28 Apr CMA Says If Microsoft Acquires Activision, Game Pass Gets More Expensive
Even a “modest” price increase would outweigh the benefits of the merger, says regulator.
Apr 28, 2023 12:05 am
Apr 28, 2023 12:04 am
More details have come to light about the decision to halt Microsoft’s acquisition of Activision Blizzard from from the recent UK Competition and Market Authority (CMA) report. Along with the extensive examination of Microsoft’s current business practices and plans, including its advantage in cloud computing, the CMA also raised concerns about how an increased library of video game content could potentially open the door for Microsoft to make things more costly for consumers.
Detailed in the 400-page report, which gave an extensive and highly detailed overview of Microsoft’s current business plans and how it would affect competitors, the CMA committee highlighted its belief that the Xbox Game Pass service would see its value heightened following potential additions from the Activision Blizzard library — which would give Microsoft an incentive to raise the price.
In the report, the CMA detailed that adding new games into the Microsoft library wasn’t the issue, but rather how having Activision’s games specifically – such as Call of Duty – would influence the catalog.
Having Activision’s content on Game Pass would represent a new option to pay for content that is already available on a buy-to-play basis on Xbox, and it would only represent better value than the status quo for some consumers (which, in any event, would only start to accrue some time after the Merger completes). Moreover, we expect Microsoft to have the incentive to increase the price of Game Pass commensurate with the value enhancement of adding Activision’s valuable content to it, and we found that even a modest price increase would significantly reduce or eliminate any potential RCB (relevant customer benefits).
In its investigation, the CMA committee explained that the gains of relevant customer benefits (RCBs) for this merger, such as the benefits of being able to access Call of Duty via Game Pass, would not outweigh the losses. Not only would the expanded Game Pass post-merger potentially make for a pricier service for consumers, this would also give Xbox more significant edge against the likes of Sony and Nintendo, both of which do not have services as extensive as Microsoft’s Game Pass and its other products.
We recognise that having Activision’s content available on Game Pass is an attractive prospect to some customers and something that, based on the comments we received from the public during this investigation, seems to explain much of the support for this Merger by those in favour of it. On balance, we found that having this new option to pay for content that is already available on a buy-to-play basis on Xbox would not outweigh the overall harm to competition (and, ultimately, consumers) arising from this Merger in the sizeable and rapidly expanding market for cloud gaming services.
As of now, Microsoft is seeking an appeal for the CMA decision to halt the merger, which has steadily been gaining traction ever since its announcement in February 2022. In addition to the details about the potential of Game Pass, the CMA report also included mentions of Nintendo’s current hardware, and how it would likely not be able to play current-gen Call of Duty games, which representatives from Activision Blizzard claimed that it could do.
For a more detailed breakdown of the current about the recent halt to the Microsoft / Activision Blizzard merger, do check out IGN’s explanation detailing everything you need to know.