Acquiring Activision Blizzard King could allow Microsoft to overtake Sony in the console market. Sony sees the merger as a major threat to its console and subscription segments. Microsoft faced fierce opposition as it merged with Activision Blizzard. It's not just regulators who have concerns. Sony was also one of the strongest opponents of the deal. Sony's outcry was so loud that Microsoft had to commit to making Call of Duty available on PlayStation for the next 10 years.
Microsoft's 10-year concession satisfied all regulators except the FTC. However, documents leaked from the Insomniac hack show that Sony is still deeply concerned. The PlayStation maker sees Microsoft's acquisition as a huge threat that could "catapult Sony" into the console market.
A "confidential" presentation slide read: "Microsoft's acquisition of [Activision] will take it beyond our current pillar industry. [Activision] provides incredible layered value in online games, mobile scale and PC store (Battle.net)."
The slide notes that Microsoft is working to build a mobile game store to compete with Apple and Google. In fact, Microsoft plans to launch the store in 2024. However, its success depends directly on whether regulators will force Apple and Google to open up their ecosystems so that alternative stores have a chance to emerge. While we've seen some movement on this front, it's not enough for the Xbox Store to thrive on competing platforms.
Sony pessimistically predicts that the end of "Call of Duty" will come in 2027, well ahead of the 10-year promise. Sony firmly believes that this acquisition is a threat to both the console and subscription sectors.
Sony believes that Xbox will make a big fuss about its release time and thus surpass PlayStation. Although Microsoft promised "Call of Duty" 10 years, it did not indicate that the launch time of the two game consoles would be the same. Sony believes that Microsoft will use this "exclusive" period to put Activision games on GamePass on a "selected day" (day one), thereby advancing its subscription dominance. Another slide read: "[Microsoft's] comprehensive ecosystem combined with exclusivity creates an even greater advantage."
Sony accountants predict that the recently restructured PlayStation Plus will face a huge threat and may have a $1.5 billion funding gap by 2027. Sony admits that its "backbone is outdated and lags behind the competition." In other words, PlayStation's past dominance has led to complacency, and now Sony feels threatened by the removal of a major brand.
Now, Sony is desperate to expand its product range. However, the company struggled to find the "perfect gaming subscription." Gamers expect top-notch games for free every month, but Sony considers this an "unsustainable" model. The company claims that it doesn't see a return on investment for premium games with reasonable "monthly and incremental" subscriptions.
Another weakness is that, unlike Xbox, PlayStation doesn't have a "unified mobile, PC and console experience." For this shortcoming, Sony has no other solution except to continue to focus on the "high-end sales model." However, this will be the status quo for PlayStation, and it sounds like even Sony thinks it's not enough.