Sony Dominates the Console Market, Microsoft Suggests
During a hearing before the European Commission, a Microsoft representative argued that Sony completely dominates the console market and therefore blocking the Redmond giant's merger with Activision Blizzard harms the competitiveness of the entire industry.
Microsoft is facing a lot of problems in its planned takeover of Activision Blizzard. The European Commission, for example, has some doubts. Yesterday, the EU body held a secret hearing in which the Redmond giant presented its position. In it, its representatives, including Vice President Brad Smith, outlined a vision of a market so heavily dominated by Sony, that protecting the Japanese conglomerate's position by blocking a publisher takeover is nonsensical, according to Microsoft.
- According to Microsoft, Sony is said to control 70% of the global console market, while the Xbox brand accounts for only 30%. As you can see, Nintendo's position is omitted here, but it makes sense (and helps MS's argument, by the way), since the Nintendo Switch as a weak hybrid console is nevertheless a slightly different category of device.
- In Europe, Sony's dominance is expected to be even greater, with PlayStation allegedly accounting for 80% of the market. In Japan, it is 96%.
- Importantly, Sony's console market share has remained stable over the past two decades. Even last year, when the Japanese conglomerate had major manufacturing problems, the PlayStation 5 accounted for 69% of next-gen consoles sold, while the Xbox X Series and Xbox S Series only accounted for 31% of the market.
- These numbers, according to Microsoft, are meant to show that the console market needs more competition.
- The Microsoft representative also added that it is not the job of regulators to protect the market position of companies that already dominate.
- Microsoft is trying to assuage the concerns of such authorities by signing agreements with competitors. The Redmond giant recently guaranteed Nintendo that it will release the next installments of Call of Duty on its consoles for 10 years (depending on the success of the deal). This is interesting because no installment of the series has been released on Switch so far. Thus, the Xbox manufacturer argues that with the acquisition of Activision Blizzard, the brand will be able to return to Nintendo devices.
- A similar deal was signed with Nvidia - in which Microsoft agreed to release all its games that are available on its own xCloud service on the GeForce Now streaming service.
How did it start and what are the concerns?
Microsoft announced its plans to acquire Activision Blizzard is early 2022. For the time being, approval for the buyout has been given by, among others, the Brazilian government agency CADE (Administrative Council for Economic Defense) and analogous authorities in Saudi Arabia and Serbia. Regulators in the US, the European Union and the UK, however, have doubts.
Concerns include how much of an advantage Microsoft's control of the Call of Duty brand might give it. According to Sony, blocking the release of the series on PlayStation consoles could cause a large group of gamers to switch to Xboxes. However, the Japanese company is not willing to sign a deal that would guarantee that CoD is released on PlayStation for the next 10 years.
The second doubt concerns game streaming. Making Activion Blizzard games exclusive to xCloud could leave the competition without a chance. That's why Microsoft has come to an agreement with Nvidia to release its games on GeForce Now.
