The Meltdown

We’ve been following this story for awhile now see here and here.

CoD Exclusivity

The main crux of Sony’s argument against the merger of Microsoft and Blizzard - that the Microsoft would make CoD exclusive - initially accepted by the CMA, has been completely reversed. The CMA reports that, after having seen new data, Microsoft making CoD an exclusive would “indicates that this strategy would be significantly loss-making under any plausible scenario”.

With that said, the biggest grievance Sony put forth to block the merger has been shot down.

Sony hasn’t had the best showing during this entire ordeal; from pretending their own developers are incapable of developing a CoD equivalent and making themselves look helpless if the merger commence as if it cannot compete to misleadingly arguing for a new console gaming category with the sole purpose of excluding the Switch - a reasoning the CMA initially accepted actually. And this last Nintendo related bit is where Microsoft cunningly found room to out maneuver Sony a second time.

Excluding Nintendo

Sony decided for the purposes of its argument that the Switch would not count because of the PS1 era ‘kiddy console’ trope (can’t believe Sony pulled this throwback out!) and because it isn’t a “high end” console.

Microsoft had strongly pushed back on Sony’s point that the Switch should not count, recognizing the Switch as not only a legitimate console, but also signing a 10 year deal with Nintendo to bring CoD over day and date.

For context, Sony initially dismissed Nintendo and the Switch as competition following Microsoft’s point that the Switch was proof that a console could be successful without Call of Duty, nullifying Sony’s claim that it cannot compete without the franchise. At that point, Sony dismissed Nintendo for other reasons mentioned here and was successful in getting the FTC and CMA to buy in to its framing.

This seems to have backfired quite ironically now, as it seems that lawmakers are accepting Sony’s argument that Nintendo is not competition - as Sony wished - but certainly not from an angle Sony hoped.

During a Senate finance committee hearing, Maria Cantwell, a democratic senator from Washington had this to say:

“I’m told that Sony controls a monopoly of 98% of the high-end game market, yet Japan’s government has allowed Sony to engage in blatant anti-competitive conduct through exclusive deals and payments to game publishers, establishing games that are among the most popular in Japan.”

Cantwell is accepting Sony’s ‘high end console’ argument, ignoring the Switch, to make the point that Sony has a 98 percent market share in Japan:

“I’m told that Sony controls a monopoly of 98% of the high-end game market, yet Japan’s government has allowed Sony to engage in blatant anti-competitive conduct through exclusive deals and payments to game publishers, establishing games that are among the most popular in Japan.”

- Sen. Cantwell

This is a valid point using the aforementioned argument put forth by Sony that the CMA accepted. By recognizing a ‘high end console market’ that does not include the Switch, again - which is what Sony wanted - it means Sony’s market share solely just compared to Microsoft’s market share, has a monopoly on the market. And the response was interesting as well:

“This is new for me, but let me take this back and I’m happy to follow up with you and your team on this”.

-US Trade Representative Katherine Tai

Of course, despite this being an accurate claim going by the imaginary console market Sony created, some folks feel there’s a reason this question was bought up…

Some folks around the interwebs believe these campaign contributions influenced the Cantwell’s question. There was an entire thread on ResetEra (now locked) that was pretty interesting for me to read through on the topic.

The big revelation here is that Sony’s third party practices will be looked into now - particularly how Sony may be manuevering behind the scenes to keep third party content off of XBox and/or GamePass. It will be very to see what we may learn from all this.

It looks as though this merger is going to go through. It will be interesting to see what happens next with Sony on this. Will they try another angle? Will Sony fold and sign a 10-year CoD deal with Microsoft like Nintendo, Valve, Nvidia, and Boosteroid have?

Time will tell!