One third-party in China said to express concern with Activision/Microsoft deal
At least one-third party in China has expressed its worries about Microsoft's (MSFT) planned $69 billion acquisition of videogame giant Activision (ATVI).The third party expressed...
seekingalpha.com
At least one-third party in China has expressed its worries about Microsoft's planned $69 billion acquisition of videogame giant Activision.
The third party expressed its concerns to China's antitrust regulator, the State Administration for Market Regulation, according to a Dealreporter item on Friday. The publication previously reported that two Chinese game operators, including Tencent, were supportive of the transaction.
From the lawyer
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New report from MLex:
- Top executives from Microsoft, Activision Blizzard and Sony, as well as representatives from Nvidia, Electronic Arts and Valve, are expected to appear at a closed-door hearing in Brussels on Tuesday 21st.
- Microsoft is calling up its president, Brad Smith, and the chief executive of its gaming division, Phil Spencer. From Activision, Bobby Kotick is also likely to appear.
- Jim Ryan, chief executive of Sony Interactive Entertainment, will also be in Brussels to underline Sony's position that the deal will harm competition.
- Further representatives from Google, Nvidia, Electronic Arts and Valve will also be present at the hearing.
- The European Games Developer Federation will be in attendance too.
- MLex understands that the Statement of Objectionsmaintains the bulk of its concerns from November.
- Microsoft will face the commission's case team at the hearing, which is also attended by a broader audience of commission officials and representatives from the bloc's national competition watchdogs.
- Other rivals and customers could be there too.
It sounds like a mini E3
The hearing is confidential but it's just another step in the process. Post hearing MS will offer remedies.
I was just checking MLex and in the last 15 years they don't have a lot of reports about what was discussed in similar hearings. But they have a good amount of reports (with insider info) when parties start offering remedies to the EC and other regulators.
So, I guess that's it's more likely that we get something new when the remedy talks begins.
In any case, with so many parties attending, maybe Reuters, Bloomberg, WSJ, NYT, Financial Times or Politico will share something about the hearing.
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New report from MLex:
- Top executives from Microsoft, Activision Blizzard and Sony, as well as representatives from Nvidia, Electronic Arts and Valve, are expected to appear at a closed-door hearing in Brussels on Tuesday 21st.
- Microsoft is calling up its president, Brad Smith, and the chief executive of its gaming division, Phil Spencer. From Activision, Bobby Kotick is also likely to appear.
- Jim Ryan, chief executive of Sony Interactive Entertainment, will also be in Brussels to underline Sony's position that the deal will harm competition.
- Further representatives from Google, Nvidia, Electronic Arts and Valve will also be present at the hearing.
- The European Games Developer Federation will be in attendance too.
- MLex understands that the Statement of Objectionsmaintains the bulk of its concerns from November.
- Microsoft will face the commission's case team at the hearing, which is also attended by a broader audience of commission officials and representatives from the bloc's national competition watchdogs.
- Other rivals and customers could be there too.
It sounds like a mini E3
The hearing is confidential but it's just another step in the process. Post hearing MS will offer remedies.
I was just checking MLex and in the last 15 years they don't have a lot of reports about what was discussed in similar hearings. But they have a good amount of reports (with insider info) when parties start offering remedies to the EC and other regulators.
So, I guess that's it's more likely that we get something new when the remedy talks begins.
In any case, with so many parties attending, maybe Reuters, Bloomberg, WSJ, NYT, Financial Times or Politico will share something about the hearing.
From the lawyer
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THE LAST 10 DAYS
- February 8th: Provisional findings and possible remedies from the CMA; they have concerns about the console and cloud gaming markets.
- February 8th: Sony requests to reject or limit Microsoft's subpoena in the FTC case.
- February 13th: Microsoft's opposition to Sony requesting a rejection/limitation to their subpoena in the FTC case.
- February 14th: MS and ABK will make the case for the acquisition in Europe at a closed-door hearing in Brussels on Tuesday 21st. Sony, Google, Nvidia, Valve, Electronic Arts and the European Games Developer Federation, among others, will be attending.
- February 14th: Warren Buffett's Berkshire Hathaway reduces its stakes in Activision Blizzard by 12.35%.
- February 14th: rumours about ABK hiring a defense activism team, suggesting that the deal could be abandoned or that divestures are coming.
- February 16th: Deutsche Bank upgraded ABK to Buy, new price target is $90.
- February 16th: rumours about a meeting between MS and Sony in early February to reach an agreement about COD.
- February 16th: summary of third party calls that the CMA had from October 2022 to January 2023.
- February 17th: at least one third party has concerns about the deal in China.
——————
THE LAST 10 DAYS
- February 8th: Provisional findings and possible remedies from the CMA; they have concerns about the console and cloud gaming markets.
- February 8th: Sony requests to reject or limit Microsoft's subpoena in the FTC case.
- February 13th: Microsoft's opposition to Sony requesting a rejection/limitation to their subpoena in the FTC case.
- February 14th: MS and ABK will make the case for the acquisition in Europe at a closed-door hearing in Brussels on Tuesday 21st. Sony, Google, Nvidia, Valve, Electronic Arts and the European Games Developer Federation, among others, will be attending.
- February 14th: Warren Buffett's Berkshire Hathaway reduces its stakes in Activision Blizzard by 12.35%.
- February 14th: rumours about ABK hiring a defense activism team, suggesting that the deal could be abandoned or that divestures are coming.
- February 16th: Deutsche Bank upgraded ABK to Buy, new price target is $90.
- February 16th: rumours about a meeting between MS and Sony in early February to reach an agreement about COD.
- February 16th: summary of third party calls that the CMA had from October 2022 to January 2023.
- February 17th: at least one third party has concerns about the deal in China.
Microsoft set to defend Activision-Blizzard acquisition against E.U. complaints on February 21
Yahoo Finance tech editor Dan Howley joins Yahoo Finance Live to discuss the latest on Microsoft's proposed acquisition of Activision-Blizzard.
From the lawyer
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I'm still reading the PF
Meanwhile, my highlights from the Appendices.
Appendix C includes lots of stats, for example about console hardware by sales value, volume, active users and installed base in UK and worldwide from 2019 - 2021:
Gamepass Ultimate has been growing every year, GP console is slowly going down, Xbox Live Gold is going down fast:
Is Nintendo cloud gaming service coming to new devices? (page C5)
Nintendo Switch Online has been excluded from our shares as Nintendo's cloud gaming service is very limited. Nintendo's cloud gaming service is only available on the Nintendo Switch device and [REDACTED]. Nintendo Switch Online gives gamers access to online play and cloud saving amongst other features. We therefore see Nintendo Switch Online as predominately an online multiplayer service rather than a cloud gaming service.
Future cloud gaming providers (page C5)
Some cloud gaming services—notably Amazon Luna—are not fully launched. Furthermore, other potential providers have not yet entered. For example, [REDACTED] 4, [REDACTED].
PS: Note 4 is from a call with a third party. So, one of the 6 third parties interviewed through videocalls could be working on a cloud gaming service (EA or Valve, maybe?)
It's hard to guess who would like to pay for cloud gaming without subscription services (page C6)
Many cloud gaming services are contained within multi-game subscription services such as Xbox Game Pass Ultimate or PlayStation Plus Premium. In such cases it is harder to determine how much customers would pay for the cloud gaming services without the multi-game subscription.
PS Cloud gaming share is overestimated in 2021 and 2022 (page C6)
The monthly figure for PlayStation Cloud Gaming was constructed by summing the number of subscribers to (any tier of) PlayStation Plus and PlayStation Now who had used SIE's cloud service in that month. This means a cloud gaming user who subscribed to both PlayStation Plus and PlayStation Now was double counted. This only applies to the figures between January 2020 and July 2022 (when PlayStation Now was discontinued). This likely still means that PlayStation Cloud Gaming's share is overestimated in both 2021 and 2022.
The hypothetical scenarios presented in the survey were difficult to design and the interpretation should be cautious (page D3)
Nonetheless, this was a difficult subject to tackle in a merger survey questionnaire with an audience of console gamers, some of whom had played CoD much less frequently or less recently than others and whose past and potential future purchasing behaviours, as a group, included a high level of variability. We also recognise that the hypothetical scenarios we presented to elicit responses were, of necessity, more difficult to design robustly than in many other merger surveys. We are, therefore, cautious in our interpretation of those survey findings that rely on stated behaviours in response to hypothetical scenarios presented to respondents.
Although the survey got a response rate below the one recommenced by the CMA good practice guide, the CMA had game time info that helped asses the representativeness of the respondent group (page D4)
The response rate achieved in the CMA Survey was 4.4%. It is difficult to achieve good response levels in online surveys generally and response rates are often as low as 1%. Here, DJS kept the survey as short and engaging as possible, offered an incentive,
and used several email reminders, but we were not able to achieve a response rate of at least 5%, the level discussed in our good practice guide. However, in this case we had gametime information for the entire sampling frame of PlayStation accounts and this enabled us to assess the representativeness of the respondent group in terms of time playing CoD. We compared those who responded to our survey with the wider sample in terms of time playing CoD and found a good match. Therefore – in terms of considerations around sample bias and in accordance with our good practice guide – we consider we can assign evidential weight to the CMA survey.
MS/ABK considered that the timing of the survey was wrong because it coincided with the launch of Modern Warfare 2, but the CMA believes that they managed to limit the impact (page D5)
The Parties submitted that the timing of the survey coincided with the launch of CoD: Modern Warfare II.The Parties said that there would be extensive marketing by Activision and SIE/PlayStation around the launch date as well as advertising across a range of channels. They submitted that this would be likely to artificially increase the relative importance that gamers (and therefore survey respondents) assign to CoD, biasing the results.
In response, we acknowledge that our survey coincided with a period of heightened advertising around the launch of CoD: Modern Warfare II. This was unavoidable given the time constraints of our inquiry. However, while we agree that this marketing and advertising activity around the time of the CMA Survey will have drawn attention to CoD in the minds of many gamers, we do not consider that this will have resulted in our findings being biased to a material extent. In our questionnaire, we avoided drawing attention to CoD (in isolation) early in the survey, instead asking about console ownership, choice and use first. Additionally, we requested that SIE should not engage in marketing activity with their customers who were in our sample during the fieldwork period for the CMA Survey. More generally, given the frequency of Call of Duty releases, a situation in which an instalment of Call of Duty is forthcoming is not entirely unrepresentative, and the level of marketing activity would, post-Merger, be within the gift of the Merged Entity (and so could be moderated to be consistent with any strategy under consideration).
Sony receives a discounted margin for every COD sale, but they don't expect that to remain post merger (page E6)
SIE applied a third-party margin of [REDACTED]% for CoD sales on PlayStation. SIE currently receives a margin of [REDACTED]% on CoD sales on PlayStation. SIE stated that it did not believe that the current discounted margin would remain post-merger, given their main competitor will control ABK's content. SIE carried out a sensitivity analysis in which it assumed SIE receives a margin of [REDACTED]% on CoD sales. It estimated that the critical switching rate at which it becomes profitable for the Merged Entity to foreclose SIE increases from [REDACTED]% to [REDACTED]%.
The CMA does not believe that gaming content drives the choice of PC OS (page F1)
As set out further below, our provisional view is that the available evidence does not support a finding that access to gaming content, and Activision content specifically, is likely to be sufficiently important to competition between PC OSs such that the withholding or degrading this input would foreclose PC OS rivals and substantially lessen overall competition in that market. The evidence suggests that (i) games do not drive choice of PC OS, (ii) a relatively low proportion of time on [REDACTED] is spent gaming and, an even lower proportion is likely to be spent playing Activision's games (even taking into account the third party complainant's [REDACTED] efforts to increase the number of Activision games available on [REDACTED] in the future), and (iii) given the wide range of functionality for which users choose to buy a PC, a very small proportion of those who have an interest in playing Activision games on [REDACTED] would be likely to switch to a different PC OS if these games were not available. As such, we do not consider further in this Appendix whether the Merged Entity would have the technical ability to restrict or degrade access to Activision's content, or whether it would have the incentive to do so.
——————
I'm still reading the PF
Meanwhile, my highlights from the Appendices.
Appendix C includes lots of stats, for example about console hardware by sales value, volume, active users and installed base in UK and worldwide from 2019 - 2021:
Gamepass Ultimate has been growing every year, GP console is slowly going down, Xbox Live Gold is going down fast:
Is Nintendo cloud gaming service coming to new devices? (page C5)
Nintendo Switch Online has been excluded from our shares as Nintendo's cloud gaming service is very limited. Nintendo's cloud gaming service is only available on the Nintendo Switch device and [REDACTED]. Nintendo Switch Online gives gamers access to online play and cloud saving amongst other features. We therefore see Nintendo Switch Online as predominately an online multiplayer service rather than a cloud gaming service.
Future cloud gaming providers (page C5)
Some cloud gaming services—notably Amazon Luna—are not fully launched. Furthermore, other potential providers have not yet entered. For example, [REDACTED] 4, [REDACTED].
PS: Note 4 is from a call with a third party. So, one of the 6 third parties interviewed through videocalls could be working on a cloud gaming service (EA or Valve, maybe?)
It's hard to guess who would like to pay for cloud gaming without subscription services (page C6)
Many cloud gaming services are contained within multi-game subscription services such as Xbox Game Pass Ultimate or PlayStation Plus Premium. In such cases it is harder to determine how much customers would pay for the cloud gaming services without the multi-game subscription.
PS Cloud gaming share is overestimated in 2021 and 2022 (page C6)
The monthly figure for PlayStation Cloud Gaming was constructed by summing the number of subscribers to (any tier of) PlayStation Plus and PlayStation Now who had used SIE's cloud service in that month. This means a cloud gaming user who subscribed to both PlayStation Plus and PlayStation Now was double counted. This only applies to the figures between January 2020 and July 2022 (when PlayStation Now was discontinued). This likely still means that PlayStation Cloud Gaming's share is overestimated in both 2021 and 2022.
The hypothetical scenarios presented in the survey were difficult to design and the interpretation should be cautious (page D3)
Nonetheless, this was a difficult subject to tackle in a merger survey questionnaire with an audience of console gamers, some of whom had played CoD much less frequently or less recently than others and whose past and potential future purchasing behaviours, as a group, included a high level of variability. We also recognise that the hypothetical scenarios we presented to elicit responses were, of necessity, more difficult to design robustly than in many other merger surveys. We are, therefore, cautious in our interpretation of those survey findings that rely on stated behaviours in response to hypothetical scenarios presented to respondents.
Although the survey got a response rate below the one recommenced by the CMA good practice guide, the CMA had game time info that helped asses the representativeness of the respondent group (page D4)
The response rate achieved in the CMA Survey was 4.4%. It is difficult to achieve good response levels in online surveys generally and response rates are often as low as 1%. Here, DJS kept the survey as short and engaging as possible, offered an incentive,
and used several email reminders, but we were not able to achieve a response rate of at least 5%, the level discussed in our good practice guide. However, in this case we had gametime information for the entire sampling frame of PlayStation accounts and this enabled us to assess the representativeness of the respondent group in terms of time playing CoD. We compared those who responded to our survey with the wider sample in terms of time playing CoD and found a good match. Therefore – in terms of considerations around sample bias and in accordance with our good practice guide – we consider we can assign evidential weight to the CMA survey.
MS/ABK considered that the timing of the survey was wrong because it coincided with the launch of Modern Warfare 2, but the CMA believes that they managed to limit the impact (page D5)
The Parties submitted that the timing of the survey coincided with the launch of CoD: Modern Warfare II.The Parties said that there would be extensive marketing by Activision and SIE/PlayStation around the launch date as well as advertising across a range of channels. They submitted that this would be likely to artificially increase the relative importance that gamers (and therefore survey respondents) assign to CoD, biasing the results.
In response, we acknowledge that our survey coincided with a period of heightened advertising around the launch of CoD: Modern Warfare II. This was unavoidable given the time constraints of our inquiry. However, while we agree that this marketing and advertising activity around the time of the CMA Survey will have drawn attention to CoD in the minds of many gamers, we do not consider that this will have resulted in our findings being biased to a material extent. In our questionnaire, we avoided drawing attention to CoD (in isolation) early in the survey, instead asking about console ownership, choice and use first. Additionally, we requested that SIE should not engage in marketing activity with their customers who were in our sample during the fieldwork period for the CMA Survey. More generally, given the frequency of Call of Duty releases, a situation in which an instalment of Call of Duty is forthcoming is not entirely unrepresentative, and the level of marketing activity would, post-Merger, be within the gift of the Merged Entity (and so could be moderated to be consistent with any strategy under consideration).
Sony receives a discounted margin for every COD sale, but they don't expect that to remain post merger (page E6)
SIE applied a third-party margin of [REDACTED]% for CoD sales on PlayStation. SIE currently receives a margin of [REDACTED]% on CoD sales on PlayStation. SIE stated that it did not believe that the current discounted margin would remain post-merger, given their main competitor will control ABK's content. SIE carried out a sensitivity analysis in which it assumed SIE receives a margin of [REDACTED]% on CoD sales. It estimated that the critical switching rate at which it becomes profitable for the Merged Entity to foreclose SIE increases from [REDACTED]% to [REDACTED]%.
The CMA does not believe that gaming content drives the choice of PC OS (page F1)
As set out further below, our provisional view is that the available evidence does not support a finding that access to gaming content, and Activision content specifically, is likely to be sufficiently important to competition between PC OSs such that the withholding or degrading this input would foreclose PC OS rivals and substantially lessen overall competition in that market. The evidence suggests that (i) games do not drive choice of PC OS, (ii) a relatively low proportion of time on [REDACTED] is spent gaming and, an even lower proportion is likely to be spent playing Activision's games (even taking into account the third party complainant's [REDACTED] efforts to increase the number of Activision games available on [REDACTED] in the future), and (iii) given the wide range of functionality for which users choose to buy a PC, a very small proportion of those who have an interest in playing Activision games on [REDACTED] would be likely to switch to a different PC OS if these games were not available. As such, we do not consider further in this Appendix whether the Merged Entity would have the technical ability to restrict or degrade access to Activision's content, or whether it would have the incentive to do so.
They could make that with selling 285k+ the last of us part 2 directors cuts
Dude is this s*** over yet?
Xbox BUYS Activision Blizzard! Fight Night!
- Top executives from Microsoft, Activision Blizzard and Sony, as well as representatives from Nvidia, Electronic Arts and Valve, are expected to appear at a closed-door hearing in Brussels on Tuesday 21st. - Microsoft is calling up its president, Brad Smith, and the chief executive of its...
UNI calls on EU to consider impacts on workers of the Microsoft-Activision merger - UNI Global Union
UNI is calling on EU regulators to consider the impact the Microsoft-ABK tie-up would have on the labour market, as well as consumers.
uniglobalunion.org
As the European Commission prepares for a hearing this week on the competition implications of the pending merger between Microsoft and Activision Blizzard (ABK), UNI Global Union is calling on regulators to consider the impact the tie-up would have on the labour market, as well as consumers.
"We know that the commission is focusing on the effect the deal will have on consumers, but it cannot ignore the role this deal would have in making the video game labour market fairer for workers," said Christy Hoffman, General Secretary of UNI Global Union. "This is an industry where workers are crushed by excessive hours and low pay while facing sexual harassment and discrimination. It is an industry that needs an expansion of worker protections, and Microsoft's commitment to labour rights will help make that happen."
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Microsoft's president to push Activision deal at EU hearing; Google, Nvidia also present
Microsoft President Brad Smith will on Tuesday seek to convince EU antitrust regulators at a closed hearing that the U.S. software giant's $69 billion bid for "Call of Duty" maker Activision Blizzard will boost competition.
www.reuters.com
Microsoft President Brad Smith will on Tuesday seek to convince EU antitrust regulators at a closed hearing that the U.S. software giant's $69 billion bid for "Call of Duty" maker Activision Blizzard will boost competition.
Smith will lead a delegation of 18 senior executives, including Microsoft Gaming Chief Executive Officer Phil Spencer, while Activision will be represented by its CEO Robert Kotick according to a European Commission document seen by Reuters.
The hearing will allow Xbox maker Microsoft to gauge the mood among senior EU and national competition officials and Commission lawyers ahead of the submission of remedies to address antitrust concerns.
Sony, which wants the deal to be blocked, is sending its gaming chief Jim Ryan.
Alphabet's Google and chip designer and computing firm Nvidia Corp, which has a gaming business, will also be taking part in the hearing, the EU document showed.
"The European Commission asked for our views in the course of their inquiries into this issue. We will continue to cooperate in any processes, when requested, to ensure all views are considered," a Google spokesperson said.
Nvidia declined to comment. The European Games Developer Federation (EGDF), which has said the deal will allow Microsoft to challenge Apple, Google and Tencent, is one of the participants.
Video game distributor Valve, video game publisher Electronic Arts and the German competition watchdogand its peers in Belgium, the Czech Republic, Finland, France, Italy, Portugal, Spain and Sweden will also be taking part in the event.
From the lawyer
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Small update from MLex:
- Ahead of the meeting and talking with the press, Brad Smith said that: "We are more than willing, given our strategy, to address the concerns that others have”. "Whether it is by contracts, like the one we did with Nintendo this morning, or by regulatory undertakings, as we have consistently been open to”.
- MLex understands that although Sony has refuted the idea that licensing deals will ease competition concerns, it is engaged in talks with the Xbox maker on potential remedies.
- The Statement of Objections is still pursuing all three theories of harm against Microsoft that were mentioned in November (OS and subscription services included, then).
——————
Small update from MLex:
- Ahead of the meeting and talking with the press, Brad Smith said that: "We are more than willing, given our strategy, to address the concerns that others have”. "Whether it is by contracts, like the one we did with Nintendo this morning, or by regulatory undertakings, as we have consistently been open to”.
- MLex understands that although Sony has refuted the idea that licensing deals will ease competition concerns, it is engaged in talks with the Xbox maker on potential remedies.
- The Statement of Objections is still pursuing all three theories of harm against Microsoft that were mentioned in November (OS and subscription services included, then).
Still sucking Sonys balls.
Upset MS went with its own show rather than the Trailers show...I mean award show.
Upset MS went with its own show rather than the Trailers show...I mean award show.
If we look historically about pricing parity:
Psychonauts 2
Deathloop
Minecraft
Elder Scrolls Online (and expansions)
Minecraft Legends
All MS games, all on PlayStation (couple on Switch), and all price parity.
So the question is, why is Geoff "Blue Pony Balls" Keighley all of a sudden concerned about price parity? Where was his price parity concern when Sony came out and bought the publisher, Bungie, and they stated that Destiny will remain on Xbox?