Microsoft has reportedly offered Sony a 10-year deal to keep Call of Duty on the PlayStation gaming platform. Microsoft is eager to complete the multi-billion dollar deal with Activision Blizzard-King (Activision for short). Not only has the acquisition passed the point at which it should have been completed, but it has also brought heavy scrutiny from regulators who are threatening to shut it down unless Microsoft spins off parts of its business.
It has prompted Microsoft executives to make a number of commitments, the latest of which is a 10-year deal to Sony over Call of Duty.
Indeed, ever since Microsoft announced its $69 billion deal to buy Activision, Sony has protested the acquisition to regulators. It has been using the company’s best-selling gaming IP, Call of Duty, as an argument to paint a picture that if the deal goes through, no one will ever see a Call of Duty game appear anywhere else but on the Microsoft Xbox platform.
Microsoft has always denied that it will keep the successful game series sequestered in the walled garden of the Xbox. And it continues to affirm its intention to honor all agreements made before the acquisition became public. However, Sony continues to apply pressure and regulators are stepping up their investigation into the deal.
In the latest development, Microsoft said it offered Sony a 10-year long-term contract earlier this month to continue delivering Call of Duty games for the PlayStation platform. While Sony did not comment on the claim, Microsoft President Brad Smith told The New York Times that it has big implications for the merger, and if it fails, it will leave a huge question mark over whether the companies can mutually benefit from the acquisition in the years to come.
If regulators allow Microsoft to acquire Activision, the following is a list of concessions that Microsoft has agreed to.
Honor past development agreements reached by Activision.
Commit to keeping Call of Duty on PlayStation for three years outside of those agreements.
Remain neutral in union negotiations between Activision and Blizzard.
Pay Activision $3 billion if the acquisition fails.
Guaranteed to continue making Call of Duty games on PlayStation for at least 10 years.
If this deal had happened four years ago, it would have made almost no sense,” Smith said. If a person isn’t even allowed to do the easy thing, then we all know we won’t continue to do the hard thing.”
Microsoft needs to convince regulators in 16 countries that the acquisition is good for consumers. So far, only Brazil and Saudi Arabia have given the green light. Serbia may also give its approval soon. However, other countries, especially the United States, the United Kingdom and the European Union, have not made much of a statement beyond increased scrutiny of the deal.
Smith sees the Activision deal as crucial to continued growth, with Microsoft’s gaming division already a major part of its revenue stream, with Xbox generating more than $15 billion a year. And it’s not hard to see that the tech giant has so much at stake in the takeover that it promised Activision a $3 billion breakup fee even if the merger fails.
Microsoft’s official position on how the deal will affect consumers is that it opens the door for more gamers to play games on any platform. Of course, that belies the fact that it refers to gaming via a Game Pass subscription in the cloud, which is certainly in Microsoft’s best interest.