In a document sent to Brazil's Administrative Council for Economic Defense (CADE) discussing the proposed acquisition of Activision Blizzard, Microsoft argues that concerns that Call of Duty will become an Xbox exclusive and will no longer be published on PlayStation are unfounded because it simply would not be profitable for Microsoft.
Regardless of how unsurprising Sony's criticism of content exclusivity is given that PlayStation's entire strategy has been focused on exclusivity over the years -- the reality is that making Activision Blizzard's games exclusive by not distributing them on rival consoles simply would not be profitable for Microsoft, the company argues in the documents.
Such a strategy would only be profitable if Activision Blizzard's games were able to attract a sufficiently large number of players to the Xbox console ecosystem and if Microsoft could earn enough from game sales to offset losses from not distributing those games on rival consoles, the company adds.
As if this were not enough, exclusivity strategies entail specific costs for titles, the document reads: further information was omitted, however, probably for confidentiality reasons. These costs, added to the estimated lost sales [...] above, indicate that Microsoft would not be able to offset the losses by earning more revenue in the Xbox ecosystem as a result of implementing exclusivity.
This is especially true considering (i) the 'gamer-centric'-as opposed to 'device-centric'-strategy that Microsoft has pioneered with Game Pass, and (ii) the fact that PlayStation has users that remain loyal across its various generations.
Continuing its argument, Microsoft says that even if Xbox exclusivity of Call of Duty proves profitable, its implementation would have no impact on competition, in part because of the intense competition in the game publishing market, the fact that exclusivity strategies are commonly adopted in the games industry, and the fact that rival consoles enjoy a high degree of player loyalty.
In sum, the paper concludes, the hypothetical adoption of any content disruption strategy would not be profitable for Microsoft, and even if it were implemented, such a strategy would have no impact on competition, for the reasons described above.
