Day four of the FTC v. Microsoft trial was a significant day, featuring testimonies from both Activision CEO Bobby Kotick and Microsoft CEO Satya Nadella. While there were high expectations for a heated grilling of the CEOs, the focus of the day’s drama was outside the courtroom. Nevertheless, Kotick provided crucial testimony about Call of Duty on the Nintendo Switch, while Nadella attempted to justify console exclusives due to Sony’s influence.
Kotick began his testimony in the morning, offering a brief history of how he acquired Activision over 30 years ago when the company was in financial trouble. He highlighted the success of the Call of Duty franchise and acknowledged that Sony has argued it is a unique game due to its annual releases. Kotick revealed that Call of Duty draws inspiration from EA’s Medal of Honor and explained how the game’s content, based on historical conflicts and wars, allowed for endless installments. He also mentioned implementing a compensation and reward system to motivate employees to work on sequels.
Kotick defended the decision to not make Call of Duty an exclusive game, stating that removing it from one platform would alienate the game’s massive player base of 100 million monthly active players. He emphasized the passion gamers have for the franchise and likened it to a sport.
Kotick also discussed Activision’s power in leveraging its publishing capabilities. He mentioned a new revenue sharing deal that Microsoft had to agree to in order to secure an optimized version of Call of Duty for the launch of the Xbox Series S / X consoles. Kotick admitted to regretting the decision of not bringing Call of Duty to the Nintendo Switch earlier, citing the platform’s success as the second most successful video game system of all time.
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Regarding Xbox Game Pass, Kotick expressed his aversion to multi-game subscription services, believing they would degrade the economics of game development. This echoed a comment made by PlayStation chief Jim Ryan about the negative impact such services would have on publishers. However, Kotick acknowledged that Activision had not made a formal decision about game subscriptions and recognized the potential strategic benefits of offering content for a limited duration of time.
The topic of the cloud also came up during Kotick’s testimony. Activision had games available on Nvidia’s GeForce Now cloud gaming service during the beta phase but later removed them to negotiate a commercial agreement with Nvidia. The FTC presented internal email communication between Kotick and Nvidia CEO Jensen Huang, suggesting that Activision would consider placing its games on subscription and cloud services if favorable commercial terms could be reached.
Towards the end of his testimony, Kotick faced questions about the possibility of introducing Call of Duty to future Nintendo consoles. He admitted that Activision missed out on the opportunity for the previous generation of the Switch but would consider developing a Call of Duty game for future Nintendo consoles once specifications became available.
The FTC drew attention to Kotick’s previous statement, where he mentioned the likelihood of making a Call of Duty game for a new Nintendo console. Judge Jacqueline Scott Corley intervened to ask Kotick about potential reasons not to make that decision, to which Kotick responded that resources and design issues could be factors. Kotick expressed interest in bringing Call of Duty to the Nintendo Switch if it could result in a great game.
The FTC also questioned the difference between Call of Duty: Modern Warfare II and Call of Duty: Warzone, highlighting the presence of a mobile version of Warzone. Kotick stated that games like Modern Warfare II could potentially be playable on phones in the future but not currently. The FTC referenced a previous statement by Kotick, where he compared playing Call of Duty on a phone to using a refrigerator as a safe.
The FTC concluded its questioning by highlighting the financial benefits Kotick would reap if the Activision Blizzard deal with Microsoft went through. With Microsoft agreeing to acquire Activision at $95 a share, Kotick’s approximate 4.3 million shares would be worth around $408 million, a significant windfall for the CEO. The FTC also referenced a lawsuit filed against Activision Blizzard in 2021, alleging a culture of harassment within the company, as mentioned in a report by The Wall Street Journal.
Overall, day four of the trial featured important testimonies from both Bobby Kotick and Satya Nadella. While some insights were gained into their perspectives on gaming platforms and business models, much of the drama of the day occurred outside the courtroom.
