Sony’s concerns about Microsoft’s Activision Blizzard deal intensified in August 2022 when Xbox chief Phil Spencer shared a list of Activision games that Microsoft would be willing to keep on PlayStation. However, Overwatch 2 was notably absent from the list, which raised alarm bells for Sony’s PlayStation chief, Jim Ryan.
During day three of the FTC v. Microsoft trial, Jim Ryan’s video deposition shed further light on Sony’s reaction to the proposed deal. Ryan defended the importance of PlayStation exclusives, expressed Sony’s hesitance to share PS6 information with Microsoft, and voiced concerns about Xbox Game Pass, which he described as “value destructive” to publishers.
The day began with Judge Jacqueline Scott Corley cautioning against livestreaming witness testimony to YouTube and other platforms. Despite the demand from thousands of gamers wanting to listen to the hearing, the court’s Zoom license only allowed for 1,000 listeners. Livestreaming was strictly prohibited, although it aimed to provide better access for interested individuals.
In his deposition, Ryan explained why Xbox games tend to perform better in the US than outside of it, attributing it to the prominence of shooting elements and online multiplayer experiences in Xbox games. This statement aligns with the FTC’s argument that the Nintendo Switch occupies a different market segment in comparison to PlayStation and Xbox, specifically due to the intense competition between Sony and Microsoft in the US market.
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Ryan further defended the significance of third-party exclusives on PlayStation, stating that streamlining development efforts is a key benefit. The FTC, however, contends that exclusives are detrimental to competition, citing examples like Microsoft’s acquisition of Bethesda and the subsequent exclusivity of games such as Redfall, Starfield, and the upcoming Indiana Jones title. Ryan argued that previously, most Bethesda games were multi-platform, and he expected them to remain available on PlayStation even after Microsoft’s acquisition.
One of Sony’s key concerns revolves around sharing development kits and next-generation console information with Microsoft. Ryan stated that Sony was unwilling to provide dev kits for Minecraft on PS5 due to the risk of a direct competitor accessing sensitive information. According to Ryan, the potential leakage of feature sets to Microsoft poses commercial risks that cannot be managed solely through contractual obligations.
Moreover, an email from Jim Ryan read during the trial revealed that he initially had no worries about Call of Duty exclusivity after Microsoft’s acquisition of Activision. However, tensions escalated in August 2022 when Phil Spencer sent a list of Activision games to Ryan, which did not include Overwatch 2. This communication breakdown between Spencer and Ryan intensified when Spencer publicly revealed that Call of Duty would continue to be available on PlayStation beyond the current contract, a move that Ryan considered inadequate and harmful to Sony’s gamers.
During his deposition, Ryan admitted that the August 26th email from Spencer was a significant factor in raising concerns about the Activision deal. While he couldn’t pinpoint an exact date when he became convinced that the transaction would harm competition, he noted that the email played a crucial role in his changing opinion. When asked if he or anyone at Sony had approached regulators before August 26th, Ryan stated that he didn’t recall but confirmed that they had a meeting with the Competitions and Markets Authority (CMA) during the summer.
In conclusion, Sony’s worries about the Microsoft-Activision Blizzard deal were fueled by the exclusion of Overwatch 2 from the list of games Microsoft intended to keep on PlayStation. Jim Ryan’s deposition shed light on Sony’s concerns about sharing information with Microsoft, the importance of exclusives, and the impact of Xbox Game Pass on publishers. The trial continues to uncover the intricacies of this industry-changing deal and its potential implications for the gaming market.
