British regulator the Competition and Markets Authority suspects it could raise Xbox Game Pass prices if its Activision Blizzard’s $69 billion merger is approved.
“Subscription prices can be easily modified and Microsoft may have the incentive to do so once it has introduced content as popular as Activision, including CoD.”
In the newly released findings, Microsoft told the CMA that they currently have no plans to raise Game Pass prices, as doing so would be counterproductive and ultimately lead to a decline in subscribers.
“The price of Game Pass will not increase due to the merger, and of course the price increase will not be in exchange for the substantial benefits of the simultaneous release of Activision games on XGP. Considering that Game Pass will continue to be restricted by B2P (buyout games), That’s especially important.”
Microsoft also pointed out that it has previously introduced popular Bethesda content into XGP, but has not raised prices. Microsoft has acquired the ownership of a series of IPs such as “The Elder Scrolls”, “Radiation”, “Doom”, and “Shame” after acquiring ZeniMax Media, the parent company of Company B.
"A merger of Activision and Microsoft would have a classic elimination of the double margin effect, as Microsoft would be able to acquire these games at (opportunity) cost and have an incentive to distribute them more widely and increase Game Pass output. To increase output, Microsoft needs to offer Game Pass at a lower quality-adjusted price. This is exactly what Microsoft has done in the past by adding content to Game Pass, such as the ZeniMax deal that results in additional content but does not result in a Game Pass subscription price increase. Especially considering that Game Pass users are price sensitive, and a Game Pass price increase will affect all users, especially those who don't value or play COD. Game Pass subscribers can cancel their subscription at any time after one month of play. Since CoD games are released on an annual basis, any impact will be short-lived, as players who lose enthusiasm for a new version of COD within a few months will leave due to the higher price. Therefore, any price increase would be counterproductive as it would in turn lead to loss of users. This is completely at odds with the interim findings' assessment of Microsoft's rationale for merging."
Sony has previously argued that if Microsoft and Activision were allowed to merge, their merger would significantly reduce PlayStation’s ability to compete with Xbox and provide Microsoft with an opportunity to raise prices, including for Xbox users (including those transferring from PlayStation). Console and game prices, and increase the price of Game Pass, and reduce innovation and quality.
