faced similar issues with other gaming publishers due to its position in the market. However, the $68.7 billion merger will allow the gaming giant to become a bigger force in the industry.
The latest court case is expected to accelerate the process of the regulatory decision between Microsoft and the FTC. The latter is not in favor of the deal, but Microsoft could win the court case to gain a huge advantage in the merger.
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