What You Missed This Week in Video Games

CMA narrows scope of concerns on Microsoft-Activision deal

"Game On" is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: This week’s biggest new release is Sony-published (SONY) baseball simulator "MLB The Show 23," which launches March 28 on PlayStation 4, PS5, Xbox One (MSFT), Xbox Series X/S, and Nintendo Switch (NTDOY). Also out this week is the PC port Sony’s "The Last of Us Part I," which also comes out March 28. The release marks the first time a game in the "Last of Us" franchise will be available on a non-PlayStation platform.

CMA/MICROSOFT: Last Friday, the U.K.’s Competition and Markets Authority, or CMA, announced: "The CMA has received a significant amount of new evidence in response to its original provisional findings. Having considered this new evidence carefully, together with the wide range of information gathered before those provisional findings were issued, the CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK. The most significant new evidence provided to the CMA relates to Microsoft’s financial incentives to make Activision’s (ATVI) games, including Call of Duty (CoD), exclusive to its own consoles. While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario. On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation. The CMA’s addendum to its provisional findings today relates only to competition in the supply of consoles and not to competition in the supply of cloud gaming services, where the CMA is continuing to carefully consider the responses provided in relation to the original provisional findings. The CMA’s merger investigation continues, and it remains due to issue its final report by 26 April 2023."

The announcement came after VideoGamesChronicle’s Tom Ivan reported that Microsoft told the CMA a decade is long enough for Sony to make an alternative to Activision Blizzard’s "Call of Duty" franchise. In an attempt to gain approval of its takeover of Activision Blizzard, the Xbox maker has offered to make each new "Call of Duty" title available on PlayStation the same day it arrives on Xbox for a 10-year period, the author noted. "At the Remedies Hearing the CMA asked Microsoft if the 10-year duration is sufficient and whether there would be a ‘cliff edge’ for Sony at the end of this period. The 10- year period is ," Microsoft wrote. "Microsoft considers that a period of 10 years is sufficient for Sony, as a leading publisher and console platform, to develop alternatives to CoD."

Meanwhile, Axios’ Stephen Totilo reported Monday that eleven members of Congress, both Democrats and Republicans, are urging the Biden administration to take action over Sony’s business practices in Japan around its PlayStation brand, Axios’ Stephen Totilo reports. Lawmakers have raised concerns to Biden officials, claiming that Sony’s business practices in its native Japan are blocking U.S. rivals, including Microsoft’s Xbox, from competing in the country’s video game market and could be running afoul of U.S.-Japan trade agreements, the author noted.

‘RESIDENT EVIL 4’: Capcom’s (CCOEY) remake of "Resident Evil 4" is the eight biggest physical launch of a game in the franchise in the U.K., surpassing week one sales of the 2005 original "Resident Evil 4" by 29%, Gamesindustry.biz’s Christopher Dring Click here to check out recent Media Buzz Sentiment on Electronic Arts as measured by TipRanks.

FORTNITE/ROBLOX: Last week, Morgan Stanley analyst Matthew Cost notes that Epic Games announced "Creator Economy 2.0," a new program to allow developers to earn money through Fortnite Creative Mode that will use a payout pool of about 29% of Fortnite gross revenue. While Epic previously made it possible for independent developers to earn money inside of Fortnite, Morgan Stanley highlights three reasons that the new payout system highlights competition with Roblox’s (RBLX) creator economy, namely that competing products are starting to launch fully, that existing gaming audiences and economies can be leveraged into the Metaverse and concern that the take rate to creators could be a competitive lever given that Roblox paid 22% of bookings to developers in 2022. The firm has an Underweight rating and $26 price target on Roblox shares. Investors in Epic include Tencent (TCEHY), KKR (KKR), Disney (DIS), and Sony.

OTHER STORIES TO WATCH:

• A federal judge dismissed a consumer antitrust lawsuit against Microsoft over its proposed Activision takeover, Reuters reports [read more]
• Microsoft told The Verge it will no longer offer a $1 Xbox Game Pass trial [read more]
• Ubisoft (UBSFY) told VGC it will not attend this year’s E3 [read more]
• Meanwhile, Ubisoft is working on an AI tool to generate non-player character dialogue, VGC reports [read more]

Keywords: video games, game on, activision blizzard, xbox, playstation