The Brazilian Mergers and Acquisitions Authority (CADE), its real name, is the equivalent of the Competition Authority here. As with all major acquisitions that have impacted the Brazilian market, it was asked to comment on Microsoft’s case, which began to accumulate purchases from video game players. Yesterday, she gave her opinion. His reasoning has to do both with the possible competitive distortions posed by the assumption of ditching Sony consoles for the Call of Duty franchise, as well as protecting Brazilian consumers.
“Given the popularity of Call of Duty, it’s reasonable to conclude that Activision Blizzard games will no longer be available on Sony consoles, forcing players of the series to migrate to Xbox consoles or PCs.”
“On the other hand, it’s reasonable to assume that if Call of Duty were to become exclusive to the Microsoft ecosystem, Sony’s loyal gamers would simply abandon the series in favor of other titles on their favorite consoles.”
“Nevertheless, it cannot be ruled out that Microsoft may view Activision Blizzard’s game exclusivity strategy to its advantage, even if such a decision could result in significant sales share, user churn, and even call obligations”
“That’s because, in theory, a strategy like this could help boost Xbox sales, democratize Game Pass, and bolster Microsoft’s ecosystem, all of which would offset lower sales in the short term.”
“Exclusive games are a mainstay of the competition between Microsoft and Sony, although neither company has successfully developed or acquired exclusive games, giving them a decisive advantage in the console market. Compared to AAA games developed by third-party companies, proprietary games It’s really less popular and generates fewer sales, and the games are still available on Xbox and PlayStation so far.”
“As we have seen, Nintendo does not rely on Activision Blizzard games to secure market share. In Sony’s case, due to its 20+ years dominance in the market, experience in the field, the largest player base in the market, exclusive Catalogs, commercial partnerships with big publishers, and a loyal consumer base. All of this should keep Sony competitive even if acquired by Microsoft, including if Activision Blizzard’s content shuts it down now.
“It is important to stress that the central objective of CADE is to protect competition in order to best protect the interests of Brazilian consumers, not the specific interests of companies in a highly competitive market.”
“In this sense, while it must be acknowledged that if Activision Blizzard games, especially Call of Duty, become exclusive to the Microsoft ecosystem, a segment of PlayStation users may decide to migrate to Xbox, CADE does not see this possibility as inherently Represents a distortion of competition in the console market.”
That’s why CADE decided to rate Microsoft’s planned acquisition positively. It is the second competition authority to do so, after Saudi Arabia in August. An opinion from the US Federal Trade Commission is expected at the end of November, when UK authorities have decided to examine the consequences of the acquisition in greater depth, with an opinion by March 1, 2023 at the latest. The committee has set a Nov. 8 deadline to review the acquisition.
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