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He just did an interview with Jaffe about the acquisition.
Hypothetically if the rest of the markets clear the merger then a case for irrationality with CAT is a slam dunk for MS and the CMA would in that scenario reverse their decision probably. So it does matter and with that being said, the MS legal team did a very good job at weakening the CMA PF and that along with other markets presumably clearing will more than likely cause the CMA to accept behavioral remedies but like Idas had said it very well be somewhat market specific. Just my opinion though
100% agree. I do not think a significant number of players will leave PS and the CMA, especially, misses that just because they buy an Xbox does not mean they will leave PS. Those 29% of COD players that already own an Xbox may just shift that COD spend to Xbox via GamePass and continue to do majority of their other gaming on PS. Honestly, I was trying to say that the CMA does not seem to understand why players multi-home and how that doesn't change their console/platform preference.
Might be a hot take but Sony doesn't need COD in PS+ to be competitive with Game Pass. Having Sony first party games day and date on the service would be huge on its own. It also makes gaming more accessible (cheaper) and starts the path towards making gaming platform agnostic with service-exclusives rather than console-exclusives. I welcome such future.
Sony doesn't need COD on PS +, they can keep status and remain number 1.
Sony will never switch to that model, their own words they can't afford to do that.
But if they were to do that they would immediately be better than gamepass due to content alone.
Ok.. I'm not seeing where this 3% thing comes from in here? Someone help me. The numbers I see all seem significantly higher? That said...
Man. This is my first time actually reading the survey. I only skimmed everyone else's impressions before. What in the world?? loll. I'm late to this party, so ignore me if you already know all of this.
The pool of respondents were PlayStation gamers who had played at least 10 hours of COD or spent more than $100, over the course of a year? And also: "Just over half of the gamers surveyed said they play games from the Call of Duty series several times a week or more (53%), with the most common frequency being to play several times per week (up to and including five times per week), at around three in ten (31%)." So... COD fans, at the bare minimum.. (Though, to be fair, maybe they just got into Warzone for a few days. Also possible. But clearly not the majority of respondents)
And yet, even this group that hardly represents the core, let alone the totality, of PlayStation's business, doesn't seem all that mobile.
The survey says that in the hypothetical scenario that COD wasn't on PS when they bought their last PlayStation, 31% would buy a different console*... but.. of course, only 15% would have bought another console* instead of their PS console. And of course, console* includes PC. Only 61% of that 31% would get an Xbox. Apply that to the 15% who would get something instead of PS console, that's just 9% of this group saying that they'd switch to Xbox instead.
Oh.. and 89% of the people who said they would get an Xbox or PC or Switch in addition to their PS console said that PS would STILL be their primary console for most other games. The financial impacts on Sony are shrinking as we speak.
Only about 7.5% of respondents would switch to Xbox if COD were available, but just had the exclusive perks that COD has on PS today. Ie: Sony's demands for parity and how the deal is WORTHLESS without it is all over.. just 1.5% of COD faithful, an already small fraction of their entire userbase...
When asked directly (which IMO based on survey design would be likely to inflate responses, because you've just primed them for FOMO), still only 15% of these gamers suggested that they would buy an Xbox over a PS in the future if COD were not available at all on PS in the future. And these gamers = people who have spent serious money or at least significant time in COD.
It's hard to construe any of this as an existential or even particularly significant threat to PlayStation's business. COD makes up less than 10% of PlayStation's revenue (I've been using 6%)? Even if I use $25b as their total revenue, and I use 10% to represent COD's share, and I use 15% to say all of that money is going away (and sure, maybe these super fans were COD whales or maybe the type of person who plays a lot of COD also spends a lot on other games - but... eh), then all of that is still only less than $400m a year.
I mean... c'mon.
That said, as always happens when I do a bunch of math. I'm probably wrong! Please feel free to tell me what stupid mistakes I've made. Thanks :D
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Having first party games one year after launch would be a start. They dont even have TLOU P2 on there still
Oh I know. Hopefully increased competition forces them there.
Sony saying they can't afford it is a load of hogwash. They make more profit from their 30% cut on third party sales than they make revenue from first party games. If anyone can make a day one MGS, it's platform holders who take a cut of everyone's sales.
Yeah, I agree that Sony would likely be able to withstand COD on Game Pass with little effect to their market dominance. Which is a shame.
I wish they would get Sifu or Kena on there. Not only do they prevent these games from getting Game Pass deals, they also don't sign them to deals. 😭
I believe it was bc in a previous filing it was said something like 15% of all playstation players have played CoD.
So taking that pool of CoD players, the survey indicated ~20% would buy a PC or Xbox next if it went exclusive.
~20% of 15% is ~3% of total PS players.
Thank you. Perfect. (pg. 19) - full foreclosure
15% of COD gamers would have bought another platform
61% of those would have bought an Xbox
So the CMA's high estimate is 9.15% of COD gamers would have bought an Xbox instead of a PS had COD not been available on PS at all.
Then on pg. 21 - partial foreclosure
12% of COD would have bought another platform
64% of those would have bought an Xbox
So the CMAs low estimate is 7.68% of COD gamers would have bought an Xbox instead of a PS had COD had exclusive content on Xbox but the base game was released on PS as well.
So Microsoft's broader survey saying only 3% of all of PS gamers would have bought an Xbox instead.
That feels like that fits:
Sony has 112 million MAUs (Q3 FY22 financial report)
41 million Warzone players on PS4|5 according to Dexerto
3.1 million MAUs played COD WW2 (2020) on PS4 according to Statista.com
So that makes 39.4% of PS gamers are COD gamers
9.15% x 39.4% = 3.6%
7.68% x 39.4% = 3.0%
OK! Thank you! I just couldn't figure out people just taking Microsoft's 3% as fact. But it looks like the CMA used a higher number without considering that not all PS gamers are COD players.
We have already seen other cases where the CMA went another route from the EC and shut down entire deals. The same can happen here too.
First, the survey is for COD players with >10 hours and/or >$100 spending in a year. More than half of them play CoD several times a week. That's already a small subset of all PS gamers.
When asked if the most recent COD wasn't available on PS:
"The most common response concerning the effect of this on their Call of Duty gaming was to have played only older Call of Duty games that they already owned (41%)."
"around three in ten would have bought another device (31%), most commonly an Xbox (61%)."
So only a small subset of a small subset would buy an Xbox.
When asked if future COD's were not available:
"The most common course of action in response to this scenario would be to 'play only Call of Duty games I already own, but not future releases' (34%). Just over one in five say they would stop playing Call of Duty altogether (21%), and just under a quarter (24%) would buy another device (either an Xbox or PC) at their next gaming device purchase."
Again, a small subset of a small subset switching.
Also:
"Those who said in this scenario that they would have bought an Xbox or PC, as well as a PlayStation, were then asked about other game purchases. Of these respondents, 89% said that if the most recent Call of Duty game were not available on PlayStation, they would still have bought other games mainly for the PlayStation."
So even with a small amount of those surveyed potentially buying an Xbox (easier to say this in a survey than to actually do it), most would keep their PS and keep buying other games on PS.
Is the end result 3% switching? I don't know, but it's obviously a small number projected.
EDIT: Oops, I should have read your whole reply before posting, since you already covered much of it :-)
If CMA doesn't delay, the deal is likely dead in April still.
April is only the beginning if the CMA blocks. Discussion only dies in April if the CMA approves :P
Sony has really got some of you truly believing that they are a company built out of pennies when it comes to their reluctance to create a GP competitor. For a company that continues to post record profits, has raised prices on software & hardware globally, charges a premium for that hardware, secured very expensive exclusivity deals for a decade since the PS4 released and still does today, has made 92 mergers and acquisitions as a company since March of 2010, the "can't afford" angle is a very, very, very tough pill to swallow.
They could but in reality do they really even have much of a case anymore? IMO I don't think they do.
As long as CMA believes that we kind of have to entertain it.
At this level, all things are political. Microsoft has already signaled that this is going to CAT. The CMA, like the FTC, will be made to prove in court how their assertions hold water. These bodies are going to make fools of themselves. Microsoft will abuse them in a court of law. The data nor the law is on their side and is overwhelmingly on Microsoft's side.
So, that said, after all this transpires, they have a choice to make. Rule against the obvious choice and risk future business and industry investment or do the smart thing and try for another case.
Their incompetent conclusions are going to be on display. It's one thing to put out white papers on their website, it's other to defend it in court. You can't be lambasted in court and then escape immense political pressure by still doing what you want to do.
In the short term I believe you're right but as time passes and MS is pumping title after title into the service while adding 3rd party too I think ps+ will fall behind only due to the length of time it takes Sonys AAA to be developed. On average they produce less than 2-3 a year like this year will only be one that we know of. It'll eventually become a numbers game.
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The CMA might be convinced by Microsoft's arguments and actions. That is possible. Appeals to the CAT are not a high probability path to victory for the appellant. They are usually more of a moonshot. Reports about the discussion at meetings with the CMA, if true, are a positive sign for the deal closing. To my mind the delay by the EC is a huge setback for the deal, because the CMA likely won't have EC behavioral remedies to lean on in making a decision.
At a certain point in time though, the CMA will know what is both proposed by Microsoft and if not already, what the EC is looking for. From there, there should be enough for the CMA to go on, no? Like which way they are leaning?
What is G&NS operating margin?
Sony's forecasting less profits than last fiscal year, despite higher revenue. LMAO.
I think the amount of RCBs in cloud gaming and how effective that MS addressed the cloud SLC means that the CMA would need to go against their own guidelines to request structural remedies. Having all of Xbox games available to stream on small cloud providers is the kill shot. It's pro-competitive, has RCB and lowers barrier to entry.
Console SLC they were looking for a ten year commitment for Sony so that should be resolved according to the CMA's own PF.
With that said it's still totally possible for the CMA to go full FTC. 🤣
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Not in a hundred years would I have imagined regulators treating video games (or a single video game in this situation) like an essential public product but here we are, with more delays and more wasted time and money that could be better spent actually doing important regulatory work that effects hundreds of millions of people..
Like? Square already doesn't put their games on Xbox and Capcom has been doing so well recently that probably wouldn't be inclined to sell. Konami for the IP? Maybe but what teams would they have for those IP? And a huge concern for Sony is the fact that their mega AAA 3rd person action machine is not insignificantly funded by CoD money. It'll be interesting to see where things go from here one way or another.
I hope they find competent people who live in the real world rather than hopelessly ineffective idealists like Khan.
So it will be funded by Fortnite, apex, destiny and sports games instead. COD wasn't the only contributor
Last year about 12%, this year about 7%
Yeah, they are posting record revenue but I think we need to account for the jpy fx impact and increased hw revenue which will boost revenue and decrease profits.
A fun 'what if' (with no right answer) regarding the concept of GP/MGS including first party games day and date is related to what revenue comes from first party full unit sales and what happens if you completely removed that revenue without adjusting anything else (which is a bit of a BS assumption)
Sony GNS forecasted profit is 2bn, and they sold 43m first party games units last year and roughly 50m. The big question that we don't know is what is the ARP of Sony first party titles is. We know across the board it is about 25-30 usd, issue is going to be the ARP is lower cause of more indie titles is digital one. There is bad assumptions that we can make so it looks feasible or unfeasible. I try not to think about it too much but it's a framework if you want to try to see what impact it would have.
People would rather have someone who says all the right things but is entirely ineffective rather than someone who is more pragmatic and chips away at the issues at hand.
So, I think it's fair to say that Sony, who operates in an industry where a key competitor is posting operating margins above 30%, is not actively ignoring a business model that could in fact be accretive to their margin, and perhaps, knows a bit more about the financial sustainability of their own business than Era posters? But, who knows.
Who is saying that putting their games day and date is the most profitable for them? It seems obvious that selling their games at full price is better than putting them in a cheaper subscription service.
A lot has been discussed between the parties involved since the PF came out. We'll have to wait and see how things go.
I was just saying that particular possibility was still on the table.
The EC just isn't satisfied with the remedies offered yet. They wanted more and now they have to analyze and see if what MS added is sufficient enough. They'll likely pass the deal, but it definitely wasn't a situation where Microsoft's initial remedies were enough to appease the EC.
It was down to the CMA for a long while now.
We don't know that either. It very well could be just as profitable if not more. Sony's decision could just be a risk evaluation. Selling games has less risk than putting them into a subscription service. Sony as the market leader is likely significantly more risk-averse than Microsoft who has been in 3rd place for 2 decades (and who has a stopgap of a larger balance sheet)
Hopefully we'll get some more reports next week that give us more info on what MS presented to the EC and if it's true that they're only focused on cloud now.
Also it'd be great to get some more insight into what the CMA is thinking like we have with the EC being set to approve the deal.
Also it'd be great to get some more insight into what the CMA is thinking like we have with the EC being set to approve the deal.
I have no idea. While their games don't interest me personally, if they could be convinced, Capcom seems like a good buy for differentiation from the Xbox offering. But who knows? I'm no business guru.
That said, I will point out that if Square were an acquisition target for Microsoft, it's irrelevant where their games are currently releasing.
OP
OP
New report from MLex:
- Microsoft hopes that the remedy package offered to the EC will put pressure on the CMA.
- Microsoft has now formally committed to making Activision's portfolio of games, including Call of Duty, available on rival cloud-gaming platforms.
- "More striking is the absence of any formal commitment to address key concerns raised by rival Sony about the deal's impact on its PlayStation, and Google about the deal's impact on its ChromeOS cloud-first operating system."
- As recently as Feb. 21 (the hearing), the EC still had concerns about those markets.
- Microsoft's offer comes after intense discussions with officials probing the deal, and the market test should be considered a good sign.
- Under the terms of its in-depth review, the commission has until May 22 to rule on the deal, although it will soon need to circulate a draft decision internally and to national authorities.
- The support of Nvidia has been key, according to MLex.
- The extent to which Sony would benefit from the remedy on cloud gaming is unclear. Sony's primary complaint has been that Microsoft would remove Activision Blizzard's games from its PlayStation, or at the very least degrade their performance on the Sony console to drive its users to the Microsoft Xbox. "That appears to have fallen on deaf ears at the EU competition enforcer."
- The offer from MS (to Sony) presumably still remains on the table. So, at some point Sony may say yes. In any case, most probably Sony will first shift its attention to the CMA.
- "No doubt Microsoft will have pointed CMA investigators to the EU regulator's latest conclusions on that point. If Microsoft can get traction there and put a dent in the narrative against the deal, that would be no mean feat — but it may not be enough."
- However, the CMA's last public word on the subject (acceptance of behavioural remedies) still remains: "None of the circumstances in which the CMA would select a behavioural remedy as the primary source of remedial action in a merger investigation ... appears to be present."
- Microsoft hopes that the remedy package offered to the EC will put pressure on the CMA.
- Microsoft has now formally committed to making Activision's portfolio of games, including Call of Duty, available on rival cloud-gaming platforms.
- "More striking is the absence of any formal commitment to address key concerns raised by rival Sony about the deal's impact on its PlayStation, and Google about the deal's impact on its ChromeOS cloud-first operating system."
- As recently as Feb. 21 (the hearing), the EC still had concerns about those markets.
- Microsoft's offer comes after intense discussions with officials probing the deal, and the market test should be considered a good sign.
- Under the terms of its in-depth review, the commission has until May 22 to rule on the deal, although it will soon need to circulate a draft decision internally and to national authorities.
- The support of Nvidia has been key, according to MLex.
- The extent to which Sony would benefit from the remedy on cloud gaming is unclear. Sony's primary complaint has been that Microsoft would remove Activision Blizzard's games from its PlayStation, or at the very least degrade their performance on the Sony console to drive its users to the Microsoft Xbox. "That appears to have fallen on deaf ears at the EU competition enforcer."
- The offer from MS (to Sony) presumably still remains on the table. So, at some point Sony may say yes. In any case, most probably Sony will first shift its attention to the CMA.
- "No doubt Microsoft will have pointed CMA investigators to the EU regulator's latest conclusions on that point. If Microsoft can get traction there and put a dent in the narrative against the deal, that would be no mean feat — but it may not be enough."
- However, the CMA's last public word on the subject (acceptance of behavioural remedies) still remains: "None of the circumstances in which the CMA would select a behavioural remedy as the primary source of remedial action in a merger investigation ... appears to be present."
Seems like a pretty big deal that MS was able to move the EC away from their concerns with the console market.
Also, Sony must be pissed at Nvidia right now lol.
Also, Sony must be pissed at Nvidia right now lol.
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This is interesting. I wonder, if the EU is not concerned about consoles, is Microsoft leaving them out of the remedies discussion trying to bully Sony into accepting the 10-year deal?
I'm hoping this goes through. MS has done a great job so far with those formal commitments.
Interesting. Thanks for the summary!
Ah, I see. Yea, I figured I was missing the bit about how many PS players played COD. Is there a document that says that somewhere? Otherwise, rscardinals' napkin math seems about right. Though, MAUs are (perhaps) going to be a smaller subset than the number of players who play 10 hours or more COD in a year. Either way, we're not talking about a lot of people, yea.
Haha no problem. Why would I say no to more math :p
I'm not sure there's a useful known figure. I recall recently Sony tried claiming some massive % of their userbase had played COD in 2021 or something, which is irrelevant for switching estimates since it includes free games on PS+, free demo, etc. A more useful metric might % of users which played COD >10 hours or spent >$100 spent in a year, as the CMA survey used, but they failed to mention, or failed to track, that enormously important metric.
So basically the CMA still are killing it come April it seems sans the total divestment of Activision? because that's how I read this