FTC Tells Sony it Has to Reveal Its Third-Party Exclusivity Deals - News
by William D'Angelo , posted on 02 March 2023 / 10,153 Views
The US Federal Trade Commission (FTC) in a newly filed order has largely denied Sony's request to stop or limit Microsoft's subpoena requesting it to divulge confidential documents.
Microsoft had requested Sony to provide a "copy of every content licensing agreement" it had entered with any third-party publisher between January 1, 2012 and present." Sony said this had no apparent probative value and it would require a manual review of over 150,000 contact records with about 60,000 companies.
The FTC agreed with Microsoft's argument, which is that the case is focusing on how the Activision Blizzard acquisition could lead to IP becoming Xbox-exclusive and how that could negatively impact competition. This meant it is important to understand Sony's own exclusivity deals and "their effect on industry competitiveness."
The FTC did grant one request by Sony and that is to limit the date range from January 1, 2019 to present, rather than going back to January 1, 2012.
Another Sony request the FTC denied was to not include files being handled by some Sony staff members as Sony says many of them were in Japanese and it would be more time consuming and expensive to find them all.
The FTC says Sony did not "persuasively explain why searching for and producing Tao's files presents an undue burden to SIE. Accordingly, SIE’s attempt to resist discovery as to Tao on the basis of undue burden is rejected."
Sony also tried to quash the request that Sony must produce "all drafts of and Communications regarding [SIE's] President and CEO Jim Ryan’s declaration titled 'SIE Declaration to FTC on Microsoft – Activision Blizzard Transaction,' dated December 5, 2022."
The FTC denied this request saying Sony "has failed to demonstrate that request 3 should be quashed and the request is rejected."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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As others have pointed out, it would be nice to see all third-party exclusives from Microsoft and Nintendo as well. The video game industry is very secretive.
Ooooh, this is about to get spicy.
Indeed. I am curious what other games has Sony paid as timed or penmanent exckusive
I'm hoping this will have a domino effect on gaming deals throughout the industry. Open the flood gates!!!!
Same. I would love to see the regulators take a big issue with these 3rd party timed exclusivity deals and the exclusive content and earlier beta test deals Sony in particular tends to get, and ban all of the above for all parties. Nothing is more anti-competitive than one of the big players in the industry paying an otherwise 3rd party, multiplatform dev to skip other platforms, be it Sony, MS, Nintendo, or Epic (they tend to pay to keep games off of Steam for a set amount of time). The regulators have basically been asleep at the wheel on this issue ever since it became a big problem in gen 7, more than 15 years ago now.
Jesus Christ, this is a terrible idea. The more regulators get involved in an industry, the worse off consumers are. We can see that in essentially 100% of industries. The more regulated, the more expensive things are, and the less choice the consumer has.
Clearly the problem is not going to just go away on it's own. Since gen 7 when Microsoft and Sony started making these hat deals more and more common, the problem has largely grown worse year by year, with Nintendo starting to hat some games and now Epic hatting games away from Steam for a year as well, and Sony hatting timed exclusive content and earlier beta tests for non-exclusive games. I know I'm sick to death of being excited to play a game only to learn it won't be on a platform I own for a year or longer, and many other people are as well. I'm also sick to death of paying full price for a game like Hogwarts Legacy only to get less content than somebody else on Playstation who paid the same price as me.
I'm usually against regulation as well, but sometimes regulation is necessary. These regulators exist to promote competition, but they have allowed this anti-competitive practice to exist in this industry for over 15 years as it got worse and worse.
I disagree that timed exclusivity is a problem. It's a completely legitimate, and reasonable business practice. It likely allows some games to get made at otherwise would not.
In any case, even if it is a problem, government can't solve it. There's essentially no problems the government is capable of solving. And
they damn sure aren't going to make anything better by meddling in the entertainment business.
And that's something that everybody should keep in mind here. This Activision deal is about entertainment, solely. Activision is not in any business other than entertainment. The idea that government should be getting involved in a totally discretionary and extremely fragmented industry like entertainment is ridiculous. Microsoft competes with Sony and Nintendo, but also every television production company, every movie company, every sports company, every book publisher, every nightclub, every bowling alley, and every other entertainment business. It wouldn't matter if they got control of 100% of the video game industry. There is still massive competition.
It's not reasonable at all?.
it's literally you paying to deny your competitor access to a third party product, that is called anti-competition, like it or not.
Like I'm not sure what book of rules you read from, but if it's corporate, it can go straight out the window, because fuck whatever a suit thinks, a suit doesn't care, a suit just goes for margins and margins aren't people.
if it's not for us, it can fuck off, I don't care about devil's advocate ideals and all that petty jargon. We've seen this industry peddle in stupid and childish shit for far too long, that we've somehow mordaciously become accustomed to making excuses for what is and isn't fair, when the reality is that we've seen these types of practices go on for centuries and still being excused, instead of called out and having the root cut out.
No, timed isn't good, I don't care if you disagree, you're just flat out wrong, because if I paid to deny you something you needed to sell, and you were negatively impacted, that is not a good result, that is a negative one, and no, we shouldn't be counting negatives as "healthy", because it just isn't.
I'm so tired of this my dude.
Man has gone on for this long and we're still trying to make shitty excuses for not playing fair and just selling and doing your own thing, like why, why is that so hard to comprehend? (I'm legit asking, because it always seems to be side-stepped).
Nintendo is the company that started the whole money hatting BS. Hell we have laws on the books from the stuff they pulled in the 80s.
Games are already expensive though and we're already getting severely nickle and dimed, what worse could intervention possibly do beyond what is already considered worse?.
Pay an extra made up tax?.
My guy, we already lose games to publishers seeing them as non profitable and they get taken off within a few months to a couple of years.
We get battle passes and MT's up the wazoo, we're also seeing pubs charge $70-80 a pop.
We're still seeing online based games that don't ened online, or SP games with some stupid online requirement, like the upcoming Suicide Squad.
Literally what else is there that is far worse than what we're already dealing with?, because I'd really love to know how world ending this idea of yours could possibly be.
Don't go full commy here, deals aren't bad, without deal we would've never seen Bayonetta 2 nor 3
Nintendo published Bayonetta 2 and 3. Not the same thing as High on Life still being published by Squanch Games or Silent Hill 2 still being published by Konami yet still console exclusives.
Technically that was a 2nd party publishing deal, a bit different from paying a 3rd party publisher who is publishing their own game to keep the game off of other platforms. I don't think anyone has much of an issue with 2nd party deals, it's the 3rd party moneyhat deals 4 different big players in the industry have been known to go for, as well as the timed exclusive content and beta test deals Sony tends to go for, that I would like to see banned.
Yes and no, Bayonetta 2 was canned by Sega but Nintendo paid to finish the dev if it would remain exclusive
That's not paying for exclusivity though, that's funding the game. I'd say if you fund a game, you naturally have some say in e.g. release details.
Funding is paying.
If you're paying for timed exclusivity you are funding the game. There is no difference at all. If you oppose timed exclusivity then if you want to be logically consistent, you oppose any exclusivity at all, at least in third party games. So, nobody should be able to make an exclusive game unless they are also the owners of one of the platforms. And even then, why make an exception for the platform holders? Shouldn't everybody just be required to put their games on every system?
Nobody likes timed exclusivity. But that doesn't mean there's anything wrong with it from a moral ethical perspective.
Timed Hats are most often on games that the publisher had fully paid to fund already. They are reimbursing part of the game's budget in exchange for exclusivity. It's only occasional that we get a hat deal that actually pays for a game to be made in the first place, like Shenmue 3 or Bayonetta 2 or Street Fighter 5.
Money is fungible. Any money that comes into a business is the same as any
other money. So, paying for timed exclusivity has the exact same impact on the company as paying for development from scratch, except that it is usually a smaller amount of money. The more money that comes in, the more money they will invest in making games, since that is the business that they are in.
Econ 101 stuff here.
Indeed, and there is no restriction to timed exclusives in this context, and in fact the comment I responded to picked a non-timed exclusive. Other threads do include discussion regarding timed exclusives, but I chose purposefully to participate in this thread instead of those regarding timed exclusives. I would have mentioned timed exclusives had I meant them. I don't think I said anything that suggested I was talking about timed exclusives or indicated that I wanted to talk about them - because I didn't.
OK, after reviewing the whole discussion, I think I can finally see your point, and... I disagree with your very premise: "If you're paying for timed exclusivity you are funding the game. There is no difference at all" I don't think it's meaningful to consider whether you've funded any part of the game or not. Instead, as far as I care, there's massive difference between covering a really large chunk of the costs of a game and covering a small portion of them. Timed exclusives are probably only a small portion of a game's total cost, whereas 'full' exclusives can probably go up to the whole cost of the game.
Also: "But that doesn't mean there's anything wrong with it from a moral ethical perspective." I don't really agree. The only reason for timed exclusives is greed, disregarding how it affects people's enjoyment of the game. It's a dick move, even though it might make sense economically. If we can agree about that, then the real discussion about the 'moral ethical perspective' you mention is whether a dick move is ethical or not.
You actually prove my point
Uh, yeah? Some deals are good, some are bad, so what? I don't have trouble admitting that.
Nintendo fully funded the development of both Bayonetta 2 and 3 and co-owns the copyright. They own these games.
Nintendo took over the development of Bayonetta 2 that was cancelled by Sega in 2012, in exchange of exclusivity, that's why I mentioned Bayo 2.
I get it. But the Bayonetta games are not typical cases of moneyhatting.
I tried to prove that exclusivity deals aren't always moneyhatting
Then you're right.
A lot of deals were made to prop up games. There are several indie games that got beefed up when Microsoft signed deals with them for Game Pass. Tomb Raider 2 got a lot more content because Microsoft's deal with Square Enix. I just think these deals need to be more apparent. If Sony pays a bunch of cash to keep a game off Game Pass vs they dropped a bunch of cash because the developers needed the money.
The fact that Sony is trying to decline documents while also being the front runner in trying to block this deal is insane to me. What are they hiding? Prove your point as to why this deal will kill your brand. Otherwise, step out the way.
This should be grounds for a formal investigation tbh, because if they are at the forefront peddling this, and then trying to hide at the same time, it tells us they have the ulterior motive for disruption to benefit only themselves, which itself is cause for concern.
Agreed. They are extremely lucky the FTC is only allowing the last 5 years. MS wanted the last 10 years, they know something we dont.
That's interesting. I hope Sony counter sue's and Microsoft releases all theirs.
I also hope Nintendo gets involved in this somehow.
I'd love to know the details of how what game ended up where.
That's what I'm hoping for as well! But at the same time, the last time MS had a huge AAA third-party exclusive, it was Rise of the Tomb Raider in 2015 and it massively backfired lol. They've mainly kept to smaller exclusive titles since. High on Life is probably the biggest they've had since but even that was AA. So there will be quite a bit, just nowhere near as exciting as Sony's and to an extent, Nintendo.
Sonys list will be the longest and i believe thats the point on why MS want them to show the FTC.
Will MS also have to reveal their third party exclusive deals as well? Don't quote me on this, but I thought during Gen 7, Xbox360 had more exclusive/timed deals than PS3 did, including with CoD which was why 360 dominated that franchise that gen. Sony just took MS page book from Gen 7 and used it in Gen 8 lol
Regardless, lets hope FTC sees all third party deals from both Sony and MS. Maybe they'll see that MS had enough deals as well but are just mad that Sony did it better lol
But at least these 3rd party deals provide more equal playing ground as it gives all parties a chance rather than a single party buying the company outright to prevent any further deals.
I do agree and hope third party deals goes away as it doesn't benefit the gamers, but I also hope large parties would stop buying devs/publishers too. I don't care if MS does end up buying Activision or deal falls through, but lets hope it all stops after this.
Depends on how deep/far back the FTC want to go, at this current point in time how many up and coming games or games right now do Sony have potentially a deal on? FF16? Forspoken? It's very few. But obvious historically more. Yet then so did MS in the past, like how Tomb Raider after being on PS and PC for years suddenly had Xbox One Exclusivity for the 'middle' of a trilogy. :P
This said it's also up to MS to actually counter those deals by one-upping Sony in terms of cash and up to the 3rd party to agree actually agree to the deals. Just like I'm sure it's also up to them to accept the money MS is paying them for GP day 1 releases.
Not like MS can argue that Sony offered a sum they couldn't beat. ;-)
From what the article stated MS requested to only go as far back as January 1, 2012, so right before PS4 when Sony started dominating again. That would seem unfair and sneaky of MS to request from that date. They don't want FTC to look at MS's deals they made during Xbox360 days eh.
I wouldn't want to be comparing lists here. No matter the generation, Sony's lists will drawf Xbox every time.
Thats not how it works. Tomb Raider was timed not permanent which isn't the issue here. Also deals aren't just made like that. Example: Sony have had the CoD marketing rights for 10 years. They most likely hold marketing rights like that with Square Enix etc as well.
You cannot make deals when deals are already in place. The only way around a deal is to outright buy the companies. MS isn't just going to sit by waiting 5 to 10 years for deals to open up. They want to compete now, and Sony are obviously doing some shady side business with these companies which is affecting competition.
Activison has been making deals with Sony for a long time now. ABK would have told MS some of these behind the scene deals they been making to Phil and Xbox, which explains why MS have requested Sony to show their papers.
It's not? Isn't the picture in the article an image from Deathloop, a game we are all assuming was a paid for timed exclusive? That is now available on other platforms. Seems to be the perfect fit for Tomb Raider as an example.
MS used to have that CoD advertising rights before Sony, that deal was Activision's to accept, whoever offered the best deal. I see nothing underhanded in that from MS or Sony, it's just an advertising deal. Activision has been making deals with everyone for the a long time.
Deathloop will probably never come to Xbox if MS didnt buy Bethesda.
Yes Xbox had Marketing rights for CoD 20 years ago. Sony have it today plus a bunch of other games not coming to Xbox due to Sony.
Its not hard to see.
Tomb Taider was 1 timed exclusive, wasnt even permanent.
"Sony have it today plus a bunch of other games not coming to Xbox due to Sony."
I mean yeah, that how it works. Xbox aren't going to do deals on Sony's behalf.
But it takes 2 companies to agree to these deals, the platform owner and the publisher/developer. Look what Epic has been doing with their store to one up Steam, in the end it is up to the publisher/developer to accept those offers.
Unless you know drew up the contract they had on Deathloop, you don't know. I'm saying from what we can see, these 2 deals look very similar, both were made with a 3rd party Publisher to bring a game made by one of their studios to their platform for a certain amount of time. Both games are now available on other platforms.
As MS now own Bethesda they have all the rights in the world to look at whatever deal was in place, it's their company, their contracts. If it was permanent, then we can assume they paid off Sony to end the contract and I'm sure they'd be more than happy to tell us all about it.
Only the last 5 years Sony has to show. And that will easily eclipse whatever Xbox has done.
This is pretty much what I’ve been thinking for a while whenever I hear people chastise Sony about their third party deals. Then you had the next gen with Rise of the Tomb Raider exclusivity, which was so controversial due to being a direct sequel AND being a game with its roots entirely in PlayStation.
My assumption for why Sony currently does so many third party deals, rather than acquisitions as MSFT does, comes down to lack of cash reserves.
I still find it funny that so many comments are tied to a single game from over 7 years ago that backfired so badly that MS hasn't done anything of that scale ever since. Like, can't anyone move past that lol. It's clearly not a factor anymore. Whereas just this year alone, Sony's getting FF16 and Silent Hill 2.
And yes, Sony the conglomerate, whose games cost somewhere in the hundreds of millions of dollars each to make, is unable to have cash reserves, yet somehow has enough money to moneyhat quite a few of equally expensive games on top of acquiring 9 studios, including Bungie, since 2021. That's like 2+2=fish
Wow, I was also hoping to see a reveal of all future 1st party titles as well haha
Are they really arguing that timed exclusives are as big of a threat to competition as outright buying huge companies, which effectively makes everything they have exclusive FOREVER unless allowances are made?
This will only show how anti competitive these Sony 3rd party exclusivity deals are, and how they maneuver the deals to block it to Gamepass or any other platforms. You have flown, very close to the sun Sony. Now, Burn!
The thing is, it was actually Sony who requested this time period, so obviously they are not going to have much incriminating stuff in there.
Wonder how big the difference is between Sony, Microsoft and Nintendo when it comes to 3rd party exclusives and or 3rd party paid content. Ether way this is about to get interesting grabs ice cream
Now this is going to get extra spicy, and I know others on here want to see MS/Ninty's deals as well, but we all know Sony has had the most deals within the past 2 gens alone, thanks to their marketshare.
Ninty's deals kinda fall into "this just works with my system" kinda deal, whilst Sony/MS are "I don't want my competitor to have this game" type deals.
I was always a bit sceptical about Persona 5 actually having been moneyhatted by Sony and not just released exclusively by Atlus because of Atlus' weirdness.
I think the real point is not to pay for exclusive releases but paying for NOT releasing paid exclusives in the future on other systems like GP or Xbox.
Checkmate!!!
You must be very bad at chess...
Go Fish!
