Microsoft: Why Call of Duty series’ success may heat up Microsoft-Sony ‘war’

Call of Duty developer Activision Blizzard posted strong Q4 results beating Wall Street expectations. It says that the results were driven by the Call of Duty franchise, especially Call of Duty: Modern Warfare II that delivered the highest opening-quarter sell-through in franchise history.
Modern Warfare II delivered the highest opening-quarter sell-through in the franchise’s history and crossed the $1 billion mark within 10 days of its late-October launch, the company said. A number of launches, including Call of Duty: Modern Warfare II, Warzone 2.0, and World of Warcraft: Dragonflight from the fantastical world of Azeroth, in October and November, helped the company retain the gaming community’s attention.

Activision-Microsoft deal
It is to be noted that Activision’s results are better than its competitors Electronics Arts and Microsoft’s gaming division. Microsoft is under lens for its $69 billion takeover of the game developer and the deal is being challenged by the US Federal Trade Commission (FTC) and being investigated by EU authorities.
Sony’s concerns over Microsoft deal
Microsoft’s biggest competitor Sony had raised concerns about the fact that the acquisition would give Microsoft control over Call of Duty, which could be a financial blow to the Japanese company.
Last year, reports suggested that PlayStation CEO Jim Ryan flew to the EU headquarters to discuss his concerns. In a 22-page response to the UK’s Competition and Markets Authority, Sony said if the deal is allowed, Microsoft would have the ability to make the game an Xbox exclusive that would drain consumers away from PlayStation.

While draining gamers away from PlayStation to Xbox may be deemed a hypothetical situation at this point of time because Sony has a fair share of exclusives, including God of War franchise, Call of Duty’s soaring revenue and popularity may have a positive impact on Microsoft’s gaming business.
A report in October quoted Joost van Dreunen, a lecturer on the business of games at New York University’s Stern School of Business as saying that the deal will allow Microsoft to have “full ownership of one of the most valuable franchises in console gaming. And naturally, Sony does not want that or like that because it will cost them business.”
Microsoft also claims “keeping Call of Duty on PlayStation is… a commercial imperative for the Xbox business” and that it is “counting on revenues from the distribution of Activision Blizzard games on Sony PlayStation.”

Sony has more exclusives than Microsoft
In December, Microsoft president Brad Smith reportedly said that Sony’s PlayStation has 286 exclusive games while Microsoft’s Xbox has just 59, and that a judge will “have to decide whether going from 59 to 60 is such a danger to competition that he should stop this [acquisition] from moving forward.”
In October, Microsoft said that since the Activision transaction was announced, Sony acquired several game studios, including Bungie, developer of the popular online game Destiny 2, Haven Studios, Lasengle and Savage Games – and a minority interest in From Software, the developer of the biggest game of 2022, Elden Ring (among other hit games) alongside Sony’s existing minority shareholding in Epic Games, publisher of Fortnite.