Microsoft buys Activision for $68.7 billion

This is huge, more day 1 Gamepass titles from these studios.

Never imagined the day COD would become exclusive but here we are

Edit: all secret uncovered so far

#1 — Jim Ryan doesn’t think Starfield’s exclusivity is anti-competitive​

#2 — 1 million PlayStation players play only Call of Duty, and nothing else​

#3 — Sony’s Call of Duty deals expires in 2024

#4 — Poorly redacted FTC docs revealed Sony’s game development budget​

TLOU 2 cost $220 million, while Horizon Forbidden West cost $212 million to develop.

#5 — Poorly redacted docs show how much COD is worth to PlayStation​

COD represents $800 million of PlayStation revenue in just the United States.
PS players who play COD are responsible for $15.9 billion of annual PS revenue

#6 — Jim Ryan initially believed that MS’s ABK purchase wasn’t about PlayStation exclusivity
Jim Ryan was “pretty sure” that COD would remain multiplatform.

Jim Ryan said that he initially believed that Microsoft’s ABK purchase wasn’t about PlayStation exclusivity and that an agreement could be reached.

#7 — Jim Ryan said, “Publishers don’t like Game Pass.” Bobby Kottick agreed and also called Game Pass “value destructive.”​

Kottick said the same thing and used the same phrase, “value destructive,” when describing Game Pass.

#8 — Sony’s internal data reveals that only 20% of PS5 owners own an Xbox in the US​

#9 — Sony’s internal data reveals that nearly 50% of PS5 owners own a Nintendo Switch in the US​

#10 — Sony reveals that Microsoft often blocks PS+ releases with Game Pass deals​

This is particularly interesting because Microsoft has accused Sony of blocking Game Pass deals when filing papers to Brazilian regulatory authorities.

Turns out Microsoft was also doing it all along.

Moreover, it was also revealed that Sony also bid for both Valheim and Immortality to bring them on PS Plus. However, Sony lost both bids to Microsoft. As a result, both games exclusively launched on Xbox and Game Pass and did not join PS Plus.

https://news.xbox.com/en-us/2023/03/14/ ... game-pass/
https://news.xbox.com/en-us/2022/08/16/ ... 22-update/

#11 — Matt Booty’s internal email showed a will to “spend Sony out of business.”​

The email was sent in 2019. Microsoft disregarded that email as a “thought experiment.” However, since that email was sent, Microsoft has spent $80 billion dollars on acquiring multiplatform game developers and publishers.

He also discussed having a “moat of content” in the same email above, referring to Microsoft’s walled-garden approach.


#12 — Microsoft made a list of 100+ developers and publishers for potential purchases​
Including SquareEnix, Sega, FromSoftware, CDPR, Ubisoft, Nintendo, and Sony!

#13 — Microsoft narrowed down potential purchases to 17 targets​

Including HouseMarque, Bungie, and Sega.

In 2021, HouseMarque mentioned that they were approached by “the usual suspects” from China, Europe, and America.

This implies that these 17 targets were officially approached for an acquisition.

#14 — Phil Spencer incorrectly denied reports of Japanese acquisitions​
In November 2021, a report leaked Microsoft’s attempt to acquire a Japanese publisher. Phil Spencer denied those reports when they were true.

#15 — A Matt Booty email revealed that Microsoft did not want to put their games on other Cloud gaming services​
“No Effin’ Way,” said Matt Booty.

The email also shows Phil Spencer sending Nvidia an official notice to take down Xbox games.

Later, when regulators started cracking down on Activision’s acquisition, Microsoft offered deals to 5 cloud services.

It’s important to note that the CMA disregarded these deals (and blocked the acquisition), saying that these deals were just to get the acquisition cleared. It is safe to assume that they made their decision after reading that email.

#16 — Phil Spencer had already decided in 2021 to make ALL Zenimax games exclusive​
This is despite reduced accountability margins.

Despite the decision already made, Phil Spencer continued saying that games will be decided “on a case-by-case basis,” including during the FTC hearing in the court.

Phil’s statement during the recent FTC hearing.

#17 — Phil stopped Tim Stuart from publicly saying that all Zenimax games would be exclusive​

The above “conversation” that Phil is referring to is this interview by Tim Stuart at the Jeffries Interactive Entertainment Virtual Conference:

https://www.ign.com/articles/xbox-bethe ... etter-best

#18 — Phil Spencer lied in court about Elder Scrolls 6’s exclusivity​

FTC lawyers later read Phil’s prior deposition in which he confirmed that Elder Scrolls 6 had been internally confirmed as an exclusive.

#19 — Microsoft wanted to make Minecraft Dungeons exclusive to Xbox

Phil’s internal email, read in court, showed that he was “frustrated” that Minecraft Dungeons is multiplatform because of the original contract.

He asked his team to “find ways” to make it exclusive.

Xbox CMO emails Phil, “This [Minecraft Dungeons] should be exclusive.”

Phil replied, “I agree.”

#20 — Phil Spencer on Xbox fans evangelizing xCloud​

Source: IGN

FYI - Evangelism is an old Microsoft strategy back from the very early 2000s. Microsoft created evangelizing teams and shared internal company memos [highly confidential] which explained that "Evangelism is War."

You can read the highly confidential internal memo in full here: https://antitrust.slated.org/www.iowaco ... X03096.pdf

#21 — Microsoft amended the contracts to make Indiana Jones exclusive​

The original contract between Disney and Bethesda included PlayStation, Xbox, and PC.

After Zenimax’s acquisition, Microsoft reached out to Disney, amended the contract, and made Indiana Jones exclusive to Xbox/PC and removed PlayStation.

#22 — Microsoft has already considered making Activision games exclusive.

In addition, the internal emails also revealed that Tim Stuart was working on an analysis model that measured how much revenue Activision would lose if we made ABK games exclusive and the potential increase in Xbox console sales and Game Pass subscribers needed to offset that revenue

#23 — Xbox missed its revenue target by over $780 million.​

Phil Spencer also confirmed that the Xbox division is not meeting its internal targets.

And the business is not strong.

#24 — Phil Spencer proposed the idea of shutting down Xbox, in 2019.​
Also calls Xbox “Polaroid.”

#25 — Of all consoles sold in 2021, Xbox had a 16% market share

#26 — Phil Spencer’s email on August 26, 2022, rang “alarm bells” for Jim Ryan​
Here is that complete email exchange between Jim Ryan and Phil Spencer.

#27 — Jim Ryan told that Phil Spencer offered Sony only old and select new games as part of the ABK agreement​
According to Jim Ryan, Phil Spencer sent a list of games that Microsoft would keep multiplatform after the acquisition, but that list was “inadequate” and only had “old games.”

According to Jim, Overwatch 1 was included in that list, but Overwatch 2 was not.

#28 — Microsoft’s internal document shows they treat Cloud as a separate market​

This goes against their regulatory arguments that Cloud gaming is only a feature and not a separate market

#29 — Satya Nadella also called Cloud gaming a separate market​
From Satya Nadella’s testimony in court.


#30 — Microsoft’s leadership discards Nintendo when looking at Xbox's success metrics​


FYI — SLT refers “Senior Leadership Team” that includes top executives such as Satya Nadella, Phil Spencer, Amy Hood, Tim Stuart, and Sarah Bond.

#31 — Microsoft did no strategic or financial analysis before making the Nintendo COD deal​
Xbox CFO Tim Stuart confirmed this.


This was interesting because (1) Microsoft was advertising COD’s availability to 150+ million gamers, and (2) Microsoft told the courts that they select platforms and exclusivity of each title based on detailed strategic and financial analysis.

#32 — Microsoft did not consult Activision before making the Nintendo/COD deal, Bobby Kottick revealed​

#33 — Microsoft tried to buy “Zynga.” Take-Two purchased Zynga later.​


Phil Spencer said that they thought they need someone even bigger. That’s where Activision-Blizzard-King came into the picture.

#34 — Microsoft agreed to 80/20 revenue splits for Call of Duty​
Instead of the usual 70% revenue, Microsoft agreed to give ABK 80% of revenue on every COD game sale on Xbox.

Microsoft did so because they thought it was “critical to get Call of Duty on Xbox.”

#35 — Microsoft bought Ninja Theory for $117 million in 2018.

#36 — Pete Hines suggested Deathloop's exclusivity​
Pete Hines also told the courts that it was Zenimax that actively sought exclusivity for each title from console manufacturers, e.g., PlayStation and Microsoft.

ACTIVISION-BLIZZARD-KING​
#37 — Kottick regrets not bringing COD to Switch​
https://www.theverge.com/e/23541088

After watching the prototype, Kottick didn’t think Nintendo Switch would be a big success. “I made a bad judgment,” Kottick said.

Kottick intends to change that and bring COD to Switch 2.

#38 — Kottick is open to bringing COD to Switch and Cloud without Microsoft​
As long as the commercial terms make sense.