I think it was SA that was public, but Kotick mentioned "multiple" approvals at the time which we think was referring to UAE but they don't share that info. This is #3
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I was specifically talking about the conclusion from the EU, which like the Zenimax deal and all other deals will be published in the Official Journal once they're done.
To me, the only real place regulators could and should have some teeth is cloud infrastructure. To me, that is absolutely something only a few companies can actually create and maintain. Those companies hold the keys and can let only the 'competitors' they want onto the highways. This is exactly something regulators should and hopefully will regulate. Concessions in the fair use of that infrastructure makes sense and are things I hope happen. To me, it's what regulators should be regulating.
That doesn't mean they should hinder new and emerging markets for a specific service on the infrastructure. What they should be doing is getting concessions about the fair use of those pipes. That way, anyone who does want to get into this emerging market can get fair treatment so that they can compete. It does make sense to me that FAAMG and a few others are in a particular position to put the thumb on the scales in an anti-competitive way in this regard. It should be scrutinized and regulated.
Anything with forcing companies to give access to their IP to other companies is something else. Anything to do with individual IP being forced to, for instance, go on a competing streaming service, is not something regulators should be wading into imo. That is a pandora's box of bad.
That doesn't mean they should hinder new and emerging markets for a specific service on the infrastructure. What they should be doing is getting concessions about the fair use of those pipes. That way, anyone who does want to get into this emerging market can get fair treatment so that they can compete. It does make sense to me that FAAMG and a few others are in a particular position to put the thumb on the scales in an anti-competitive way in this regard. It should be scrutinized and regulated.
Anything with forcing companies to give access to their IP to other companies is something else. Anything to do with individual IP being forced to, for instance, go on a competing streaming service, is not something regulators should be wading into imo. That is a pandora's box of bad.
Nvidia's business model is interesting/unique, as it's effectively like a B2C version of Ubitus whilst owning part of the tech chain necessary i.e., their own GPUs at cost. No need to produce their own content or require ports, and they can partner with platforms such as Steam where users already have a library/can purchase games from (with licensing buy-in from studios/publishers).
In terms of users, it's hard to gauge precise numbers across the board. GeForce Now had 20M users as of August 2022, but that includes the free tier and they don't publish paid user numbers. Same with both GPU & PS+, total sub numbers might be published but it's an additive package with a content library.
Microsoft unloaded in those redacted statements they sent them
Google said they had no problems to Brazil then months later made the decision to shut down stadia, caught wind of Brazil approving the deal without remedies, and booked a ticket to Brussels ASAP.
nope, everything's in here. No new threads
There's no "endgame".
If there are people who want console/pc experiences w/o owning consoles/PCs, cloud gaming providers would love to attract these customers. But this segment of the market would be complimentary.
If we ever get to a point where "exclusive streamers" are the primary customer, it will be because these services were already a hit with customers who stream and play locally.
Last month, Kotick suggested it had already received regulatory approval "from a couple of countries". So its at a minimum of three now. Idas, in the first post here, suggests the U.A.E. is the likely other country.
Yup. Defining the market (and then arguing the deal would be anti-competitive in that market) could be a headache... They've really avoided doing so in previous rulings so this decision could have major impact on how gaming is regulated.
Pretty much my stance on it. Cloud infrastructure is essentially a utility in this modern world. Fair & equitable access to it enables competition to strive in new/emerging markets.
I might be ELI5-ing this in terms of what I'm getting at, but what exactly should be regulated? There are companies out there have spent decades building up cloud services for themselves and others to use. How can 'fair use' be applied to companies who have moved decades worth of money and man-power vs companies just wanting to get their feet wet in it.
Most likely UAE. Kotick mentioned that "a couple" of countries had given the green light when Saudi Arabia gave the approval
OP
OP
Oh! That's why they updated the site 15 days ago.
I start reading it (good thing that I don't have any meetings tomorrow xD). I'll post some highlights later.
The conclusions in English (number 5 sounds like a dig to Sony :s )
1.- Regarding the horizontal overlaps verified in the markets of game publishing, game distribution, online advertising and licensing for merchandising products, the analysis carried out indicated that the Operation would not be able to promote significant changes in their respective offer structures, in any of the scenarios considered - either because the concentration generated was less than 20%, or because the low variation of the HHI pointed to the inexistence of a causal link between this AC and possible possibility of exercising market power, according to parameters defined in Resolution No. 33, of April 14, 2022, from Cade.
2.- With regard to possible vertical effects , an attempt was made to assess whether, as a result of the Transaction, Microsoft would have the ability or incentives to close any of the vertically related or complementary markets.
3.- As for the possibility of closing the game publishing market (upstream), it was found that, despite Microsoft having control of a relevant portion of the console and digital game distribution markets (downstream), the company would not have incentives to make it difficult for publishers competing with Activision Blizzard to access its platforms, as this would necessarily imply a reduction in quantity and variety of the catalog of games available in the Xbox ecosystem, making the company's products and services less attractive to consumers.
4.- With regard to the possibility of closing downstream markets , the analysis pointed out that, despite their relevance and popularity, Activision Blizzard games – and in particular the Call of Duty series– would not be essential assets to the performance of Microsoft's current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital stores and multiple game subscription services for PC and consoles). Thus, even if the Activision Blizzard game catalog were to become exclusive to the Microsoft ecosystem after the Transaction, SG/Cade considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
5.- Furthermore, it is important to highlight that the central objective of CADE's activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors . After all, one cannot lose sight of the fact that the holder of the legal assets protected by Law No. 12,529/2011 is the collectivity, and not the competitor/economic agent as an individual entity. In this sense, although it is recognized that part of the users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision Blizzard games - and especially Call of Duty– become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.
6.- Finally, in relation to the existing complementarity between the activities of Microsoft and Activision Blizzard in the game publishing markets - and especially in the mobile games segment - and online advertising, it was found that the shares held by the Parties in these segments, in all scenarios examined, are well below the minimum percentage considered for the purpose of presumption of the possibility of closing the market, as defined in article 8, IV of CADE Resolution No. 33/2022.
It is concluded, therefore, that the possible vertical integrations and complementarities that may be generated or reinforced by the Transaction do not give rise to significant risks to competition, since no elements were identified that allow inferring the closure of any of the vertically related markets.
In view of the foregoing, it is concluded that the present merger is approved without restrictions.
UAE as the OP mentions in the approved v pending review segment
This is all true, but 100% of GeoForce now users are using the game streaming service, but only a percentage of GPU users stream games, which is a percentage of overall GP users.
That's why I suspect Nvidia's service is the most widely used.
we can't really tell who has or who hasn't unless they make it known or publish their resolution online, for all we know there could be more than these three.
Good. I can't wait for this to be done and over with.
Yea that definitely sounds like a dig to Sony. I sense more comments from Jim Ryan in the future
I guess we will start seeing a lot of countries approving the deal and we need to wait for the key regions: UK, UE and US? 🤔
Is this correct?
Is this correct?
It explicitly states, "The CAT will not engage with the merits of the CMA's decision or conduct a wholesale review of the parties' evidence.".
"parroting a competitor's talking points", the CMA's concerns being aligned with Sony's is related to the merits of the case, it doesn't prove irrational behaviour.
The second part of your comment is directly about the merits of the decision.
The CMA tweet about all their decisions, so it's not anything of note.
Since the anti-trust agencies are usually in align with each other, and Brazil is a key market, it's unlikely that Brazil's decision will turn out to be an outlier amongst key markets.
I see, thanks.
Thanks for the information, that make sense.
It's one of the markets that MS needs approve from and it's the 13th largest market.
I'm glad the Brazilian regulators made that point clear.
"Furthermore, it is important to highlight that the central objective of CADE's activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors ."
It's wonderful to have that in writing.
It's wonderful to have that in writing.
That's still debatable, as Nvidia's 20M number is from registered users. It's not clear if they are active or simply cumulative registrations from both free and paid tiers since launch. Either way, I'd view a competitive market only via paid subscribers unless there is an alternative monetization model used for free users i.e., F2P games pose an interesting model where users can stream it for free but the provider gets a cut of any MTX spent; I suspect this was what MS did in collaboration with Epic for Fortnite on iOS. There was a dramatic increase in cloud gaming users through this venture.
In any case, we're getting a bit too in the weeds/speculative but it is interesting to explore different streaming models that could or already exist.
Lmao, Brazil is not a key market. No matter how much people try to use smaller markets as some key point here, what matters for this is what US and EU/UK will say.
YEP, good guy CADE will make me not buy blizzard games anymore because of gamepass <3
not going to spend half of minimun wage for a CoD game anymore (even tho sony players in Brazil say if the game is cheap its low quality lol)
you know that Brazil is the top 10 country by gaming revenue, and Brazil was the second country in story to win a major in every FPS game (CS, paladin, R6Siege, valorant, etc)
Top Countries & Markets by Game Revenues | Biggest Games Markets
What are the biggest games markets in the world in terms of revenue? Discover the top games markets in this ranking from Newzoo.
newzoo.com
gaming in Brazil is strong, its our economy that is fucked up making it less attractive.
btw, you know why took so long to disney buy fox? because CADE didn't want to approve the merge because of Fox Sports. At the time US already had already approved the merge but disney had to wait for Brazil to approve
Disney CEO Flies to Brazil to Seal Fox Deal, Leaves Empty-Handed
Walt Disney Co. Chief Executive Officer Bob Iger journeyed to Brazil to push for a key piece of regulatory approval on the entertainment giant’s proposed $71 billion deal with 21st Century Fox Inc., but the talks ended without an agreement.
www.bloomberg.com
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View: https://twitter.com/playstation_x3/status/1577790991305678848?s=20&t=1ySjvOZIDIYX6CXxLsNalQ
I know it's a fake account, but I found it funny.
Great response by CADE. CMA's document was almost embarrassing in how defensive it was of the current market leader.
It's okay if Xbox ever becomes the market leader. That's not a monopoly.
Now if years down they're attempting to acquire another publisher at the scale of ABK, I certainly expect even more scrutiny and a possible block. Though that's just a dumb hypothetical anyway.
It's okay if Xbox ever becomes the market leader. That's not a monopoly.
Now if years down they're attempting to acquire another publisher at the scale of ABK, I certainly expect even more scrutiny and a possible block. Though that's just a dumb hypothetical anyway.
OP
OP
HIGHLIGHTS from the decision in Brazil approving the transaction without restrictions (I've tried to Copy/Paste the most interesting and relevant parts, but there is a lot of interesting info and new data).
This is only PART 1. So, considerations about the relevant markets, descriptions from the parties and initial considerations from the regulator.
Part 2 is the really interesting part (but I'll do a second post with that because otherwise I'm going to hit the word limit :S )
RELEVANT MARKETS
In view of the above, this SG/Cade understands that, for the purposes of this analysis, game development and publishing activities can be grouped into a single relevant market under the product dimension, given that: (i) the Parties publish the games they develop; and (ii) none of them offer game development services to third parties in the ordinary course of their business.
Thus, the development and publication of game software will be considered as a single market in this opinion, hereinafter referred to only as "game publishing" or "video game publishing".
Therefore, this opinion will examine the game publishing market under the product dimension, considered under the following scenarios: (i) game publishing for all devices (without segmentation); (ii) publishing of PC games; (iii) publishing games for consoles; and (iv) publishing games for mobile devices.
This SG/Cade understands that the definition regarding the geographic dimension of the relevant market can be left open at this opportunity. Thus, the present analysis will consider the game publishing market under the (i) global and (ii) national geographic scenarios.
Based on the above, it appears that, with regard to the game distribution activity, the possible horizontal overlaps and vertical integrations resulting from the Transaction are restricted to digital distribution for PCs and consoles , since none of the Applicants operates in digital distribution of games for mobile devices, nor in the physical distribution for any platform.
n view of the above, this opinion will consider the markets for (i) digital distribution of games for PCs and consoles (considered together), (ii) digital distribution of games for PCs and (iii) digital distribution of games for consoles under the dimension of product, encompassing both the sale of game content in digital stores and the subscription services of multiple games for download or streaming . However, the possibility of other product market definitions for the products/services that make up these segments is left open, a hypothesis to be evaluated in future cases as necessary.
The results of the market investigation suggest that, as gaming hardware , mobile devices are likely to constitute a distinct product market from PCs and consoles. Indeed, given that mobile games generally differ significantly from titles published for other platforms in terms of production costs, technological sophistication, performance, gameplay, gaming experience and monetization model, it seems unlikely that the interested consumer in playing the latest AAA releases of the industry consider smartphones and tablets as capable of replacing consoles and PCs as hardwaregeared towards games. Likewise, casual gamers who prefer fast-paced games would hardly consider PCs and consoles as close replacements for their mobile devices .
PCs and consoles, in turn, seem to be perceived as closer competitors. Most current electronic games are published for both platforms and provide very similar gaming experiences. Even Sony, a traditional player in the console segment, has recently started to publish games that were exclusive to the PlayStation, such as God of War , Horizon Zero Dawn and Uncharted , for computers.
The following relevant markets will be considered in this opinion:
A) game development and publishing market, considering the following scenarios:
a.1) publication of games for all devices (without segmentation), in the global and national scenarios;
a.2) publication of PC games, in the world and national scenarios;
a.3) publication of games for consoles, in the world and national scenarios; and
a.4) publication of games for mobile devices, in the world and national scenarios;
B) digital game distribution market, considering the following scenarios:
b.1) digital distribution of games for PC and consoles (without segmentation), in the global and national scenarios;
b.2) digital distribution of PC games, in the world and national scenarios; and
b.3) digital distribution of games for consoles, in the world and national scenarios;
C) market for game consoles, in the world and national scenarios;
D) national online advertising market, considering the following scenarios:
d.1) online advertising (no segmentation between search and display advertising );
d.2) online display advertising ; and
d.3) online advertising within games (in-game );
E) national licensing market for consumer products (merchandising )
SUBSCRIPTION SERVICES
The various game subscription services offered on the market are relatively recent, and differ significantly from each other in terms of scope and scope. There are services offered by publishers/developers that provide access to games from their catalog on PCs and/or consoles, such as EA Play, by Electronic Arts ("EA"), and Ubisoft+, by Ubisoft ; others, offered by game hardware manufacturers , allow subscribers to play online with other players and access a catalog of downloadable games on their respective platforms, such as Sony's PlayStation Plus, Nintendo Switch Online from Nintendo and the Xbox Game Pass "Console" subscription . There are also cloud gaming subscription services , or "cloud games", which allow the user to play games via streaming on any device with a screen (such as televisions, smartphones and tablets , among others) connected to the Internet, through a browser. or application. In this type of service, game processing is done on remote servers and not on the hardware used by the player, thus allowing subscribers to have access to current games even without having a dedicated console or state-of-the-art PC. Services such as Xbox Cloud Gaming fall into this category(available through the Xbox Game Pass "Ultimate" subscription ), Amazon Luna and Google Stadia, the latter two still unavailable in Brazil
On the other hand, specifically with regard to game subscription services , the unanimous understanding expressed by the consulted companies is in the sense that such services would not constitute a specific product market, supporting the Claimants' claims in this regard. In fact, [RESTRICTED ACCESS TO CADE] the responses received by the SG suggest that, from a consumer perspective, subscription services would be perceived as direct competitors of individually marketed games, and therefore should be considered in the context of a broader market. wide distribution of games.
The Parties allege that subscription services are still not very representative in relation to the total revenue generated from the sale of game content, and, according to industry expectations, they should continue to coexist with other payment models. In this regard, they cite a report by IDG Consulting ("IDG") regarding the console games segment, which estimates that, in 2025, subscriptions will represent around 14% of console-related revenues – a increase of only 4 percentage points ("pp") compared to 10% in 2020 –, and 22% when excluding hardware sales.
In this regard, firstly, it is important to emphasize that the distribution of products/services through a subscription model, in which the consumer has to make periodic recurring payments to obtain (and maintain) access to the desired product/service, constitutes a clear market trend in the most varied segments, with relevant impacts on consumer habits and consumption patterns. In this context, it is reasonable to assume that, as well as the development of subscription video and music streaming services – such as Netflix, Disney+ and Spotify, among others – has substantially affected the way users access and consume this type of audiovisual content, multi-game subscription services could also play a disruptive role in relation to the current competitive dynamics of the video game industry.
In particular, subscription services with cloud gaming seem to have special potential to transform the structure of the industry over the next few years, as they dispense with the use of dedicated hardware to access state-of-the-art electronic games. In this way, such services can be seen as competitors not only of other subscription services and digital stores that distribute games, but also, to some extent, of console manufacturers.
CLOUD GAMING
In addition, the Parties inform that Microsoft also offers several cloud computing services, many of which are used by development studios when developing, hosting and running games. However, they claim that this potential vertical relationship, reported to antitrust authorities in other jurisdictions, would not be relevant for the competition analysis carried out within the scope of CADE, as they understand that: (i) cloud services are not a specific input the video game industry; and (ii) there are no relevant game development studios in Brazil that require such services. More specifically, Microsoft states (REDACTED).
FEEDBACK FROM THIRD PARTIES
In general, the companies consulted did not express opposition regarding the "grouping" of electronic game development and publishing activities in the same relevant market. On the other hand, with regard to a possible segmentation of this market by platform/ hardware , there was no consensus. While some players understand the separation of the market at least between PC games and console games and mobile games as appropriate, others suggest that the market should be considered in a broader context, given that all games, regardless of platform, would compete with each other. by the consumer's time/attention/engagement.
In addition to the segmentation by platform, the questionnaire sent by SG also asked the official companies about a possible subdivision of the game development and publishing market based on other criteria, such as the type/genre of the game or the profile of the gaming public. However, none of the agents consulted pointed out the need for further segmentation of this relevant market in terms of the product.
EXCLUSIVITY
It follows, therefore, that this relationship of complementarity constitutes the only reason why the hardware segmentis being considered in the analysis. In this context, what needs to be investigated is whether, as a result of the acquisition of Activision Blizzard (and its catalog of games and services) by Microsoft, the devices manufactured by the latter – consoles, PCs or mobile devices – could benefit in such a way that harm competition. More precisely, it must be evaluated whether, with the eventual completion of the Transaction, Microsoft would have the ability or incentives to make access to Activision Blizzard's games and services exclusive (or "preferred", under significantly more favorable conditions) to the users of its own devices; and, if such a possibility were found, whether there would be significant impacts for competing hardware manufacturers.
However, one cannot lose sight of the fact that Microsoft is the leading company in the segment of operating systems for PCs, holding a much higher market share than all its potential competitors. In this context, it is worth questioning whether the company could not, in a possible post-Operation scenario, prevent the access of computers equipped with OS competitors of Microsoft Windows - such as computers manufactured by Apple, which operate with the macOS system, and Chromebooks operating with Chrome OS – to the Activision Blizzard games catalog, and thereby impacting competition in the PC market.
To investigate this possibility, SG consulted the Battle.net catalog , Activision Blizzard's official digital store for PC games, in order to check if the company's titles would be compatible with OS other than Windows. At the time, it was noted that among Activision Blizzard's most popular PC and console games, only World of Warcraftand some earlier iterations of the Call of Duty and Diablo series are available for computers running on other operating systems. – more specifically, macOS, from Apple's line of personal computers. In addition, it was found that the purchase pages of the latest games list only Windows in their "system requirements" indications, not mentioning any other PC-oriented operating systems. In practice, therefore, it appears that the main Activision Blizzard games today were already being released exclusively for PCs that run on Windows, even before the proposed acquisition by Microsoft. Thus, there are no indications that the completion of the Transaction may, by itself, imply any relevant impact on the current dynamics of competition in the PC and operating systems segments.
This is only PART 1. So, considerations about the relevant markets, descriptions from the parties and initial considerations from the regulator.
Part 2 is the really interesting part (but I'll do a second post with that because otherwise I'm going to hit the word limit :S )
RELEVANT MARKETS
In view of the above, this SG/Cade understands that, for the purposes of this analysis, game development and publishing activities can be grouped into a single relevant market under the product dimension, given that: (i) the Parties publish the games they develop; and (ii) none of them offer game development services to third parties in the ordinary course of their business.
Thus, the development and publication of game software will be considered as a single market in this opinion, hereinafter referred to only as "game publishing" or "video game publishing".
Therefore, this opinion will examine the game publishing market under the product dimension, considered under the following scenarios: (i) game publishing for all devices (without segmentation); (ii) publishing of PC games; (iii) publishing games for consoles; and (iv) publishing games for mobile devices.
This SG/Cade understands that the definition regarding the geographic dimension of the relevant market can be left open at this opportunity. Thus, the present analysis will consider the game publishing market under the (i) global and (ii) national geographic scenarios.
Based on the above, it appears that, with regard to the game distribution activity, the possible horizontal overlaps and vertical integrations resulting from the Transaction are restricted to digital distribution for PCs and consoles , since none of the Applicants operates in digital distribution of games for mobile devices, nor in the physical distribution for any platform.
n view of the above, this opinion will consider the markets for (i) digital distribution of games for PCs and consoles (considered together), (ii) digital distribution of games for PCs and (iii) digital distribution of games for consoles under the dimension of product, encompassing both the sale of game content in digital stores and the subscription services of multiple games for download or streaming . However, the possibility of other product market definitions for the products/services that make up these segments is left open, a hypothesis to be evaluated in future cases as necessary.
The results of the market investigation suggest that, as gaming hardware , mobile devices are likely to constitute a distinct product market from PCs and consoles. Indeed, given that mobile games generally differ significantly from titles published for other platforms in terms of production costs, technological sophistication, performance, gameplay, gaming experience and monetization model, it seems unlikely that the interested consumer in playing the latest AAA releases of the industry consider smartphones and tablets as capable of replacing consoles and PCs as hardwaregeared towards games. Likewise, casual gamers who prefer fast-paced games would hardly consider PCs and consoles as close replacements for their mobile devices .
PCs and consoles, in turn, seem to be perceived as closer competitors. Most current electronic games are published for both platforms and provide very similar gaming experiences. Even Sony, a traditional player in the console segment, has recently started to publish games that were exclusive to the PlayStation, such as God of War , Horizon Zero Dawn and Uncharted , for computers.
The following relevant markets will be considered in this opinion:
A) game development and publishing market, considering the following scenarios:
a.1) publication of games for all devices (without segmentation), in the global and national scenarios;
a.2) publication of PC games, in the world and national scenarios;
a.3) publication of games for consoles, in the world and national scenarios; and
a.4) publication of games for mobile devices, in the world and national scenarios;
B) digital game distribution market, considering the following scenarios:
b.1) digital distribution of games for PC and consoles (without segmentation), in the global and national scenarios;
b.2) digital distribution of PC games, in the world and national scenarios; and
b.3) digital distribution of games for consoles, in the world and national scenarios;
C) market for game consoles, in the world and national scenarios;
D) national online advertising market, considering the following scenarios:
d.1) online advertising (no segmentation between search and display advertising );
d.2) online display advertising ; and
d.3) online advertising within games (in-game );
E) national licensing market for consumer products (merchandising )
SUBSCRIPTION SERVICES
The various game subscription services offered on the market are relatively recent, and differ significantly from each other in terms of scope and scope. There are services offered by publishers/developers that provide access to games from their catalog on PCs and/or consoles, such as EA Play, by Electronic Arts ("EA"), and Ubisoft+, by Ubisoft ; others, offered by game hardware manufacturers , allow subscribers to play online with other players and access a catalog of downloadable games on their respective platforms, such as Sony's PlayStation Plus, Nintendo Switch Online from Nintendo and the Xbox Game Pass "Console" subscription . There are also cloud gaming subscription services , or "cloud games", which allow the user to play games via streaming on any device with a screen (such as televisions, smartphones and tablets , among others) connected to the Internet, through a browser. or application. In this type of service, game processing is done on remote servers and not on the hardware used by the player, thus allowing subscribers to have access to current games even without having a dedicated console or state-of-the-art PC. Services such as Xbox Cloud Gaming fall into this category(available through the Xbox Game Pass "Ultimate" subscription ), Amazon Luna and Google Stadia, the latter two still unavailable in Brazil
On the other hand, specifically with regard to game subscription services , the unanimous understanding expressed by the consulted companies is in the sense that such services would not constitute a specific product market, supporting the Claimants' claims in this regard. In fact, [RESTRICTED ACCESS TO CADE] the responses received by the SG suggest that, from a consumer perspective, subscription services would be perceived as direct competitors of individually marketed games, and therefore should be considered in the context of a broader market. wide distribution of games.
The Parties allege that subscription services are still not very representative in relation to the total revenue generated from the sale of game content, and, according to industry expectations, they should continue to coexist with other payment models. In this regard, they cite a report by IDG Consulting ("IDG") regarding the console games segment, which estimates that, in 2025, subscriptions will represent around 14% of console-related revenues – a increase of only 4 percentage points ("pp") compared to 10% in 2020 –, and 22% when excluding hardware sales.
In this regard, firstly, it is important to emphasize that the distribution of products/services through a subscription model, in which the consumer has to make periodic recurring payments to obtain (and maintain) access to the desired product/service, constitutes a clear market trend in the most varied segments, with relevant impacts on consumer habits and consumption patterns. In this context, it is reasonable to assume that, as well as the development of subscription video and music streaming services – such as Netflix, Disney+ and Spotify, among others – has substantially affected the way users access and consume this type of audiovisual content, multi-game subscription services could also play a disruptive role in relation to the current competitive dynamics of the video game industry.
In particular, subscription services with cloud gaming seem to have special potential to transform the structure of the industry over the next few years, as they dispense with the use of dedicated hardware to access state-of-the-art electronic games. In this way, such services can be seen as competitors not only of other subscription services and digital stores that distribute games, but also, to some extent, of console manufacturers.
CLOUD GAMING
In addition, the Parties inform that Microsoft also offers several cloud computing services, many of which are used by development studios when developing, hosting and running games. However, they claim that this potential vertical relationship, reported to antitrust authorities in other jurisdictions, would not be relevant for the competition analysis carried out within the scope of CADE, as they understand that: (i) cloud services are not a specific input the video game industry; and (ii) there are no relevant game development studios in Brazil that require such services. More specifically, Microsoft states (REDACTED).
FEEDBACK FROM THIRD PARTIES
In general, the companies consulted did not express opposition regarding the "grouping" of electronic game development and publishing activities in the same relevant market. On the other hand, with regard to a possible segmentation of this market by platform/ hardware , there was no consensus. While some players understand the separation of the market at least between PC games and console games and mobile games as appropriate, others suggest that the market should be considered in a broader context, given that all games, regardless of platform, would compete with each other. by the consumer's time/attention/engagement.
In addition to the segmentation by platform, the questionnaire sent by SG also asked the official companies about a possible subdivision of the game development and publishing market based on other criteria, such as the type/genre of the game or the profile of the gaming public. However, none of the agents consulted pointed out the need for further segmentation of this relevant market in terms of the product.
EXCLUSIVITY
It follows, therefore, that this relationship of complementarity constitutes the only reason why the hardware segmentis being considered in the analysis. In this context, what needs to be investigated is whether, as a result of the acquisition of Activision Blizzard (and its catalog of games and services) by Microsoft, the devices manufactured by the latter – consoles, PCs or mobile devices – could benefit in such a way that harm competition. More precisely, it must be evaluated whether, with the eventual completion of the Transaction, Microsoft would have the ability or incentives to make access to Activision Blizzard's games and services exclusive (or "preferred", under significantly more favorable conditions) to the users of its own devices; and, if such a possibility were found, whether there would be significant impacts for competing hardware manufacturers.
However, one cannot lose sight of the fact that Microsoft is the leading company in the segment of operating systems for PCs, holding a much higher market share than all its potential competitors. In this context, it is worth questioning whether the company could not, in a possible post-Operation scenario, prevent the access of computers equipped with OS competitors of Microsoft Windows - such as computers manufactured by Apple, which operate with the macOS system, and Chromebooks operating with Chrome OS – to the Activision Blizzard games catalog, and thereby impacting competition in the PC market.
To investigate this possibility, SG consulted the Battle.net catalog , Activision Blizzard's official digital store for PC games, in order to check if the company's titles would be compatible with OS other than Windows. At the time, it was noted that among Activision Blizzard's most popular PC and console games, only World of Warcraftand some earlier iterations of the Call of Duty and Diablo series are available for computers running on other operating systems. – more specifically, macOS, from Apple's line of personal computers. In addition, it was found that the purchase pages of the latest games list only Windows in their "system requirements" indications, not mentioning any other PC-oriented operating systems. In practice, therefore, it appears that the main Activision Blizzard games today were already being released exclusively for PCs that run on Windows, even before the proposed acquisition by Microsoft. Thus, there are no indications that the completion of the Transaction may, by itself, imply any relevant impact on the current dynamics of competition in the PC and operating systems segments.
The only thing that would be realistic along your point is that MSFT or Amazon cannot charge a lower rate for given SKUs or cycles on Azure/AWS to their internal business users compared to external users. That being said, I don't think that is particularly applicable to the game streaming scenario. The way to guarantee the best streaming experience is to co-locate specialized hardware in the data center similar to what MSFT is doing already (vs using Azure as a service). I don't think it's realistic to regulate actual data center usage and force companies to host a potential competitor's hardware on premises.
