The proposed acquisition of Activision Blizzard by Microsoft has been blocked by the U.K.’s Competition and Markets Authority (CMA) in a 400-page report. The report analyzed various aspects, including the potential financial losses Microsoft would face if it made “Call of Duty” an exclusive Xbox game. While concerns regarding exclusivity have been addressed, the CMA’s primary concern was the impact on the cloud gaming market and potential monopolies.
CMA’s Decision and Concerns
The CMA’s decision to block the merger was based on concerns over monopolies in the fast-growing cloud gaming market. They expressed worries that Microsoft’s acquisition of Activision Blizzard, particularly adding its games to Xbox Game Pass, could lead to potential price increases. Even a small price increase could negate any benefits to consumers. The CMA believes that Microsoft’s strong position in cloud gaming services and its history of keeping popular franchises multiplatform justify their concerns.
The Significance of “Call of Duty” and Multiplatform Strategy
“Call of Duty” is one of Activision Blizzard’s flagship franchises, enjoyed by players on both PlayStation and Xbox platforms. The report analyzed the “critical diversion ratio” to determine the financial viability of removing “Call of Duty” from PlayStation platforms. It was concluded that it would not be financially profitable for Microsoft to pursue a total foreclosure strategy. The analysis also highlighted the importance of Microsoft’s multiplatform strategy, which allows the company to benefit from wider player bases and the popularity of its Game Pass subscription.
Xbox’s Competitive Advantage and Concerns Over Monopolies
With the proposed acquisition, Xbox Game Pass would have gained a significant competitive advantage over rivals Sony Group Corp and Nintendo ADR. Microsoft’s extensive library of games, including Activision Blizzard’s titles, would have enhanced the service. However, the CMA raised concerns about potential monopolies in the cloud gaming market. They found that Microsoft had not effectively addressed these concerns and believed that consumers could be negatively impacted by price increases resulting from reduced competition.
The Future of Microsoft and Activision Blizzard
Microsoft has expressed its intention to appeal the CMA’s decision, signaling its commitment to the acquisition. The company sees significant value in acquiring Activision Blizzard’s portfolio of games and expanding its influence in the gaming industry. The decision of the appeal process and its implications for the cloud gaming market are yet to be determined. Meanwhile, Activision Blizzard remains a major player in the gaming industry, continuing to develop and publish popular games across multiple platforms.
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Frequently Asked Questions
1. What were the details of Microsoft’s proposed acquisition of Activision Blizzard?Microsoft’s proposed acquisition of Activision Blizzard involved a bid to purchase the company, which would have given Microsoft control over Activision’s game franchises, including “Call of Duty.” However, the merger was blocked by the U.K.’s Competition and Markets Authority (CMA) due to concerns about potential monopolies in the cloud gaming market.
2. What are the popular game franchises associated with Activision Blizzard?Activision Blizzard is known for several popular game franchises, including “Call of Duty,” “World of Warcraft,” “Diablo,” “Overwatch,” and “StarCraft.” These franchises have a significant following and have contributed to Activision Blizzard’s success in the gaming industry.
3. Why did the U.K.’s Competition and Markets Authority (CMA) block the merger?The CMA blocked the merger between Microsoft and Activision Blizzard due to concerns over potential monopolies in the fast-growing cloud gaming market. They were worried that Microsoft’s acquisition of Activision Blizzard’s library of games, including “Call of Duty,” could lead to a potential price increase for consumers, which would have a negative impact on the market.
4. How does Xbox Game Pass work, and what would adding Activision Blizzard’s games to the service mean?Xbox Game Pass is a subscription service offered by Microsoft that allows users to access a wide library of games for a monthly fee. Adding Activision Blizzard’s games, such as “Call of Duty,” to the service would expand the Game Pass catalog and provide subscribers with more gaming options. However, the CMA expressed concerns about potential price increases and the impact on consumers.