FTC, Xbox-Activision and Sony Fiasco – The Biggest Reveals You Probably Don’t Know
The US Federal Trade Commission has been engaged in a trial with Microsoft over its $68.7 billion acquisition of Activision Blizzard. While a verdict is coming later this month, the revelations from the proceedings have been insane, whether talking about Microsoft’s strategies over the years or Sony’s triple-A game budget. Let’s go over 16 of the biggest here.
Microsoft Wanted to Spend “Sony Out of Business”
Several previously confidential documents and emails have come to light, including Xbox Game Studios head Matt Booty telling CFO Tim Stuart in 2019 that the company was in a “very unique position to be able to go spend Sony out of business.” He also acknowledged Sony as “the only other player who could compete with Game Pass, and we have a 2-year and 10 million subs lead.”
Google at the time was cited as being “3-4 years away from being able to have a studio up and running” (and we know how that turned out) while Amazon had “shown no ability to execute on game content” (harsh but true at the time). The email is argued to be old and referring to “industry trends” that were never pursued or are “unrelated to the acquisition,” but it certainly showcases the mindset back then.
Microsoft Listed Sega, Bungie, Square Enix and More for Acquisition
One bit that wasn’t refuted is how Microsoft had a list of potential other acquisition targets in 2020, which included Sega and Bungie. These were part of a “consideration” set based on Game Pass and Steam data and included studios like Larian, Team Cherry, FromSoftware, CD Projekt, Remedy Entertainment and more. It even listed companies like Nintendo, Sony, DeNA, Square Enix and even Sony for bolstering its “mobile footprint.”
While it did filter out some names, including those with acquisition prices over $20 billion, Square Enix looked to be part of a separate acquisition in 2019. It was internally referred to as “Project Phoenix” and would see the publisher’s Western-developed titles – which eventually went to Embracer – acquired in addition to franchises like Final Fantasy, Kingdom Hearts and so on. It would have strengthened Microsoft’s Japan presence and even kept those titles off of PlayStation, but obviously, it didn’t go through.
Project Dragon Exclusive to Xbox Series X/S and PC
Among the many projects in development at IO Interactive is a new fantasy RPG called Project Dragon. Initially rumored to be exclusive to Xbox Series X/S and PC, it was discovered in emails during the hearing that it’s only coming to Microsoft’s console (at least at launch). Probably not the craziest news, especially since very little has been revealed about the project. However, given that it’s not out until post-April 2025, at the very least, receiving confirmation now without any official announcement is pretty insane.
Indiana Jones was Previously Multi-Platform, Now Exclusive to Xbox and PC
MachineGames’ upcoming Indiana Jones title will also be exclusive to Xbox Series X/S and PC. However, considering its announcement before ZeniMax’s acquisition by Microsoft, something has to give. Sure enough, Bethesda’s SVP of global marketing and communications, Pete Hines, confirmed to the FTC’s lawyers that the original deal with Disney was to release the title on “multiple consoles.”
The deal was amended after Bethesda was acquired, turning it into an Xbox exclusive (also releasing day one on Game Pass). Hines said, in his view, that it was about “reducing risk and trying to get to a degree of certainty. You’re dealing with a licensor who’s going to have a ton of feedback on what you’re making, add a lot of time to your schedule, and you’re required to provide a release window. You immediately have a clock that’s ticking. We liked the idea of bringing it to Game Pass and all the players we could reach there.”
The Outer Worlds 2 on PlayStation Still Undecided
There is a bit of a twist in the exclusivity tale. The Outer Worlds 2, announced by Obsidian Entertainment in 2021 for Xbox Series X/S and PC, is undecided on PlayStation. It follows the FTC asking if a title like The Outer Worlds, which has an existing community on PlayStation, would be exclusive to Xbox. Xbox Game Studios head Matt Booty said that a “decision has not been made” about this but that Microsoft is committed to communities for existing titles on other platforms. So far, as seen with Minecraft, it’s held up that part of the bargain.
Xbox Losing Console Wars Since 2021
Microsoft Gaming CEO Phil Spencer has spoken before about Xbox’s current position in the console wars. However, in Microsoft’s document to the FTC, it outright admitted that it lost the console wars and has been losing since PlayStation and Nintendo consoles outsold the original Xbox in 2001 by a “significant margin.” In terms of current console revenue and installed customer base, Xbox has a 21 percent share. While the shares for PlayStation and Nintendo were redacted, Xbox was established as firmly in third place.
The Last of Us Part 2 and Horizon Forbidden West Budgets Revealed
Sony also revealed some documents and, unfortunately, it didn’t redact them properly. Before being pulled, the documents revealed that The Last of Us Part 2 cost $220 million to develop with 200 employees working full-time. Horizon Forbidden West had over 300 employees and cost $212 million. It also revealed that global marketing costs for triple-A titles were large in addition to the development costs, which makes you wonder about the total money spent.
Next Console Generation Expected to Start in 2028
While rumours have floated about a PS5 Pro coming next year in December, Microsoft believes that the next generation of consoles will begin in 2028. It didn’t confirm that a new Xbox was on the way or that Sony has the PlayStation 6 up its sleeve – just that the “expected starting period” for the next generation is 2028. That would mean an eight-year life cycle for Xbox Series X/S and PS5, which launched in November 2020 – not too shabby.
PlayStation Not Against Starfield’s Xbox Exclusivity
PlayStation has been swearing up and down about the popularity of Call of Duty on its consoles, but it’s not exactly worried about Bethesda’s Starfield being exclusive. Sony Interactive Entertainment president and CEO Jim Ryan testified that he didn’t like Redfall (which makes two of us) or Starfield as exclusives, but also didn’t think it’s “anti-competitive.” Then again, he did expect those titles to be multi-platform since “pretty much every other Bethesda game” fell into that category before Microsoft acquired the studio.
Microsoft Acquired Bethesda to Avoid Starfield Being PS5-Exclusive
Before Microsoft acquired ZeniMax and its studios, Sony was reportedly in talks to make Starfield a timed exclusive for its consoles. Phil Spencer lent some credibility to those reports, stating, “When we acquired ZeniMax, one of the impetus for that is that Sony had done a deal for Deathloop and Ghostwire…to pay Bethesda to not ship those games on Xbox.”
When Microsoft heard that Starfield could also skip Xbox at launch, Spencer said, “We can’t be in a position as a third-place console where we fall further behind on our content ownership, so we’ve had to secure content to remain viable in the business.” So there you have it – part of the reason for acquiring ZeniMax was to ensure Starfield didn’t end up exclusive (timed or otherwise) to PS5, further emphasizing its importance as a title.
The Elder Scrolls 6 is “Five-Plus” Years Away
With Starfield being important to Xbox, it seemed a given that The Elder Scrolls 6 would crop up at some point during the hearings. Microsoft’s Phil Spencer said it’s “many years away”, making it “difficult for us right now to nail down exactly what platforms that game will launch on.” So, for now, there’s still hope that it comes to PlayStation.
Perhaps more interesting is that he expects it’s likely “five-plus” years from release. Of course, that means it could launch in 2028 at the earliest and perhaps even later. So if you expected any news on the title (aside from it potentially being Todd Howard’s last game in the series as director), the wait continues.
Jim Ryan and Bobby Kotick Not in Favor of Game Pass
One thing is for sure – neither Jim Ryan nor Activision Blizzard CEO Bobby Kotick are fans of Game Pass. The former said after speaking to “all publishers,” they “unanimously do not like Game Pass because it’s value-destructive. I talk to publishers all the time, and this is a very commonly held view over many years by the publishers.”
Kotick also doesn’t approve multi-game subscription services but also can’t do anything about it if the acquisition goes through. “I don’t agree with the idea of a multi-game subscription service as a business proposition going forwards.” However, he acknowledged that Activision and Microsoft could “agree to disagree” (perhaps due to the reported $390 million he’ll receive from company shares if the deal goes through).
Kotick Regrets Not Supporting Nintendo Switch
Speaking of Kotick’s other regrets (not including various alleged scandals at Activision Blizzard), he feels bad about not releasing Call of Duty on the Nintendo Switch. It was considered but didn’t happen due to “bad judgement.” “When I saw a prototype of the Switch, it was different. I thought the Wii was the most extraordinary video game system ever created. When I saw Switch prototypes, I was concerned. They were trying to accomplish a lot. I didn’t think it was going to be successful,” said Kotick. But hey, at least he’ll “consider it” in the future if this acquisition doesn’t go through (barring any supposed lack of resources).
Kotick Believes Next Nintendo Console is About as Powerful as Xbox One/PS4
Kotick also revealed “active talks” with Nintendo about its next-generation console. He said it would likely be equivalent to the hardware in the PS4 and Xbox One. Of course, it’s not an outright confirmation that the Switch 2 is real, but just the fact that talks for a new Nintendo console were happening, especially given the years of rumors, is something. Right?
Kotick Demanded Higher Revenue Share for Call of Duty on Xbox
Hilariously, in the early days of the Xbox Series X/S, Kotick threatened to remove Call of Duty from Microsoft’s consoles altogether. The reason? A higher revenue share, as testified by Xbox corporate vice president Sarah Bond. “It was clear that Call of Duty would be on PS5, and that would not have been good if it was not also on Xbox if it was launching at the same time. It was clear if we did not move beyond the standard revenue share, he would not place Call of Duty on Xbox,” said Bond.
This led to Microsoft agreeing to an 80/20 revenue split (the standard practice is 70/30). It only adds more fuel to the rumors that Kotick is out if the acquisition goes through. As always, time will tell.
Microsoft Expects PS5 Slim Later This Year
The next generation of gaming consoles may start after the next five years or so, but Microsoft believes Sony is launching a new PS5 later this year. Recent court documents saw it claim, “PlayStation likewise sells a less expensive Digital Edition for $399.99 and is expected to release a PlayStation Slim later this year at the same reduced price point.” It also believes that its “handheld version of the PlayStation 5”, likely referring to Project Q, is coming this year and costing less than $300.
There have been rumors of a PS5 with a detachable disc drive that will replace the current model. It allegedly entered production last April and will launch in September, while the present model will reportedly cease production by Holiday 2023. Sony hasn’t officially confirmed either of these things, and Microsoft didn’t specify whether this new model is the PS5 Slim they’re talking about, so we’ll have to wait and see.