Take-Two CEO: Cloud Gaming is 'Simply a Distribution Method' in Reaction to CMA Ruling - News
by William D'Angelo , posted on 02 June 2023 / 5,783 Views
The UK regulator, Competition and Markets Authority (CMA), last month blocked Microsoft's $67.8 billion acquisition of Activision Blizzard over concerns with cloud gaming.
Take-Two CEO Strauss Zelnick speaking with IGN expressed his support for the acquisition by saying, "What's good for them is also good for the industry."
He appeared to disagree with the reason the CMA gave for blocking the deal saying that cloud gaming is "simply a distribution method." While Cloud gaming might expand the gaming market, he says it is just another part of the larger gaming market.
"I think it's important never to confuse a distribution technology with a business model," Zelnick said. "I would love to believe that streaming our titles would massively expand the marketplace. I'm not sure there's any reason to believe that."
Electronic Arts CEO Andrew Wilson earlier this month said he was "indifferent" about the acquisition and believes EA will remain the number one publisher on Xbox.
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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Isn't that part of the problem? Don't disagree with him but the distribution method of mobiles have turned into a monopoly for 2 companies who dictate the prices and rates, it's why Epic took both Apple and Google to court. If 1 company controls the cloud gaming distribution and all you can do is use cloud gaming to game, then you'd have to go to 1 service and pay their rates whatever they set them at... or not game at all.
Thats why MS have made remedies for the EU. Something the FTC and CMA failed to work out.
The remedies created benefit everyone.
The question is how this deal allows MS to control or own the cloud market. The only thing MS can control is their games on the cloud. Its not like MS can control Nintendo or Sony games, stop Nintendo or Sony from putting their games on the cloud. MS cannot control any cloud service outside of their own games. If you believe that digital distribution is just another way to deliver games and Cloud services is just another way to deliver games then what exactly is the difference. MS cannot control digital distribution no more than they can control cloud services outside of their own games.
That’s under the assumption that Sony would just sit by and watch, which is not realistic. And I think the video steaming market is a better comparison, which has lots of competition.
It might turn out video game streaming ends up like Video/film/TV streaming, that first started with Netflix and later Amazon, these companies were essentially independent and relied on TV and Film companies for their content, it wasn't until 2012 when Netflix used the money made from subs to make their own content.
Yet it took Disney purchasing Fox (and hulu) to get their streaming service, instead of developing their own, it then instantly took most of Fox and Disney content from competing services. This meant that Netflix, Amazon, and whoever were able to make money at start of things to create their own content and allowed (when they could) the TV companies (Disney, HBO, Paramount) to get into streaming when they could.
In this case it's one of the game makers and platform makers who owns the streaming/cloud trying to buy another big game maker after already buying a big game maker. Cutting out that section of independent cloud based gaming providers from building up reputation and money to create their own content. MS could pull all their content and put it on their service only.
Do I think that in this case MS buying Activision is important enough to cause this? Not really, Activision only make CoD and Blizzard are money grabbing. King is mobile so not part of this. But that doesn't mean people might be wary of it happening and other companies not stepping up like the TV and Film industry did leaving us with 1 dominating cloud based gaming company and 2 or 3 tiny others who cannot compete with what GPU offers.
And I'm not sure why it's up to Sony to stop it. Are MS not competing constantly with Apple, Google and/or Amazon? Is Xbox not competing with EA, Ubisoft, WB, Steam, Epic and Nintendo also in various ways?
Finally someone talked some sense
That statement is wrong and masks the truth. Cloud streaming is a distribution method that ties in monopoly. Take Steam for example, it is also a distribution method, but it's got the lion's share of the market. So cloud streaming can give Microsoft a monopoly.
- "While Cloud gaming might expand the gaming market, he says it is just another part of the larger gaming market."
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"I would love to believe that streaming our titles would massively expand the marketplace. I'm not sure there's any reason to believe that."
I'm sure he said the same about mobile gaming......it is after all gaming but boy of boy did it expand the market and now it drives the market.
Really terrible for British soft power and makes a real mockery of the whole project of having an independent CMA. One thinks maybe there is a political dimension to this
If distribution method didn't have the mean of expanding the market no one would try different means of distribution. "I would love to believe that streaming our titles would massively expand the marketplace. I'm not sure there's any reason to believe that." Makes no sense.
Also nope, saying if it's good for MS it is good for everyone isn't really true.
At this point, I wonder if his answers are from a bot
I'm sure some of it comes from him seeing a number of opportunities arising out of consolidation of the gaming market through ABK style take overs, ranging from the possibility that there are less multiplatform ABK games resulting in an opening for them to fill the void, another being the chance for big 3rd party publishers like Take Two to have their own ecosystems on the cloud and lastly at the very least seeing it as having set up a climate where whether they are interested or not any buyout of Take Two itself comes with a hefty premium for those shareholders like him.
Then look at it a different way, how did digital distribution change the market for PC software and Console. How many storefronts do you have. The thing about Cloud is that any one vendor can only control their own software. Its not like MS can suddenly dictate how Sony, Nintendo or any other software company can distribute their own games or even corner the market where its only MS games and everyone else. That is why it doesn't make sense if you are trying to make the Cloud business as something separate from the gaming business as a whole. MS putting their games on Cloud only effect MS games, they cannot corner the cloud market if all they do is put their games their. They have no control over Sony or Nintendo which mind you have cloud capabilities as well. They cannot dictate how other publishers push their games into the cloud or even distribute them that way. It was always weak argument using cloud as the block for the deal because that would mean cloud would some day be the sole way people play their games and that future is not even close.
Ok let's look at digital distribution that started at like 5% of the sales of SW and today is much more than 50% and revenue and profit of the platform holders grew in the same period. For me if there was no expectation of increased revenue/profit they wouldn't even care about including a new distribution channel.
And if streaming wasn't a new business model them MS wouldn't project such growth of their userbase when going to TV and smartphone using XCloud.
You not getting it, its not about the distribution its about who controls it. How many different software storefronts there are for digital games. Who controls that market. The situation for cloud. How can MS control the cloud market if the only thing they can push through the cloud is their own games. Can MS dictate how Sony and Nintendo push their games through the cloud. Can MS suddenly jump from 3rd place to first place because they have XCloud over Sony PS Now and Nintendo Cloud service. Can MS dictate how EA, Tencent, Ubisoft or any other publisher or developer deliver their games over the cloud. If anything everyone different company will decided on how they distribute their games over the cloud just like every vendor decides what storefront to use to sell their games. What I do not see is any one company being the sold distributor of gamers over the cloud just like we do not see the same for streaming movies, music or anything else.
They cant control it outright but they can become the major player by the virtue of the fact that they have extensive cloud infrastructure and can put all there software on it so it fulfills the roles that both Xbox live and the consoles themselves do now.
MS is happy to give ten year deals since they know that cloud gaming is still in its infancy and this is a long term strategy.
They are looking at cloud gaming as a chance to start with a clean slate against Sony, they know they having the upper hand when it comes to the infrastructure side but need content these acquisitions represent their attempt to acquire the software component that makes their cloud gaming a compelling proposition for gamers.
Based on only reading articles it is the post ten years period that seems to worry the CMA and despite the shorter term Sony COD focus also worries Sony the most since they too see a scenario where eventually nearly all of those games end up going behind the MS cloud wall when the service is deemed ready.
CMA is one of the few liars in the world who is treating cloud as separate from the rest of the gaming market.
Everyone credible knows for a fact that it is not seperate, since all the same games available appear on the service.
Credibility shot into 1000 pieces.
Game pass, and Xbox Cloud, are a new form of business model.
Xbox wants to be like netflix, and not traditional "buy to play"model. Clearly 2 different business models.
Except a Netflix business model doesnt work for gaming the way it works for movies due to the speed of consumption. I can watch a dozen movies in a weekend and get more than my moneys worth. Starting multiple 30hr+ games? Nobody is playing more games than those that just buy each game full price. Or are people just starting games and playing 1hr and moving on?
Nobody needs to play multiple games every month to get your money's worth. One game over $20 is already getting your moneys worth. Not every game is a 30+ hour experience. There is a wide range of shorter to longer games.
This is a weird critism of a game subscription that doesn't hold much weight when games cost more than other forms of media.
I also play more games since I started using Game Pass.
It’s interesting reading speculation about something everyone could easily find out for themselves.
Unlike Netflix, Game Pass is available for free at the cost of 3-5 minutes a day of effort.* That's way, way, way better than $20+ per game!
- In any country with Microsoft Rewards, that is. :)
The fact is looking at completion rates and trophy data most games don't get completed and I have seen plenty of top selling games where even trophies that are automatically earned in the first hour or less are showing an 80% or less completion and I would guess that its become more pronounced with game pass, so to answer your are people playing 1hr and moving on question, yes game sampling is indeed a thing.
I don't think anyone is arguing that Game Pass isn't a new business model. It absolutely is.
But I think you're conflating Game Pass and Xcloud here. One is a new business model, the other is a new distribution system.
Let's inform distribution companies that distribution isn't a business model =p
Perhaps so! :)
My point (and the point of Take Two's CEO, from what I can gather) is that selling games is a business model, and selling boxed games or digital distribution are two different distribution systems.
Game Pass is a digital distribution game subscription service, which is a different business model than buying digitally distributed games. Game pass has two different distribution systems, download or streaming, but I wouldn't call one a different business model than the other. Both are the same business model, but two different ways of distributing the game.
Depends. If you have a big enough difference in "demography" between the public that buy in one and the other they basically become business model by themselves even if offering the same product.
I disagree with this. It really doesn't matter which choice you decide to use to play your game, whether to download it locally and play it or from the cloud, its the same thing. Its more an access feature today than a separate business model because XCloud is not separated from GP. As an add on it will always be just another way to play the same games you already have access to whether you download it or play on the cloud. This is why when the CMA tries to make it appear that XCloud is a separate market, it doesn't line up. MS cannot control other ways any other business distribute or give access to their games. MS does not control Sony, Nintendo, Tencent you name it so saying they have some % of the cloud market is to basically just ignore how other companies do the same thing. It never made sense.
Something doesn't need to be separated to be a different business MODEL. Again if let's say only 30% of your users buy both (digital or physical) then you have two models, same for digital. It may not make much difference to differentiate them, but they are still different and have their own dynamics even the prices and discounts between selling digital or physical aren't in synchro.
It has to be separate or it cannot be proven to be its own business like the CMA states. If its just an add on service to GP then its no different then any other add on service like PS Now for PS+. The CMA stated that MS controls 60% of the cloud market but that cannot be true if they are saying XCloud owns that percentage and then ignore PS NOW or even Nintendo own cloud service. How is the CMA getting that number and what are they comparing it with.
Not sure they are ignoring PSNow, but they can't pick the whole PS+ sub to say it is PSNow because only a small portion of PS+ have the streaming option also subscribed (even if not used). Similar wise they didn't pick the whole GP or XBL (gold or otherwise) for the XCloud market they picked only the sub that have the XCloud (and sure other benefits as well) and indeed MS themselves said more than 20M people have used XCloud.
Don that is exactly what the CMA is doing for XCloud. They are making an assumption that MS owns 60% of the cloud market based on GP Ultimate. There are no numbers for Ultimate compared to PS+ extra or even Nintendo own cloud services. It's one thing to say MS owns this percentage if GP Ultimate is 25 million users and PS+ Extra is 10 million or something like that but even still, they would need to define how XCloud is not another distribution service instead of a business model like GeForce Now. Meaning that XCloud is not its own cloud service that People sign up for but instead people sign up for GP Ultimate because of all of the extra features. Its no different then anyone signing up for for PS+ extra for extra features not because you can use PS Now with it. 20 million people using a feature is one thing, how many people active use it to play games is something else.
