Cognition Dissemination: Microsoft’s Gaming Plans Were Always Clear

Microsoft has spent a good portion of the last few years buying several large companies, thus creating one big headline after another in the video gaming universe. Smaller developers such as Ninja Theory, Playground Games, and inXile Entertainment have been gobbled up alongside larger ones like Obsidian Entertainment and especially Bethesda Softworks. But it was their acquisition of Activision Blizzard that generated the largest number of headlines, considering the sheer number of heavy-hitting franchises like Call of Duty, Diablo, and Overwatch that would soon be under Microsoft’s wing, even if all those individual installments would be exclusive. It’s why the acquisitions have been worth scrutinizing, something Sony Interactive Entertainment has especially not hesitated to do, and is being challenged by courts and government watchdog organizations across the country. The merger wasn’t completed on the originally-scheduled June 30th date — last Friday, notably — for this reason.

These are two American companies intending to merge, so the most notable challenges are coming from the Biden administration’s Federal Trade Commission (FTC) in the US. The FTC sued to block the merger, and Microsoft has spent the last couple of weeks fighting the FTC’s seeking of a preliminary injunction in court as part of FTC v. Microsoft before the latter can close the current merging deal on July 18th. The arguments have generated big headlines in the gaming and tech worlds through the revelations from what Microsoft and Activision were discussing behind the scenes — especially Microsoft.

Some among them are alarming, but not as surprising as they should be. The most startling one featured head of Xbox Game Studios Matt Booty, who mentioned in an email sent to Xbox CFO Tim Stuart in 2019 that Microsoft was in a “unique position” to “go spend Sony out of business.” Booty pressed the need to avoid a “situation where Tencent, Google, Amazon or even Sony have become the Disney of games and own most of the valuable content.” The intention behind this was to secure themselves a worthwhile future for both their exclusive lineup and Game Pass that Sony couldn’t hope to compete with when they started their own competing game subscription service, as they did last year.

The goal of this mass acquisition initiative from Microsoft was always clear. It was a generous conclusion to say this was merely the company’s way of rebuilding their console-exclusive software lineup, something lacking since the mid-to-late Xbox 360 era. A certain crop of Xbox executives became tired of this deserved criticism during the entirety of the Xbox One’s life, which played a part in knocking Microsoft behind Sony and the PlayStation 4 in sales. But there were and remain more reasonable ways for them to rebuild the lineup, including expanding their internal studios and other teams already in their possession, and making exclusivity deals with third-party developers and publishers.

Microsoft’s David Cuddy, general manager of public affairs, sent a damage controlling statement to The Verge claiming this strategy was never utilized and was irrelevant because it predated the announcement of the Activision Blizzard merger by 25 months. (This also qualifies it for another feature on this blog.) Even if that wasn’t the case, it’s an important artifact in the case of the FTC and other watchdogs thanks to highlighting where Microsoft’s line of thinking was.

It’s also notable because, well, has it really changed? It doesn’t look that way. The company has, in the time since that 2019 email, acquired the developer behind million sellers like the Elder Scrolls titles, the Fallout games, and the Doom games through Bethesda, and is now trying to subsume an even larger organization. Given this, and their considerations to acquire companies like Sega, Bungie, and Square Enix, a subtler version of this plan remains.

It says a lot that a company like Microsoft can even plan for this level of domination, let alone partially embark on it. The biggest governments around the world have done an intentionally pitiful job of preventing corporations from going on mass acquisition sprees when they feel the desire to. For every large acquisition that’s been scuttled, around five more progress despite watchdog challenges and scrutiny. Microsoft has made the kinds of acquisitions that Sony and especially Nintendo can only dream of, and nothing will stop them from pursuing even larger ventures in the slightly distant future.

Grimly, there’s little chance of the Microsoft and Activision Blizzard deal not going through, despite the delays. The most ideal solution they could come up with is to delay it in the hopes that the company would soon lose interest, but the mere prospect of having the likes of Call of Duty as a console-exclusive title in the distant (as in, beyond the PlayStation 5 and Xbox Series) future is too good for Microsoft to pass up. Not to mention how the US judiciary continues to bend over backwards for corporations when the highest court isn’t taking rights away.

The endpoint here will be undesirable for anyone who doesn’t like corporate acquisitions, they sure are great for people who think it’s fine when their favorite company does it. At least we’re getting juicy previously-private info on the way to the destination. That counts for something, at least.

Related posts:

Cognition Dissemination: Google Stadia, and the Beginning of the Video Game Streaming Wars Cognition Dissemination: Microsoft’s Already-Confusing Series X Cognition Dissemination: It’s No Surprise That Game Pass Is Cannibalizing Sales Cognition Dissemination: Is the Activision/Xbox Merger Really in Danger?