Microsoft and Sony, two of the biggest players in the gaming industry, have recently announced a deal to keep Activision’s Call of Duty franchise on PlayStation consoles. This deal comes after Microsoft’s proposed acquisition of Activision Blizzard, the publisher of Call of Duty and other popular games, for $68.7 billion in January 2022. The deal has raised some concerns about the potential anti-competitive effects of the merger, as well as the future of Activision’s games on other platforms.
What is the deal?
According to Microsoft Gaming CEO Phil Spencer, Microsoft and Sony have signed a binding agreement to keep Call of Duty on PlayStation for 10 years following the acquisition of Activision Blizzard. This means that PlayStation users will be able to enjoy the best-selling shooter series on their consoles until at least 2033. The deal also includes future versions of Call of Duty and any other current Activision franchise.
The deal is similar to a 10-year agreement between Microsoft and Nintendo, but not the various deals Microsoft has struck with Nvidia and other cloud gaming platforms to bring Call of Duty and other Xbox / Activision games to rival services.
Why is the deal important?
The deal is important for several reasons. First, it shows that Microsoft and Sony are willing to cooperate and compromise on one of the most popular and profitable game franchises in the world. Call of Duty has been a staple of PlayStation consoles since 2006, and has generated billions of dollars in revenue for both companies. By keeping Call of Duty on PlayStation, Microsoft and Sony are ensuring that millions of fans will continue to enjoy the game on their preferred platform.
Second, the deal alleviates some of the anti-competitive concerns that have been raised by regulators and competitors over the proposed acquisition. Sony’s interactive entertainment division CEO Jim Ryan had expressed his worries that Microsoft would use its power in the gaming market to cement dominance or sabotage the PlayStation versions of Activision’s games. However, in a leaked email, Ryan also admitted that he was not actually worried about Call of Duty exclusivity and was confident that the game would remain on PlayStation for many years to come.
Implications for the stock market
Third, the deal has positive implications for the stock market. The announcement of the deal boosted the shares of both Microsoft and Activision Blizzard, as investors welcomed the news of a peaceful resolution between the two rivals. Microsoft’s stock rose by 0.51% to $345.75, while Activision’s stock rose by 1.08% to $128.50 on Sunday. The deal also signals that Microsoft is confident that it will be able to close the acquisition despite some regulatory hurdles. The FTC had sued to stop the deal in July 2022, but was denied by a federal judge. The EU had approved the deal in May 2023, while the UK’s Competition and Markets Authority said it was prepared to negotiate with Microsoft over the terms of the deal.
Conclusion
The Microsoft and Sony deal is a landmark agreement that will shape the future of the gaming industry for years to come. By keeping Call of Duty on PlayStation, Microsoft and Sony are showing their respect for their customers, their competitors, and their regulators. The deal also benefits both companies financially, as they will be able to share the profits from one of the most successful game franchises in history. The deal is a win-win situation for everyone involved, except maybe for those who were hoping for some exclusive content or features on their favorite platform.
