In a filing to Brazil’s national competition regulator, Microsoft has claimed that Sony pays unnamed video game developers to prevent them from adding content to the Xbox Game Pass.
The claim was found in an Aug. 9 document that Microsoft filed with Brazil’s Conselho Administrativo de Defesa Econômica (CADE), as it attempts to get regulatory approval for its acquisition of the California-based video game studio Activision Blizzard.
In a translation posted by The Verge, Microsoft states that its ability to continue expanding Game Pass “has been hampered by Sony’s desire to inhibit such growth.” It goes on to claim that “Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”
It’s a bold statement, but Microsoft doesn’t provide any more information than that in the filing, and Sony has yet to comment. There are a couple of interesting details here, however.
Brazil’s CADE is one of many competition regulatory agencies that Microsoft has to get by in order to finalize its acquisition of Activision Blizzard. Unlike most of its international equivalents, however, CADE’s review process is public, and many of the relevant documents have been made freely available via its website.
As a rule, major video game companies tend to keep their internal data private whenever possible; Microsoft in particular hasn’t announced sales numbers for the Xbox in years. CADE’s regulatory transparency, much like last year’s Apple vs. Epic suit, offers a rare opportunity to look behind the curtain. As a result, a thread on the games forum ResetEra has been digging into Microsoft’s CADE filings since the end of July.
One of the notes highlighted by that thread is Sony’s answers to a questionnaire from CADE. Put briefly, Sony argues that Activision Blizzard’s flagship franchise Call of Duty is an essentially irreplaceable franchise with no real rivals.
While it does have some competitors, a combination of factors such as the games’ budget, the size of Activision Blizzard, and its current status within the genre all mean that Call of Duty, in Sony’s eyes, is in a category by itself.
Sony’s argument here is bolstered by Call of Duty‘s sales numbers. Last year, the top two best-selling games of 2021 were both Call of Duty games, with well over half of Black Ops: Cold War‘s first-day digital sales coming from Sony’s PlayStation. You have to go back to 2006 to find a year where at least one Call of Duty game wasn’t one of the year’s best sellers.
Microsoft has repeatedly stated that it doesn’t intend to keep future Call of Duty games off of competitors’ platforms; in fact, the next game in the series, this winter’s Modern Warfare 2 (not to be confused with 2009’s Modern Warfare 2), already has a page on Steam. Even so, Sony does now find itself in a position where the most profitable third-party game on its platform may be owned by and making money for its biggest competitor.
Further, Sony claims to CADE that Game Pass currently makes up 60-70% of the market share for gaming subscription services. While Sony has recently thrown its hat into that particular ring, alongside other major players like Apple Arcade, Nvidia’s GeForce Now, and Humble Choice, it argues to CADE that it could be years before Xbox Game Pass has any real competition in the space.
While this should all be taken with a grain of salt, it does paint an interesting picture of Sony’s shifting priorities. As it went into the current generation of console hardware, it seemed like the company planned to ride its momentum from the PlayStation 4 and stick to business as usual. Microsoft’s approach, conversely, was to switch to a more service-based model.
Now, Sony’s bought Bungie; intends to shift its development priority to more profitable live-service games; and has reworked PlayStation Plus as a similar platform to the Game Pass. Its plans and priorities have changed dramatically in the last eight months or so.
Sony is visibly trying to repackage itself on the fly here, in an unexpected way. This could be due to the multiple delays for the PlayStation 5’s release schedule.
One of the big factors in the PlayStation’s favor, particularly with the PS4, has been its lineup of exclusives, and many of those have been pushed into 2023. Now Microsoft’s talking about yanking the best-selling game of 2022 out from underneath it. Sony’s got to figure a few things out in a hurry here.
Overall, this does put Microsoft’s accusation into some useful context. It does make a certain amount of sense, given the situation, if Sony is leveraging its position to try and keep some developers off the Xbox Game Pass. It does seem, however, that Sony has ended up feeling much more threatened by Microsoft’s current console initiatives than previously thought.