What, me worry? —
In FTC trial, Microsoft also downplays cloud gaming as “stuttering… tiny… niche.”
Publicly, Sony has been adamant that Microsoft’s proposed acquisition of Activision would give Microsoft too much power over PlayStation’s access to key multi-console franchises like Call of Duty. Privately, though, Sony Interactive Entertainment President and CEO Jim Ryan seemed less concerned, according to a blockbuster email Microsoft presented Thursday during opening statements in a court hearing on the FTC’s attempts to block the Activision purchase.
“It’s not an exclusive play at all,” Ryan said in the January 2022 email, as read by Microsoft lawyer Beth Wilkinson. “They are thinking bigger than that and they have the cash to make moves like this.”
“I’ve spent a fair amount of time with both [Microsoft gaming head Phil Spencer] and Bobby [Kotick] over the past day,” Ryan continued in the email. “I’m pretty sure we will continue to see CoD on PlayStation for many years to come. I’m not complacent and I’d rather this hasn’t happened but we’ll be OK, more than OK.”
Microsoft hyped up the in-court revelation in a statement provided to Ars Technica: “Today showed Sony has known all along we’ll stand by our promise to keep games on its platform and made clear its work to lobby against the deal is only to protect its dominant position in the market.”
Ryan’s previously private email stands in stark contrast to Sony’s public statements on the proposed acquisition. As recently as this April, Sony was telling the UK’s Competition and Markets Authority that it worried Microsoft could undermine PlayStation by offering Sony a “degraded” version of Call of Duty in terms of performance, price, or even release date.
Sony also previously called Microsoft’s initial proposal of a three-year Call of Duty sharing deal “inadequate” last September. Sony has also refused to sign a subsequent 10-year Call of Duty deal that has been offered to other platform holders, a move Activision CEO Bobby Kotick said was an attempt to “sabotage” regulatory approval.
Less formally, Microsoft’s Phil Spencer has promised in interviews to release Call of Duty on PlayStation “as long as there’s a PlayStation out there to ship to.” Sony has cited the example of Bethesda’s post-acquisition Xbox exclusives as a primary reason why it can’t trust that kind of promise, and the FTC subsequently cited the same pattern as “powerful evidence” against approving the deal.
New Xbox exclusives and streaming pessimism
Elsewhere in the opening statement, Microsoft confirmed that Bethesda’s upcoming Indiana Jones game, first announced in 2021, would indeed be exclusive to Xbox and PC. But in a Finding of Fact document filed with the court, Microsoft said that “Xbox expects that many other future ZeniMax titles will be shipped on PlayStation and Nintendo.”
That same Finding of Fact document also includes some surprisingly frank discussion from Microsoft regarding cloud gaming’s technical and market deficiencies. Despite years of development, Microsoft notes that cloud gaming “makes up only a tiny fraction of the billions of hours of gameplay each year and has never achieved consumer demand beyond its current niche.”
The document also highlights cloud gaming’s “latency issues,” which can cause “‘stuttering’ effect[s] or lags in gameplay.” Because of issues like these, Microsoft reports that “a large majority of Xbox Cloud Gaming users report relying on the service to try new games in order to decide whether to download them natively to play, rather than streaming for regular play.”
Downplaying cloud gaming’s importance could be important to Microsoft’s legal arguments, especially after UK regulators cited cloud gaming market competition as the key reason they were blocking the proposed Activision purchase. Still, the pessimistic cloud outlook is striking to see from Microsoft after years of effusive cloud gaming hype from some corners of the company.