Microsoft offers Sony 10-year access deal for Activision's 'Call of Duty'

Michael Buckner/Getty Images Entertainment

Microsoft (NASDAQ:MSFT) president Brad Smith confirms the company's looking to fend off objections to its $69B Activision Blizzard (NASDAQ:ATVI) by offering rival Sony (SONY) a 10-year guarantee for same-day Call of Duty releases.

In a Wall Street Journal op-ed, Smith responded to recent regulatory tensions at home and abroad by saying Microsoft's acquisition of the videogame publishing giant (and its best-selling first-person shooter) is "good for gamers."

Following reports of a potential Federal Trade Commission antitrust lawsuit, Smith says "That would be a huge mistake. It would hurt competition, consumers and thousands of game developers."

The company's Xbox "remains in third place in console gaming, stuck behind Sony's dominant PlayStation and the Nintendo Switch (OTCPK:NTDOY)," and Microsoft has "no meaningful presence in the mobile game industry."

It's about modern innovation and offering consumers the options for cloud gaming, he says - for which Microsoft needs a strong library of popular games ("we simply don't have enough").

"Think about how much better it is to stream a movie from your couch than drive to Blockbuster. We want to bring the same sort of innovation to the videogame industry," Smith writes.

Sony is the "loudest" objector, he notes. "That’s why we’ve offered Sony a 10-year contract to make each new Call of Duty release available on PlayStation the same day it comes to Xbox." He adds they'll make the same commitment to other platforms.

Speculation about a potential long-term Call of Duty access deal has been rising as analysts weigh the likelihood that the deal can go through.

Comments

[ECUCHRIS]

Xbox is mobile....

[Vlad Deshkovich]

looks like things are getting tricky for the acquisition .. calling it a 50/50 for now

[Harsh Truth]

Sony should demand at least 100 years access deal!

[ECUCHRIS]

@ckbn Microsoft shouldn't even offer.

[SeriousUsername]

Oh the irony of "Mr. Exclusives" (because otherwise noone buys our stupid consoles) Sony complaining about access rights to another video game.
You can't even make a strong argument that this would make Microsoft too large. Activision is an insect to Microsoft. Also look at other companies seemingly allowed to evolve into 50% of the US economy (Apple).
Deal will most likely go through.

[Brodie Marschall]

@SeriousUsername Indeed. Activision Blizzard CEO Bobby Kotick shared with his employees that he thinks the deal will still close even though the FTC blocked it for now and they're gonna win the lawsuit. kotaku.com/...

[SeriousUsername]

@Brodie Marschall I wouldnt trust kotaku if they told me the ocean is blue.
Whatever, we'll see.

[cobth]

Maybe this is where all the legal resources for the FTX debacle went.... :)
haha.

Will see what happens to SBF and Co.......

[MoneyPig]

First, how corrupt is MSFT? The Xbox platform situation is much worse than this article presents, it's behind Google and Apple.

I will say it again, GOOG and APPL will destroy all the ATVI franchises if MSFT aquires them. MSFT doesn't have a device other than Xbox.

Second, it's just stupid. If anything MSFT needs to be broken up.

[AnyO]

@MoneyPig not seeing one coherent thought presented here.

[Harsh Truth]

@MoneyPig The only sensible intelligent comment on this topic.

[GillBates]

As an Apple shareholder, I would like to see them buy Netflix and continue to offer Netflix on non-Apple devices for 10 years to show they are totally not a monopoly. It's all about the long game.

[Anthony H. Steinmetz]

Only 10-year? The Franchise has been successful for nearly 20 and it definitely has the staying power for 20 more.

[ECUCHRIS]

@Anthony H. Steinmetz It's better than nothing.

[Solojif1]

They make video games. We aren’t talking about oil, food and medicine. This is a complete waste of the governments time.

[nicholas__t01]

@Solojif1 government IS a waste of time. Anything it touches it destroys or undermines.

[User 56360468]

If cloud gaming is the future, then Microsoft should offer every console and PC maker a cloud gaming app that can run their games from their server over a virtual screen and give them a cut of the revenues if it's pre-installed.
Sony could also change its software in the next 10 years to allow a PC-emulation mode, so people can run and install PC games too, since the PS5's CPU is a variant of the Ryzen 3000s and 4000s (AMD Zen 2). Having a second Windows operating system that the system can boot into should be pretty easy to do.

[Caywyn]

@Found.Alpha Most of this is already true to one extent or another. I believe most PC’s come with the Xbox app installed which allows access to game pass to download game and stream them. At any rate the last few I bought had it preinstalled as part of windows. I don’t think Microsoft is paying manufacturers to install it. The last Lenovo desktop I bought came with a trial of game pass.

As for Windows being on the console, in the case of Xbox it was and I suspect still is. When the Xbox one launched, it used three OSes. A low level boot OS that was running a version of hyper-V and when running an app it would launch in a (customized) version of windows. When you launched a game it would launch in the Xbox os. If you’ve ever used an Xbox and noticed how you can have one game and app open at a time and switch between them almost instantaneously without having to have the game/app reload, that’s because it’s two different OSes running and you’re switching between each VM. There’s quite a few benefits to doing this, but that’s a bigger discussion.

I believe the series consoles do the same as the one, as the software is basically the same, just updated hardware (with of course some features only usable on the newer hardware).

What they don’t have, of course, is a way to actually open a desktop. I don’t know that makes much sense on a console though. I guess that would allow you to load actual windows apps on the console, but you’d likely have a lot of trouble with that as it would open the door for issues. Delete the wrong Xbox system file, try to run something using the native CPU drivers (it is Zen 2, but it’s a customized Zen 2) etc.

[dandroidz]

@Found.Alpha and Apple should make iMessage available as an app to Android. Yeah no.

[FEWGEE1]

@Found.Alpha It's a load of rubbish. Microsoft boasted about "the power of the cloud" way back in 2012 before they released the Xbox One, and we still don't have the technology or broadband infrastructure to deliver it ten years later.

They should invest that $69 billion in the studios they own now, if they're so worried about "not having enough" games, rather than trying to monopolise the industry.

[petro2020]

A USA company wants to buy another USA company and a Japanese company is protesting. Ok, approved. Next subject please.

[bloozeman]

@petro2020 that's not how the global economy works.

[PrashantGokhale]

@petro2020 Japanese company sells in the US and has US shareholders =plus it is bad for consumers. Like healthcare is monopolized by Anerican companies and they are not good for the consumer

[careful investor 1]

@PrashantGokhale it's about games. It's not like healthcare.

[SuperPac]

Great deal, Sony. Take it and stop your anti-MSFT lobbying.

[anil92691]

SEC needs to start protecting US businesses, which are losing billions to EU penalties.

[P M D]

I'm in favor of the deal (even bought Activision as an arbitrage play), but the SEC's job is to protect investors, not businesses.

[TommyIrish]

ATVI looks likely to outperform the market next six months.

[Julian Beatty]

Not happening. Absolutely awful for gamers. Getting blocked. Short ACTI

[Pmg1959]

@Julian Beatty Why

[thirdcamper]

@Pmg1959 You'd think he'd be short ATVI, for starters.

[Julian Beatty]

@thirdcamper
Well for one, Activision owns a lot of other big franchises besides call of duty; Elder scrolls, Fallout, Warcraft and far more. A 10 year deal is useless in this case because its only temporary and regulators are focused on long term structural changes in the market.

The bigger issue is not so much the consolidation of the video game industry, but more so of the obvious and *guaranteed probability that Microsoft will use their vertical integration of consoles, windows, and now several large publishers that they bought out to kick sony out of the console market* by making AAA historic releases Xbox exclusive. Then we have game-pass/subscription issues where Microsoft will probably consolidate all the popular AAA onto their service and ratchet up prices.

Zero chance this goes through. There might be one FTC member dumb enough to approve this deal, but EU will very likely reject this deal (buying bethesda was already a stretch), and China almost certainly will never approve this thing. FV of ACTI is prob closer to 60.

[Tradevestor]

As expected anyway seekingalpha.com/...