In a new document sent to Brazil’s Administrative Council for Economic Defense discussing the Activision Blizzard acquisition, as reported by VGC, Microsoft further addressed some of Sony’s concerns regarding the successful first-person shooter series becoming an Xbox exclusive, saying that turning Activision Blizzard’s games exclusive wouldn’t be profitable: “Regardless of how unsurprising Sony‘s criticism of content exclusivity is – given that PlayStation’s entire strategy has been centered on exclusivity over the years – the reality is that the strategy of retaining Activision Blizzard’s games by not distributing them in rival console shops would simply not be profitable for Microsoft.” “Such a strategy would be profitable only if Activision Blizzard’s games were able to attract a sufficiently large number of gamers to the Xbox console ecosystem, and if Microsoft could earn enough revenue from game sales to offset the losses from not distributing such games on rival consoles.” In addition, making games like Call of Duty exclusive to Xbox comes with title-specific costs that, added to the lost sales on other platforms, would result in Microsoft not being able to offset the losses, as exclusivity wouldn’t lead to higher revenues in the Xbox ecosystem, even more considering Microsoft’s strategy and Sony’s extremely loyal userbase. “Such costs, added to the lost sales estimated […] above, mean that Microsoft would not be able to offset the losses by earning higher revenues in the Xbox ecosystem as a result of implementing exclusivity.” “This is especially true considering (i) the ‘gamer-centric’ – as opposed to ‘device-centric’ – strategy that Microsoft has pioneered with Game Pass, and (ii) the fact that PlayStation has the most loyal users across its various generations, with all indications that brand loyalty accrued in previous rounds of the ‘console wars’ suggesting that PlayStation will continue to have a strong market position.” Even if making Call of Duty an Xbox exclusive would turn out to be profitable, Microsoft feels that it would have no competitive impact, given the intense competition in the game publishing market and the high degree of userbase loyalty of the competitors. The full document sent to Brazil’s Administrative Council for Economic Defense can be found here.
