Activision purchase causes Sony headache, CADE documents reveal

The gaming world was in an uproar with the purchase of Activision Blizzard from ecosystem. And as this is an action that involves many markets, it is necessary to go through the scrutiny of many countries and their respective trade boards to prevent a monopoly from happening. This process is already underway, and a new chapter unfolded yesterday (01) when documents from the CADE (Administrative Council for Economic Defense) were made public. They reveal a concern of Sony with the acquisition of Activision, with a lot of relevant information, both from Sony and Microsoft.

game developers

According to Sony, anyone can start developing and publishing PC games. However, to develop a game of the “AAA” type, thousands of employees are needed, in addition to the need to have a budget in the hundreds of millions. Meanwhile, the games called indies can be produced and distributed by a single person.

Still, many of these games can hardly compete with major franchises. Sony uses as an example Call of Duty from Activision, Fifa from Electronic Arts and Grand Theft Auto from Take-Two/Rockstar.

Competition

Sony cites in its document that both it and the ecosystem and Activision have rivals with the technology, knowledge and money to create AAA games. Some of the examples cited by the company are the Epic Games, owner of Fortnite, Riot Games, of League of Legends, Ubisoft, of Assassin's Creed, Electronic Arts, of Fifa, and many others.

Even so, the company claims that none of them has managed to produce a franchise that could face the success that Call of Duty it has. THE Sony also says that the game of Activision should be treated as a separate game category.

The importance of Call of Duty

According to Sony, Call of Duty is a AAA game that has no comparison in the current market. She cites a study by GameDaily That say "The importance of Call of Duty for entertainment in general is indescribable. The brand was the only video game IP to break into the top 10 of all entertainment brands among fanatics, joining powerhouses like Star Wars, Game of Thrones, Harry Potter and Lord of the Rings.” She completes by saying that Call of Duty is so popular that it can prompt the buyer to select the platform on which to play the game.  

A Sony mentions that the Activision spend a lot of money to maintain the production of Call of Duty, even more so when maintaining an annual launch of the franchise. Each game takes between 3 and 4 years to be produced, and this is only possible thanks to the 4 studios responsible for development (Activision, Infinity Ward, Treyarch e Raven Software), in addition to the support of other subsidiaries of the company. She also mentions that other studios take care of the Warzone, battle royale of the company, and of Call of Duty: Mobile.

Still according to Sony, almost 3 thousand people work in the various processes necessary to make a game, such as development, publication and distribution. In addition, there was an interest in hiring another 2000 people in 2021.

Another point presented by the company was the amount of sales of Call of Duty. She claims the games have been at the top of the best sellers of the last decade, and no other studio can compete. She uses as an example the number of followers of the Facebook of the game, 24 million, against that of its main competitor, Battlefield, on the same platform, with 7 million. while on instagram Call of Duty has 12 million, Battlefield owns 2 million. 

Finally, Sony argues that gamers are loyal to the brand, as many follow Call of Duty since 2003. She argues that many players are already used to the game system, which improves with each new entry. And she ends by saying that even in bad years, like 2021, considerably weaker than others in a financial sense, the game of the day, Call of Duty: Vanguard, was still among the best sellers.

game distribution

A very interesting data was presented about the distribution of games in Brazil. According to Sony, a small portion of consumers have opted for Playstation 5 Digital Edition, giving more preference to the version with disk input. She claims that this is mainly due to the country's lack of internet infrastructure, and also thanks to the predilection for making payments with physical money.

According to Sony, the distribution of games by physical media brings a cost, production of packaging, inserts, media, logistics and everything else, but compared to the total values ​​of development, nothing very relevant. 

Game Pass

For Sony, one of the main reasons why the Game Pass grew so quickly was the input of content from the various studios acquired by Microsoft. She cites that since 2017, studio names such as Obsidian Entertainment, Bethesda, Double Fine and many others. And if they added the games of Activision service, would be a paradigm shift. This would happen, according to the company, by the simple fact that players take the content as a purchase motivator. 

According to the owner of PlayStation, Game Pass, today, registers an increase in the last five years in numbers between 60% and 70% of the world subscription market, and between 70% and 80% in Brazil. 

In 2020, before the purchase of Zenimax, Game Pass had about 10 million subscriptions, corresponding to a revenue of US$1.2 billion, considering a cheaper subscription of US$10. Now, in 2022, at the time when it announced the purchase of Activision, the number of subscriptions was already around 25 million subscribers, with revenue close to $ 3 billion.

Finally, the Sony says he doesn't know the time or expense needed to create a service that can effectively compete with the Game Pass. Since, according to her, everything she offers today is an improvement of her physical channels.

exclusive games

For Sony none of the exclusive games produced by both her and ecosystem tipped the scales in favor of one console or the other. She says that this type of game has less popular appeal and brings in less revenue than third-party AAA games available on both platforms.

Finally, the company says that the amounts generated by the Activision are extremely important to her revenue stream. She claims that the franchise games Call of Duty represent one of the largest third-party shares of the company's revenue

Microsoft's response

Microsoft has already responded to the points raised by the CADE, and pointed out that Sony recently launched a new service, playstation plus deluxe, which will add a series of games for its subscribers. Among the companies mentioned, there is Ubisoft, which will place titles like Assassin's Creed, The Division and many others. These additions could characterize the service of the Sony as a potential competitor to Game Pass.

Finally, Microsoft uses European Union jurisprudence that does not consider the existence of game genres, as many of them have more than one. Rocket League, one of the examples given, mixes sport, action and running, among many others. And it still presents an extensive list of games that can be considered competitors of Call of Dutyas the Apex Legends, Battlefield, Fortnite and many others.

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Source: CADE (Sony), CADE (Microsoft)