During Microsoft’s standoff with the FTC over a preliminary injunction of the proposed acquisition of Activision Blizzard, witness was privy to emails and internal communications that painted president and CEO of Sony Entertainment Jim Ryan as less concerned about potential anticompetitive practices as he was something else.
A new leak from the ransomware group Rhysia sheds some light on what exactly Ryan was more concerned about with regards to Microsoft acquiring Activision. Imbedded in a treasure trove of files that include Insomniac’s game release roadmap of titles such as Wolverine, Spider-Man 3, and Ratchet & Clank, are leaked documents that express Sony’s concerns that Microsoft could “leapfrog” the company if it were to acquire Activision Blizzard.
Sony put together a slide deck that covers general concerns and talking points for lawyers, partners and investors that go over what a potential Microsoft and Activision acquisition could mean for competitors, mainly themselves. Among the slides are talking points that include what Sony describes as “The Call of Duty Threat… in 2027.”
- MSFT acquisition of ATVI for $69B could disrupt and threaten console gaming and game subscription markets
- Console – shift from PS to Xbox with timing and in-game differential as the weapons
- Subscription – MSFT’s comprehensive ecosystem coupled with exclusivity creates greater dominance
- Sony impact – massive threat to PS+ (upwards of $1.5B of annual revenue threat, gap to fill_
- 45m subs x $12 monthly x 12 months x 20% MP 3rd party
There are other details Sony sees as potentials threats with Activision under Microsoft’s steward such as Day and Date threats, the “leapfrog” effect ATVI provides with its scale and mobility presence, and a resulting PC storefront.
While it looks like Sony will have many of Marvel’s single player properties in the bag for the next decade under Insomniac’s proven brilliance, Microsoft and Activision look to counter with a more buffet-style “play anywhere” gaming approach. Thanks to the UK’s Competition and Markets Authority (CMA) Microsoft cannot unilaterally gate-keep Activision’s flagship title Call of Duty from Sony, but the company does receive an instant bonus from having an influx of revered titles added to its Game Pass library.
Microsoft may not have a 50-to-60-hour industry acclaimed single player exclusive to hang its hat on in the next five to ten years, but it will have several games players can spend hours replaying amongst their friends across several devices in-between the years it takes Sony to pump out their herald titles. In-game purchases, mobile transactions, subscriptions and subscriptions based DLCs are where Microsoft and Activision Blizzard are gearing up and Sony’s tried, and true exclusivity play lacks the sustained revenue a subscription-based approach can achieve over time.
Sony admits that it’s “pillars are already dated behind the competition,” meaning it’ll need to do more than offer stellar single-player games such as God of War or Spider-Man every couple of years to combat an onslaught of gaming options distributed across several places that aren’t the PlayStation console.
Ironically, Sony was among the first out of the game to establish a cloud-based gaming experience alongside its PlayStation Plus subscription platform predating xCloud and Game Pass. However, Sony allowed its Plus service to languish with unenticing pricing and limitations on gaming experiences for years, leveraging it as an add to an online multiplayer.
In the last couple of years Sony has scrambled to revamp its subscription service and as journalist Paul Thurrott put it, “Jim Ryan’s ambitious plan to launch more than 10 service games before March 2026 is not going as well as expected. Last week, The Last of Us developer Naughty Dog announced that it was canceling The Last of Us Online – a game that’s been in development for many years – to focus on what they’re best at, and that is developing single-player narrative games.”
Despite its efforts to scramble up a competing multiplatform online experience, Sony remains leashed to the idea of a “premium sales model is the central approach” where they presumably continue to rake in millions on a select handful of exclusives rather than more incrementally sustained revenue via subscriptions.
Sony believes Microsoft subscription model is unable to cover the ballooning investments into AAA titles the company has often done over time, leading to the notion that the perfect game subscription is still very “elusive”.
Head of Xbox Phil Spencer has repeatedly claimed that Game Pass is financially solvent for the company and spending $69B on a publisher would tend to lend credence to those affirmations.
It’ll be interesting to see if Sony can successfully pivot towards a subscription model or if Insomniac will continue to deliver its bread-and-butter single player games to fuel that “premium sales model.”
