Microsoft’s $69 million purchase of Activision Blizzard is in court. On Thursday (22), the company began its battle in the courts to prove that the acquisition does not pose a risk to the gaming market. And for that, she admits: Xbox lost the console war.
In a court filing, Microsoft reveals that since it was launched in 2001, “the Xbox console has consistently ranked third among the three competitors, behind PlayStation and Nintendo in sales.”
The company also reveals some numbers about the market: the Xbox has 16% of console sales and 21% of the installed base, as the number of current users is called.
PlayStation and Nintendo’s shares have been censored, but previous documents speak of 34% and 50% of sales, respectively.
Microsoft admits this to argue that the purchase of Activision Blizzard is part of a bet on a different strategy: making money selling games and not consoles.
The hardware would even be sold below cost. This would be a way to subsidize players so that they generate revenue by buying games and accessories.
It’s not the first time Microsoft has appealed to this argument. In December 2022, the company further said that only 10% of exclusive titles are on Xbox, versus 40% for PlayStation and 50% for Nintendo.
Sony does not believe it will lose Activision games
In U.S. courts, the Federal Trade Commission (FTC) has filed a lawsuit against the purchase of Activision. The agency fears the acquisition could turn games like Call of Duty into Xbox exclusives.
Microsoft denies it — and, apparently, even the competition doesn’t think that’s the case.
In an email also revealed on Thursday (22), Jim Ryan, head of PlayStation at Microsoft, says that the purchase “is not even a move to have exclusivity.”
“They’re thinking about something bigger than that, and they have money for things like that,” Ryan writes in the message.
He also says he’s spent enough time talking to Phil Spencer, head of Xbox at Microsoft, and Bobby Kotick, CEO of Activision Blizzard, that he believes Call of Duty will continue on PlayStation for “good years.”
“I’d rather that didn’t happen, but we’ll be OK, better than OK.”
Microsoft races against time
The company is in a hurry to defend itself. The FTC has filed for an injunction to pause the purchase of Activision, and Microsoft is trying to prevent that from occurring. If it doesn’t, the deal would be barred until Aug. 2, when a hearing would be held.
That date is a problem for Microsoft. Under the terms of the acquisition of Activision, the companies set the date of July 18, 2023 as the deadline to close the deal.
If this is not possible, both can rediscuss the agreement, but Microsoft has already said: it will give up the purchase.
And it’s not just in the U.S. that’s the problem. In the UK, the Competition and Market Authority (CMA) vetoed the acquisition. For the agency, the problem is in the cloud gaming market: Microsoft would start far ahead of other competitors.
