Where Does The Microsoft-Activision Deal Leave PlayStation?

Where Does The Microsoft-Activision Deal Leave PlayStation?

The news that Xbox intends to acquire Activision Blizzard raises many questions. One of the biggest: what does this acquisition mean for PlayStation and its still-unannounced Game Pass competitor? Let’s talk about it.

Oh, to have been a fly on the wall at PlayStation last night. A moment of reckoning almost a decade in the making has arrived.

When Sony asserted itself and its dominant PlayStation 4 as the home of high quality, exclusive games, it set a cowed Xbox on a new path. Xbox stopped trying to compete on exclusives and focused on a new, third-party centric goal. If Sony staked its model on games you couldn’t play anywhere else, then Xbox would become the best place to play everything else.

As time has gone on, that strategy hasn’t changed much. Game Pass has proven popular, and a hungry beast. To position Game Pass as its entire platform moving forward, Xbox must now regularly shovel content into its video game furnace. The best way to do that is to ensure as many studios as possible are creating content expressly for Game Pass. And so, the battle comes full circle. Weirdly and unexpectedly, exclusivity has once again become the industry’s central battle.

It is exceedingly rare to see Sony caught behind the eight ball like this. When the Xbox Series X|S launched in the same window as Sony’s PlayStation 5, Sony seemed confident it had everything it needed to battle back its competitor for another generation. It seems to have miscalculated how far Xbox was willing to go. Sony has made it clear that it intends to get a Game Pass inspired platform off the ground, but nothing has emerged yet. Every month it spends building that service is a month Xbox can spend courting more talent.

Sony can’t really afford to delay its Game Pass competitor much longer. The thing about having a Game Pass style subscription service is you need content to put on it. This is why Xbox is on a shopping spree. Between Bethesda and ABK, Xbox has now locked up two of the largest third-party publishers in the industry. Only three other AAA publishers — Electronic Arts, Ubisoft, and Take-Two Interactive — now remain. All three have content deals with Game Pass. Take-Two cycles 2K and Rockstar titles on and off the service regularly. Ubisoft will launch Rainbow Six Extraction on Game Pass this week, but its Ubisoft+ platform remains separate. EA has walked up to the acquisition line but has not dared cross it. Its full EA Play library is now bundled into the Game Pass Ultimate subscription.

And so, Sony’s third-party options grow thinner. It could always license titles from Xbox studios for its platform, but that allows Xbox to hold all the cards on content. That’s ground Sony is not used to ceding. Knowing that, could PlayStation make a move on one of the remaining AAA publishers? Possibly. What if Xbox cuts a deal and gets Cloud Gaming up and running on the Nintendo Switch? PlayStation will look worse for wanting to protect itself because the optics will suggest it doesn’t want to partner up.

It has all the drama of one of Shakespeare’s histories. An old foe it had considered insignificant has staged a carefully plotted coup. And it’s working.

So what can PlayStation do? My expectation is they’ll try to match it.

If I had to pick one of three companies above most likely to cop an offer from PlayStation, my money would be on Take-Two. It would be a costly venture, perhaps pricier than the A$100 Billion Microsoft paid for ABK. Such a deal would make Rockstar and its invulnerable Grand Theft Auto IP a PlayStation exclusive, and that would have to be an attractive prospect.

The other alternative is that Sony pushes harder into indie territory, making its platform a curated library of smaller titles by smaller studios and publishers. Given Sony’s uneven history with indies, this seems unlikely but it is a move it could make.

Regardless of the move it makes, another question arises: what then? What can PlayStation do now to make any approximation of Game Pass stick? The answer is to buy and buy big.

To be clear, this all sucks. This kind of consolidation is not only bad for the games industry, it’s bad in any part of the entertainment world. It does little for creativity, and it drives huge piles of money into fewer and fewer hands. Is Xbox Game Pass a ripper deal at a purely retail level? Absolutely. But will we still be saying that in four years when the buying spree is complete and these megastudios are shuffling around inside a single ecosystem, trying to stay out of each other’s way so as not to step on Microsoft’s bottom line? Time’s gonna tell on this one.

For more, Kotaku US’ Luke Plunkett wrote a great piece on why all this is awful and will only continue. I recommend you read it.

Comments

  • When Phil said the console wars were over, he meant that you’d only be buying an Xbox.

    Hopefully we may see Gravity Rush make a comeback.

  • Great analysis that I completely agree with. Take-Two and EA are probably the only two publishers with enough ‘pull’ for their top-tier games for Sony to be able to compete against MS (and even then, they’d be outgunned). But this consolidation will absolutely make things worse, not better, as we’ve already seen with past acquisitions/mergers (e.g. ABK).

    As a gamer in this new reality, this definitely makes me want to pick up a Series X, especially as I haven’t had confidence in Sony’s ability/willingness to truly match Gamepass, even before this latest news. Plus, as a PC gamer, Ultimate has been great, particularly when jumping between devices playing from the same save games.

    But I also LOVE the haptics of the DualSense (although I haven’t had great luck with their durability, currently waiting on a third replacement due to stick drift, and previously had issues with the adaptive triggers). I really hope MS come out with their own improved haptic controller soon.

    I find the reporting on the numbers being paid funny though. In the last few hours alone I’ve seen $67B US, $69B US, $70B US, $90B AU and now $100B AU. I know rounding is common place, but it means a completely different thing when you’re talking billions of dollars.

  • It’s far too early to be counting Sony out or putting all the eggs in the acquisition and subscription service basket.
    The idea Sony has to respond to everything MS is doing is a dud take that’s been rolled out on a weekly basis for years now despite the consistent answer.

    Sony just needs to build on what they have and MS needs to start delivering on what it’s buying.

  • “To be clear, this all sucks.”

    Not for the consumer. Value is about to become a BIG player in the console wars, and that is great for everybody’s wallets.

    The big studios are going to get paid no matter what (maybe without needing to use pay-to-win or gambling mechanics), and Indies are going to have the three main platforms fighting for good games.

  • The reality is Sony just doesn’t have a fraction of the buying power that Microsoft does. What they do have is some of the best talent in the industry. If the quality games keep coming I’m not going anywhere.
    I’d be lying as a PlayStation gamer if I said this doesn’t sting a little though.

    • Yep. MS are sitting on piles of cash compared to Sony, AND they got a bargain served up to them with Activision Blizzard’s share price taking a massive hit over the last few months, trading at almost half their peak price (from $103/share down to $57 at it’s worst, and getting to about $65 before this deal).

      I’m not sure that there’s a similar acquisition opportunity for Sony to grab. Ubisoft’s share price is down from 12 months ago by a decent amount. As is Namco Bandai. But I’m not sure that either of those would be enough to compete.

      Take-Two and EA are the only publishers that could compete against MS’s lineup, but Sony couldn’t afford them even if it wanted them.

    • The problem is that the biggest selling games l, like COD, are now xbox exclusive. I agree Sony’s exclusive line up is second to none (Ms are definitely making ground here as well, weather you want to admit it or not) but the general masses don’t care. They want to pay 15 bucks a month for the annual Fifa and COD games and you have to admit, the vaule for money is incredible.

    • I think they mean based on net worth and revenue generated: Square Enix is worth $2 billion USD and Namco Bandai $7 billion USD. EA is worth $37 billion USD.

  • The best way to combat a move like this is to keep investing in studios and making new IP’s.
    Imagine Microsoft had invested USD69b into something new rather than buying a festering turd.

    • This is the way.

      Flood smaller studios with investment and grow the next AAA studios.

      I’m sure there’s plenty of ex-AAA studio devs and designers sitting on great ideas that got shot down in favour of pumping out the next generic iteration on an existing IP, who could do great things if given the chance.

    • I think you’re probably right. Sony certainly can’t go toe-to-toe with Microsoft on acquisitions. The reality is that MS will still need to get people on to their console in big numbers AND they will need to pump up the cost of game pass to pay for all of these things in the long run.

  • If Activision Blizzard becomes a third-party developer for Xbox does this mean that Activision Treyarch Raven Software High Moon Studios Beenox Sledgehammer Games Infinity Ward Demonware and Toys for Bob will stop developing the Call of Duty series on PS4 and PS5 along with Crash Bandicoot Spyro the Dragon and Tony Hawk?
    I mean what the fuck is going on here with this Activision Blizzard deal with Xbox.

    • unlike the Bethesda/Zenimax buyout, it is extremely unlikely that CoD and other games Actiblizz has put out will become exclusives because those studioes and developers have problem dealing with Sony.

      Big thing that people forget/dont understand is that Bethesda Game Studios has had a history of issues working with Sony, from allowing modding to happen on consoles to piss poor versions of their games working on Playstation consoles. I can gaurentee you that bethesda had no issue dropping support for playstation when given the offer.

  • If Sony want to go shopping for companies with decent IP but temporarily depressed stock prices due to employee abuse scandals they are sadly spoiled for choice. Ubisoft could probably be had for a relative song.

  • There’s an economic theory which suggests major consolidation of companies in an industry is signalling a major market crash in that industry, as it is indicating that the top competitors are struggling to find profitable innovation strategies for growth while even major players in the industry are also struggling to remain profitable.

    This could be signalling trouble ahead for the AAA sector of games development

    • Koticks interview yesterday indicated this exact issue, well that and not being able to attract talent, which considering the dumpster fire they made isn’t hard to reconcile.

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