The video gaming industry has been abuzz with rumors and speculations about why Sony didn’t sign a 10-year deal with Activision for Call of Duty (CoD). According to the UK Competition and Markets Authority (CMA) report, Microsoft’s contract deals with cloud providers might be the reason behind Sony’s decision.
While a 10-year CoD deal would have been a lucrative opportunity for Sony, it appears that there were significant financial implications that made them reconsider. In this blog, we will explore the details of the CMA report and shed light on why Sony might have been disinclined to sign a long-term deal with Activision.
Cloud providers like Amazon Web Services (AWS) and Microsoft Azure have become the backbone of the video gaming industry. Platform holders like Sony and Microsoft use these providers to deliver gameplay experiences to their customers. However, as per the CMA report, Microsoft’s deals with cloud providers favored the company to such an extent that Sony couldn’t agree to Activision’s 10-year CoD deal.
The report states that Microsoft’s partnership with cloud providers ensured that they kept 100% of the game’s revenue, including in-game store purchases. Meanwhile, Sony and other platform holders only keep 30% of the revenue generated from such purchases. Since CoD is an extremely successful game franchise, the financial implications of moving the game to Microsoft’s platform for Sony would have been significant.
Moreover, the report reveals that Microsoft secured a discounted price from cloud providers, offering them more significant cost savings than their competitors. Such exclusive deals with cloud providers provide a financial edge to Microsoft, which Sony cannot match.
The CMA report indicates that Microsoft, with its vast resources, has been leveraging its power and negotiating extensive deals with cloud gamers. In doing so, the company is subtly taking market share from its competitors, including Sony. Sony, which doesn’t have Microsoft’s vast resources, has to consider various factors before signing long-term deals like the 10-year CoD contract.
The CMA report also raises concerns about the monopoly of large technology companies in various sectors. It reiterates the need for fair and level playing fields in business, especially for the benefit of consumers.
The UK CMA report has offered an explanation for why Sony might have declined to sign a 10-year CoD deal with Activision. Microsoft’s advantageous cloud provider deals made it difficult for Sony to compete with the company’s financial advantages. The report highlights the importance of a level-playing field in business and the need for fair competition. As the video game industry continues to evolve, it’s essential to have regulations that ensure the growth is fair and sustainable for all stakeholders.