Over the past few weeks, Microsoft’s acquisition of Activision-Blizzard has been under scrutiny not only by the US Federal Trade Commission, but by all the major international competition authorities. Obviously, the aim is to understand whether an acquisition of such importance, given and considered the valuation of over 70 billion, could somehow configure situations of monopoly or in any case detrimental to competition.
Of all the documents produced, the most interesting is undoubtedly the report presented by Sony to the Brazilian authorities, which is now freely available to anyone in a public form.
Basically it is a series of questions of all kinds posed by the Brazilian authorities to which Sony had to give an answer to better understand the impact of the acquisition, questions ranging from “Are there any Activision-Blizzard titles that have not competitors in the market? ”to“ What is the impact of exclusive video games? ”.
For the first time, one of the main platform-owners of the video game sector, that is the parent company of PlayStation, has therefore expressed itself beyond mere corporate communication on various issues relating to the evolution of the video game market, talking about exclusives and blockbuster, competition and the actual weight of the intertwining between products and gaming platforms.
“Exclusive games are a parameter of competition between Microsoft and SIE, although no company has so far developed or acquired an exclusive game that has definitely shifted the balance in favor of a console. This is because the exclusive games themselves are less popular and bring in lower revenue than third-party AAA games, which are usually available on both Xbox and PlayStation. ”
This was Sony’s answer to the age-old question, to the discussion that ignites the last glimpses of the ancient console-war: according to Sony there has never been a single exclusive able to move the balance of the market. Closed question? Only in part, because there is another section of the document presented by Sony’s lawyers that is worth analyzing, that is a series of interventions – mainly related to the Call of Duty series – in which it is not only the blockbusters of Activision-Blizzard but also the impact of these works on the PlayStation ecosystem.
“Activision’s Call of Duty is an essential game: a” blockbuster “, an AAA game that is unrivaled. According to a 2019 study, ‘the importance of Call of Duty for entertainment in general is indescribable. The brand was the only video game IP to enter the top 10 of all brands, joining works such as Star Wars, Game of Thrones, Harry Potter and The Lord of the Rings. ‘ Call of Duty is so popular that it influences the choice of the console by the users and its network of users is so loyal that even if a competitor had the budget to create a similar product, it could never rival. ”
Then follows a careful examination, rich among other things of elisions of confidential text sections, in which we talk about the results achieved by Call of Duty on the Sony platforms and the general structure of the series. So, how should we take this examination, which obviously does not express value judgments but simple observations, in the general economy of the document?
If on the one hand Sony stated that no exclusive video game has ever proved capable of changing the balance in favor of a console, on the other hand it has identified Call of Duty as a title for which not only there is no competition but “towards of which – even if a competitor were built at home – a real rivalry could not be created ”.
The first crucial piece of information we can glean from the document is that, most likely, killer applications are definitely dead in the competitive relationship between Sony and Microsoft. In fact, the great exclusive video games, such as God of War or The Last of Us, live on shares of the installed bases that pale in front of the astronomical numbers reached by the great blockbusters such as Grand Theft Auto, FIFA and the aforementioned Call of Duty; blockbusters that reach such numbers precisely because of the widespread presence on all platforms.
So yes, undoubtedly there is a fraction of users who orient the purchase choice of a platform on the basis of exclusive products, but it remains an irrelevant fraction for the analysis of the entire market. The story could change only if these blockbuster video games that make a market in their own right became exclusive but in this specific case the possible exclusivity could undermine the very diffusion of the products, finally proving harmful.
But then is it really correct to say that the console exclusivity of AAA video games is an ancient practice and without a real reason for being of an economic type? Obviously this is not the case, and why they reside precisely in economic theory, specifically in all the undergrowth of what are now called the intangible assetsthat is, all the intangible resources that are specific to a company and that the competition cannot easily replicate.
It is clear that product exclusivity represents one of the central pillars of competition in all sectors: Netflix has its Originals, Amazon produces films and television series, McDonald’s offers its Big Mac, Burger King the Whopper, DAZN grabs the rights TIM, FIFA and eFootball Serie A televisions battle for the licenses of football teams, theaters compete for the most anticipated kermesse.
On the one hand Sony is claiming that the exclusivity of a single video game for a console has never been able to move the balance, and this is undoubtedly true, but on the other hand it is paying some developers in order to prevent certain products from landing. on Xbox Game Pass after reinstating, among other things, the next main chapter of Final Fantasy into its private portfolio. Beyond these findings, the actual impact of exclusivity should be sought not in the cold statistics linked to the single production but in the entire history of the company and, precisely, in its intangible assets.
The importance and diffusion of the PlayStation brand today are in fact closely linked to a concept of quality that did not emerge spontaneously but which has been meticulously constructed through years of exclusive successes capable of cementing that same concept of quality in the hearts of users. Those who have owned a PlayStation 4, today choose to buy a PlayStation 5 with the prospect, one day, of receiving exclusive products of equal if not superior quality to those that have emerged in the past, those that have marked the history of the brand.
This obviously does not change the fact that from a competitive perspective there are even more decisive elements, such as prices, and that this kind of mechanisms – if analyzed in isolation – may appear to be of little relevance. But there are strategies, above all that of Nintendo, which seem to offer a still different perspective.
Nintendo is in fact the only platform-owner to be able to boast five proprietary IPs in the ranking of the best-selling software, and some of them are currently present on 50% of the installed base; practically Mario Kart 8 Deluxe (50 million units) and Animal Crossing New Horizons (40 million) are present on one Switch every two in circulation, while Super Smash Bros, Pokémon and Breath of the Wild run on 30% of the consoles distributed.
Also in this case, on the other hand, it is the result of a strategy more than thirty years long more than the exploits linked to individual productions. On the Sony front, in fact, the 19 million copies placed by God of War make it the most popular exclusive title net of over 116 million consoles distributed.
A strategy of exclusivity is therefore also possible in the video game sector, net of the looming presence of those third-party giants that on balance occupy market niches equal in size to those of real consoles. In view of the acquisition of Activision-Blizzard by Microsoft, on the other hand, the Redmond house seems determined not to erect any type of barrier, and probably not only because these would penalize its new blockbusters economically, but also for a matter purely linked to that image of inclusiveness outlined by Phil Spencer last July.
The only exception is represented by Starfield, because Phil Spencer himself stated – even on the occasion of the postponement – that Microsoft aims to create an experience that is more played than any other, but it is not known whether he was talking about the Bethesda catalog. or the whole world of AAA video games. What is certain is that the sci-fi RPG presented by Todd Howard will be very important to understand how broad the scope of a new generation first-party production can actually be.
Ultimately, we can safely say that the concept of killer application is not definitively dead but is simply changing. More than in the impact of the single exclusive production, the weight is to be found in the “philosophy” that characterizes the entire history of a platform, in its present portfolio but above all in the perspective of a future full of quality. Sure, building individual artisanal works at home currently seems impossible to economically challenge titans like Call of Duty or GTA Online, but in the long run, people tend to always go back to where they’ve been good.
And then – but this is a purely personal consideration – one wonders: would a Crash Bandicoot ever exist without a Super Mario? Here, our hope is that the platform-owners will continue to “challenge” each other in this way in the pursuit of innovation, once and for all abandoning the temporal exclusivity agreements and all the other nonsense that only damages the public.
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