Microsoft CFO: Making Call of Duty an Xbox Exclusive Was Never Discussed - News
by William D'Angelo , posted on 02 August 2023 / 4,028 Views
Microsoft CFO Amy Hood in her written declaration submitted as part of the Microsoft vs FTC hearing said they never discussed the possibility of making Call of Duty an Xbox console exclusive.
"An essential component of that valuation was the [redacted] in forecasted total future sales of Activision‘s content on all platforms, including continued sales of Call of Duty on Sony’s PlayStation," reads the Hood's declaration.
"The possibility of making Call of Duty exclusive to Xbox was never assessed or discussed with me, nor was it even mentioned in any of the presentations to or discussions with the Board of Directors. I understood the necessity of keeping Call of Duty on other platforms. The acquisition’s strategic rationale and financial valuation are both aligned toward making Activision games more widely available, not less."
Hood added an important part of the acquisition to Microsoft's shareholders is it had to be profitable from year one and "contribute to an increase in earnings per share."
Microsoft Gaming CEO Phil Spencer last week swore under oath to Judge Jaqueline Scott Corley that Microsoft will keep releasing Call of Duty on PlayStation consoles. He clarified this is as long as Sony allows Call of Duty to remain on PlayStation.
"I think as we've seen even in preparation for this that gamers are an active and vocal group," said Spencer at the time. "Us pulling Call of Duty from PlayStation in my view would create irreparable harm for the Xbox brand."
Judge Corley reminded Spencer was under oath and Spencer said, "I would raise my hand, I would do whatever it takes. We have no plan. I'm making a commitment standing here that we will not pull Call of Duty, it is my testimony, from PlayStation.
"As you said, Sony obviously has to allow us to ship the game on their platform. But absent any of that, my commitment is, and my testimony is that we will continue to ship future versions of Call of Duty on Sony's PlayStation 5."
Microsoft in February signed a "binding 10-year legal agreement" to bring Call of Duty games to Nintendo platforms and has offered the same deal to Sony to keep Call of Duty on PlayStation for 10 years.
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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You can't say it was never once talked about, you can say it was never seriously talked about. But I'm sure at least one decision maker at Microsoft brought it up at least once it meetings.
I wasn't aware you were amongst Microsoft's Board of Directors to make such a statement.
I could be wrong here, but a $7.5 billion deal is just a bit smaller than a $69 billion deal. Surely a CFO of all positions would expect immediate ROI with the latter. Only way to do that is to keep business as is.
Neither you or I will ever know for sure.
Maybe not the board of directors, but I'm sure Matt Booty brought it up at least once on the elevator or near the water cooler.
Lol, you know Matt definitely wears his green and white colors well and probably drove the Phil home himself and told him "Make all ABK exclusive, F Sony"
I don't think the mention of Amy Hood should be interpreted to include water cooler talk. It is obviously limited to official meetings.
I'm sure it was discussed too, like "We ain't doing exclusivity with CoD", "Cod exclusivity would be ludicrous", "Sony is only showing fake concern that we go exclusive with CoD" etc.. Those can be considered discussions about exclusivity.
Yes. The whole idea of pulling it from PlayStation doesn't make sense. Call of Duty is a massive cash generator. That has a big impact on Activision's value. My guess is that it accounts for at least $10 billion of the purchase price of Activision. Microsoft is not going to throw $10 billion away.
I mean yeah, it just doesn't make logical sense. I'm sure it was thought about by many executives in the privacy of their own minds, but the idea of bringing it up in an actual meeting was abandoned after their mind arrived at the logical conclusions:
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It doesn't makes sense to pull an IP from the platform where more than half of it's revenue comes from, you will convince some PS users to switch over and by an Xbox, but it would be negligible amount, maybe 20% of PS CoD gamers would be willing to spend $300-500 just to play CoD, but the rest wouldn't. That is just too much revenue sacrifice for such a small marketshare boost.
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Making any IP on that highest tier of popularity exclusive would lead to a lot of negative press and angry gamers. It's just not worth it to become gaming enemy #1 just to gain a negligible amount of marketshare.
- You can't take an IP that is played by quite alot of underaged gamers and then make it exclusive. This is a big part of why Minecraft stayed multiplatform after Xbox's acquisition, as confirmed in interviews with Xbox employees. Like, Minecraft, a significant portion of the CoD playerbase is under 18, and parents will be pissed if their kids or teens suddenly start having temper tantrums asking for an expensive new console so that they can keep playing one of their favorite games/series.
"It doesn't makes sense to pull an IP from the platform where more than half of it's revenue comes from"
Heard the same about Bethesda games and here we are.
Then you heard wrong - the US FTC made that accusation, but the EU regulators immediately refuted the FTC. MS never said future Bethesda titles would not become Xbox exclusives - they said it'll be in a case-by-case basis
"Report: FTC is wrong about Microsoft’s “commitments” to EU regarding ZeniMax deal"
“Microsoft’s past conduct provides a preview of the combined firm’s likely plans if it consummates the Proposed Acquisition, despite any assurances the company may offer regarding its plans,” FTC states in the redacted public version of its complaint. “In March 2021, Microsoft acquired ZeniMax Media Inc. (‘ZeniMax’), the parent company of the well-known game developer and publisher Bethesda Softworks LLC (‘Bethesda’). Microsoft assured the European Commission (‘EC’) during its antitrust review of the ZeniMax purchase that Microsoft would not have the incentive to withhold ZeniMax titles from rival consoles. But, shortly after the EC cleared the transaction, Microsoft made public its decision to make several of the newly acquired ZeniMax titles, including Starfield, Redfall, and Elder Scrolls VI, Microsoft exclusives.”
However, the EU dismissed the claim after the independent media organization MLex reached out to confirm it. (Screenshots of the article shared by a ResetEra user named Idas.) According to the European regulator, Microsoft didn’t make “commitments.” In its statement to MLex, the EU explained why it approved the ZeniMax deal.
“The commission cleared the Microsoft/ZeniMax transaction unconditionally as it concluded that the transaction would not raise competition concerns,” the EU told MLex, adding that the absence of competition concerns “did not rely on any statements made by Microsoft about the future distribution strategy concerning ZeniMax’s games.”
Additionally, the European watchdog stated that Microsoft denying the availability of ZeniMax titles to its competitors has an insignificant effect on competition. It also explained that the competitors still have access to an “essential input,” while the rival consoles can gain more enticing titles.
Finally, Microsoft directly destroyed FTC’s claim that it made assurances to the EU regarding the availability of future Zenimax titles to other platforms by citing its own statement in the merger notice to the European Commission:
"Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment. Factors that will inform Microsoft’s decision-making on future games include consumer demand and preference and the willingness of third parties to work with Microsoft to launch games for their devices."
Microsoft will do what ever makes the most money. Exclusive or on all platforms. Either way makes sense if the numbers make sense.
OfCourse not
"Us pulling Call of Duty from PlayStation in my view would create irreparable harm for the Xbox brand."
Yeah, that's what they said about Bethesda games. Almost verbatim.
Bethesda wasnt purchased as a multiplatform division.
Of course it was. That's why Phil Spencer's previous comments are now evidence in ABK acquisition reviews.
No deal was signed to have Bethesda games remain multiplatform.
I'm not aware that bethesda games aren't releasing on any platforms where they derived more than half of their revenue.
Bethesda games have historically done very well on PC. If I had to guess at the revenue mix for the average Bethesda game, I'd think it's about 50% PC, 27% PlayStation, 23% Xbox. I'm just making that up, and again this is just for a theoretical average game. But I'm reasonably confident that I'm in the right ball park.
In fact, it actually might be even less on PlayStation, because they were less tolerant of mods. And modifications are big part of Bethesda games.
Except they didn't say that, Bethesda game exclusivity would be decided on a case-by-case basis.
They never said that. They never made a promise about any specific franchise staying multiplatform like they are with CoD.
