Activision
Sony and Microsoft signed a binding agreement over the weekend ensuring that Call of Duty will remain on PlayStation for at least 10 years after Microsoft’s proposed purchase of Activision is complete. The agreement, which Sony had resisted signing for months, effectively ends a bitter battle between the two console giants over the alleged anti-competitive effects of Microsoft’s $69 billion Activision purchase, which was first proposed in January 2022.
The new agreement also effectively moots one of the most significant arguments made by the Federal Trade Commission in its federal case to block the merger, which failed to earn an FTC-sought injunction last week. And it’s likely not a coincidence that the agreement with Sony was announced just one day after a federal appeals court denied the FTC’s request for an appeal over that injunction decision.
The deal, as announced over the weekend by Xbox Chief Phil Spencer and Microsoft Vice Chair and President Brad Smith, doesn’t seem to include a promise of PlayStation access to any of Activision Blizzard’s other popular franchises (including Crash Bandicoot, Spyro, Overwatch, Diablo, and more). But the fate of Call of Duty has long been the major focus of both Sony and regulators. Court documents revealed that Call of Duty alone is worth at least $800 million in annual revenue to Sony and that up to 20 million PlayStation owners spend a significant portion of their console playtime on the series (including 1 million PlayStation owners who literally play no other games on the system).
A bitter history
Microsoft initially offered Sony a three-year Call of Duty deal last summer, an offer Sony publicly called “inadequate” at the time. Microsoft then upped the formal offer to a 10-year deal by late last year, adding to an informal promise of “eternal support” for Call of Duty on PlayStation.
Nintendo and Nvidia would sign similar deals securing Call of Duty for their platforms earlier this year. But Sony continued to hold out, arguing in UK legal documents that it couldn’t trust Microsoft’s promises on this score because of Microsoft-exclusive Bethesda titles and “the myriad ways Microsoft could circumvent its obligations.”
Sony also publicly expressed worries that Microsoft would only give PlayStation a “degraded” version of Call of Duty in an attempt to buoy the Xbox platform. But Microsoft has repeatedly promised that PlayStation Call of Duty will continue to match Microsoft platforms in terms of “release date, content, features, upgrades, quality, and playability.”
Sony’s public complaints have also conflicted with reports of the company’s private response to the news of Microsoft’s attempted Activision acquisition. In a private January 2022 email revealed at the FTC trial, Sony Interactive Entertainment President and CEO Jim Ryan said, “I’m pretty sure we will continue to see CoD on PlayStation for many years to come.”
And in March, an Activision Blizzard executive publicly accused Ryan of saying that he “[doesn’t] want a new Call of Duty deal. I just want to block your merger.” Ryan later confirmed in court testimony that he had told Activision CEO Bobby Kotick that he “thought the transaction was anti-competitive,” and that he “hoped that the regulators would do their job and block it.”
With Sony’s acquiescence and the FTC case losing significant steam, the UK’s Competition and Markets Authority stands as the only significant barrier left to Microsoft and Activision finally completing their merger. Microsoft and the CMA are currently discussing “how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA.”