Brazil’s competition watchdog, the Administrative Council for Economic Defense (CADE), approved the merger of Microsoft and Activision Blizzard without restrictions, citing PlayStation’s dominant position within the video game industry and Nintendo’s ability to compete without relying on franchises like Call of Duty.
in a long public presentation, CADE referred to PlayStation’s portfolio of exclusives, saying: “Investment in exclusive content is, and always has been, very important to the competitive dynamics in the console segment. Exclusive content was, most likely, one of the main factors responsible for positioning PlayStation as the leader in the global console market for more than two decades, a leadership that continues to this day.
CADE also mentions that Nintendo employs a similar strategy with exclusive content, noting that Microsoft also doesn’t seem to sell as many consoles as PlayStation and Nintendo. Of course, one of the biggest concerns about the Microsoft acquisition is Call of Duty’s cross-platform status.
“As we have seen, Nintendo does not currently depend on any content from Activision Blizzard to compete in the market”, explains CADE. “In turn, Sony has several attributes: strength of the world’s leading brand for more than 20 years, deep industry experience, largest user base, largest installed base of consoles, strong catalog of exclusive games, alliances with multiple publishers, third party, brand-loyal consumers, etc., which should help keep PlayStation competitive in a possible post-transaction scenario, even in the face of possible loss of access to Activision Blizzard content.”
The watchdog says it’s certainly possible that if Call of Duty became exclusive to the Microsoft ecosystem, many PlayStation gamers would migrate to Xbox or PC to continue to have access to the franchise.
Call of Duty would lose players and revenue in the short term due to this strategy, and would invariably lead many players to favor cross-platform shooters like Rainbow Six and Battlefield. Even EA CEO Andrew Wilson said a few weeks ago that Call of Duty, potentially becoming a Microsoft exclusive, could benefit the Battlefield franchise.
However, this approach would ultimately lead to more Xbox console sales and Game Pass subscribers in the future, as well as giving Microsoft a huge competitive advantage within the video game market.
Ultimately, CADE concluded that its objective is to protect Brazilian consumers, not the interests of PlayStation. CADE says: “In this sense, although it is recognized that some PlayStation users may decide to migrate to Xbox in the event that Activision Blizzard games -and especially Call of Duty- become exclusive to the Microsoft ecosystem, SG/ Cade does not believe that such a possibility represents, in and of itself, a risk to competition in the console market as a whole.”
This is an early hurdle cleared by Microsoft, but the acquisition will still face scrutiny from the UK government, several US senators, New York City, and the US Department of Justice. Activision Blizzard shareholders approved the deal in April, there is still much debate about its merits or potential problems.
George Yang is a freelance writer for IGN. You can follow him on Twitter @yinyangfooey