The Sony chief says publishers hate the game pass
The Nintendo Switch: a Video Deposition Against the Sony/Player/Bethesda Boundary for Playstation Game Developments
The court only allows 1,000 people to listen in at a time and it hits capacity many times. People are streaming the hearing to make it easier for people who want to listen in. Courts are not prepared for the number of people who want to listen to this hearing.
With that administrative warning out of the way, we moved straight into the video deposition of PlayStation chief Jim Ryan. It ran for around 70 minutes and, at times, jumped around due to parts being edited out for confidentiality reasons.
A lot of their games involve shooting, and there are moments of online brouhaha. Both of which typically are more popular in the US than they are outside of the US.”
The FTC argued against the Nintendo Switch being a high performance console market because they believed it to be separate from the PS4 and XBOX. The Switch argument is very tedious for me. The two consoles are not alike in their way of competing with each other.
We consider Nintendo to be in a different market segment. Nintendo has hardware technology which is much less sophisticated than the other consoles. Its hardware typically retails for a cheaper price, and its audience is aimed rather younger.”
Ryan defended the need to have third-party exclusives on Sony’s platform. Ryan said the effort required to make the game reduces because of game studios. Pete Hines spoke about Starfield being exclusive on the first day. According to the FTC, exclusives are bad for competition and Microsoft‘s purchase ofBethesda meant the upcomingIndiana Jones game wouldn’t be sold in the States. Ryan expected these games to remain on PlayStation after Microsoft acquired Bethesda:
Sony is hesitant to share future PS6 development kits with Microsoft because they may build games like Call of Duty in the future.
The development kits allow the developers to work on the features of the new console. [Delaying dev kits] would typically mean a developer may bring its content to the new platform later than would otherwise be the case. The commercial risks associated with the knowledge of these feature sets leaking to our principle competitor is not something we’d rely on any contract to enforce.”
Dev kits aren’t the only thing that Sony fears with an Activision-owned Microsoft. A bombshell email was read out in court last, which showed that Jim Ryan was pretty sure Call of Duty would continue to be on Sony for many years to come.
“It was not a meaningful list. This list represented a particular selection of older titles that would remain on PlayStation, for example Overwatch is on there but Overwatch 2 is not on there, the current version of the game.
At the same meeting with investors, Ryan discussed Microsoft’s Game Pass push and the proposed Activision Blizzard acquisition. “That has driven them to make a large acquisition. I talked to all the publishers, and they absolutely don’t like Game Pass. He went on to say in his deposition that “I talk to publishers all the time, and this is a very commonly held view over many years by the publishers.”
Ryan: I wouldn’t say I was concerned at all, but it was Phil Spencer’s response after my email that sent alarm bells ringing.
“What Bobby wanted to do was cover himself by extending the marketing collaboration between Sony and Activision, in the event of the transaction not proceeding.”
“One of the reasons why we are investing massively in first-party development and publishing is to provide us with an edge against pressure on a historic business model. You have the ability to be self-determinant if your business model is where you own elements from top to bottom.
We then moved on to the question of exclusivity. Microsoft has models and analysis for keeping games exclusive. “Nobody at Microsoft recommended withholding Activision games,” said Microsoft’s lawyer. Lee responded:
Ryan also said he was surprised at the 25 million Xbox Game Pass subscriber numbers Microsoft disclosed in January 2022, as he was “expecting a larger number given all the money they have spent.” He compared it to Sony’s 55 million PlayStation Plus subscribers at the time, and Sony went on to claim in an October filing with the Competition and Markets Authority in the UK that Microsoft has 29 million subscribers. The 25 million figure is not officially announced by Microsoft.
Ryan’s testimony also revealed that Xbox beat PS5 sales for three months in 2021. The PS5 sales were briefly overtaken by the XBOX Series S / X sales due to Sony’s shipping constraints. Ryan says there’s no other time during this latest generation of consoles where Xbox sales have materially exceeded the PS5.
The final portion of Ryan’s deposition was focused on the cloud. PlayStation Now, Sony’s previous cloud gaming service, had a subscriber base of 3 million users, Ryan says. He believes that cloud gaming won’t be meaningful until at least 2075.
The FTC Takes Call of Duty Seriously: Analyzing Microsoft’s Models of Competition in a Game on XBOX and PC
The FTC went on to call Robin Lee, PhD, a professor of economics at Harvard University. He has been a panelist and speaker at the FTC, discussing competition and consumer protection. He is very much an expert in the competition field, so Microsoft, naturally, wanted to try and tear his quantitative models apart.
It was at times like Lee was interviewing to become a politician. Lee wasn’t helpful in explaining how he had defined the console market early on, which you can tell frustrated Microsoft’s lawyer Beth Wilkinson. This led to a tense exchange early on:
The rest of the exchanges weren’t much better, with Wilkinson trying to make sense of Lee’s models on a whiteboard. It turned into a showdown into his research, with Judge Corley intervening multiple times.
Such a loss would come from PlayStation losing players, as Call of Duty isn’t available on Nintendo Switch. Lee took the data from old consoles such as PS4 and XBOX One and used it to make 888-282-0465 888-282-0465 888-282-0465 888-282-0465 888-282-0465 888-282-0465 888-282-0465. Game Pass or cloud gaming services have no models for share shifting in games where titles like Call of Duty are taken away fully.
After a quick lunch break, Lee went back to be questioned by the FTC’s lawyer, but he also faced a lot of questions from Judge Corley. Lee suggested it’s important to extend his analysis beyond current Activision content and to look at other games the company could produce in the future to analyze the competition effects.
My economic opinion is that the merged entity is a likely economic incentive to foreclose Call of Duty as well as other activities entitled, and I note that economists think firms tend to act in their economic interest, but there is some uncertainty in the future.
After the FTC got into Call of Duty on XBOX and PC, Judge Corley asked why people would not switch to a PC to play the game and get more value out of it.
Source: https://www.theverge.com/2023/6/28/23776652/ftc-microsoft-day-three-hearing-summary-sony-playstation-jim-ryan-xbox-game-pass
Microsoft vs. the FTC: Xbox Game Streaming Services Are Not Available During the Early Stages of the Series X Game Relaunch
Dr. Lee: There’s the Series X and PS5 and the Series S is still in that market. The customers who buy the X console are more likely to switch to a PS5 or a Switch if the Series X price increase is taken into account. So this decides the market definition, evaluate a price increase on any of the products in the market.
At the conclusion of his testimony, he was questioned about cloud competition. The cloud is a new market that is still seeing new competition, and it’s difficult to judge harm in it. “The role that smaller entrants have can be greater than in other mature markets because if they can’t get access to content, then harm from foreclosure could be magnified in the future,” said Lee.
The European Commission managed to secure a remedy from Microsoft to enable a free license to consumers in EU countries that would allow them to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for. Cloud providers will be given a free license to stream these games. Microsoft has already claimed it will apply this automatic offer globally, but the FTC has largely dismissed Microsoft’s potential cloud agreements.
After a long and exhausting day of testimony, it was time for some light. Phil Eisler, who leads the GeForce Now team, is in a deposition. The FTC had called Nvidia as a witness in a nine-minute video that felt like it went by as quickly as the 240fps that GeForce Now supports.
Microsoft’s lawyer took over questioning to ask about the company’s agreement earlier this year for Xbox PC games on its streaming service. The head of the Xbox Game Studios told Phil Spencer in a March 2021 email that he preferred that the games of Bethesda be removed from the GeForce Now service.
The quality of playing locally has gotten closer to us over time. The cloud gaming server is more powerful that consoles, so we can run higher frame rates and add visual effects. Nvidia has upped its frame rates from 30fps all the way up to 240fps, which dramatically reduces latency.
“Did Activision agree to make these games available?” asks the FTC. “We worked with a contact at Blizzard; they were supportive of the games being available during beta.” Call of Duty games were also on GeForce Now during beta and were “one of the more popular games on the service.”
“The agreement entitles us to the content provided the transaction completes on the Activision side,” said Eisler. “We have already begun working with Microsoft to onboard their first-party titles, so we’re confident that will solve our concerns there.”
Source: https://www.theverge.com/2023/6/28/23776652/ftc-microsoft-day-three-hearing-summary-sony-playstation-jim-ryan-xbox-game-pass
Day Three Microsoft’s Economic Expert: Summary of Sony Play Station Jim Ryan XBOX and Action Blizzard
For the final part of day three, Microsoft called on its own economic expert: Elizabeth Bailey, PhD. Bailey is an expert on antitrust, competition policy, and intellectual property issues.
Microsoft has argued that the deal with Activision isn’t about consoles. According to Bailey, XBOX mobile revenue is a small portion of the overall mobile gaming revenue. “Activision Blizzard is also very small in mobile gaming. So combined, they’ll have 3.8 percent of mobile gaming.”
Bailey has access to the data from both consoles for Call of Duty. Microsoft argues that data for market share and usage shouldn’t be limited to just the US and that it should be global. Bailey said that it reinforces that competition and competitive decisions are made no matter where they are in the world.
Bailey was able to analyze game time to determine if the same games are popular in the US and other parts of the world. “If you look at the most highly played games, that set of games that are most highly played in the US is a very similar set of the most highly played games in other countries around the world,” says Bailey.
Source: https://www.theverge.com/2023/6/28/23776652/ftc-microsoft-day-three-hearing-summary-sony-playstation-jim-ryan-xbox-game-pass
Observational Warning on Microsoft’s Decision to Remove Call of Duty from Windows Device Catalog: The First Seven Days of the FTC telemetry Hearing
Bailey confirmed that Lee had access to the same telemetry data, but the pair have obviously come to different conclusions. It is worth noting that the data is not always conclusive. Microsoft looked at what happened when it decided to remove the Start button in Windows 8.
Judge Corley wanted to know if people had a choice of what game bundle they got and if it was different in different states. Bailey didn’t have an answer to that other than an anecdote about buying a console herself and deciding between bundles. That could be a big hole in the telemetry analysis.
Bailey concluded her testimony by saying that Call of Duty is an important game but that there is nothing unique about it. She’s also looked at the Nintendo Switch being successful without Call of Duty. Switch share has grown 35 percent without Call of Duty, Bailey claims. Bailey will resume his testimony on day four.
A big one is expected on day four. Bobby Kotick will be the first to speak, but we will hear more from Bailey. Microsoft CEO Satya Nadella will also appear at around 1:30PM PT, and Nvidia’s Jeff Fisher will also appear via a video briefly. Dennis Carlton, an economics expert, is being called by Microsoft for his observations on Lee’s report.
The hearing will resume again on Wednesday morning at 8:30AM PT / 11:30AM ET. Judge Corley has a prior midday commitment, so there will be a long lunch break until Nadella appears.
We started the day with a warning from Judge Scott Corley, who was worried about people putting witness testimony up on the internet. It’s strictly prohibited, and Judge Corley warned YouTubers are jeopardizing the ability for potentially all US court proceedings to be officially streamed to the public via Zoom. “You are welcome to live blog; that is fine, but no recording or streaming.”
Oh, and if you’re really into math and quantitative analysis, then maybe you can help decipher some of the testimony from Robin Lee, PhD, the FTC’s economic advisor. I think the third day left everyone confused and a bit bewildered, as it was a large part of the day.
Source: https://www.theverge.com/2023/6/28/23776652/ftc-microsoft-day-three-hearing-summary-sony-playstation-jim-ryan-xbox-game-pass
The 2021 PlayStation Game Costs $15.9 billion a Year: Sony’s Account of the Cost of Playing Call of Duty and The Last of Us
Phil Spencer, the head of Microsoft’s Xbox unit, sent a list of games to Jim Ryan, the head of Sony’s PS3 platform, in August of 2022, raising worries for the company. There was a list that was made up of Overwatch and not the other way around. According to Ryan, this “sent alarm bells ringing.”
This is not just how much games cost to make, it is something else as well. According to Sony, over one million PS4 users only play Call of Duty. Sean Hollister is a colleague of mine and he has analyzed the document.
The court has scrambled to remove the document, but the damage is done; reporters and Sony’s competition have already downloaded all the documents while they were in the public domain. Among other things, the document shows that Horizon Forbidden West apparently cost $212 million over five years with 300 employees, and The Last of Us Part II cost $220 million with around 200 employees:
In 2021, over [14?] million users (by device) spent 30 percent or more of their time playing Call of Duty, over 6 million users spent more than 70% of their time on Call of Duty, and about 1 million users spent 100% of their gaming time on Call of Duty. In 2021, Call of Duty players spent an average of [116?] hours per year playing Call of Duty. Call of Duty players spending more than 70 percent of their time on Call of Duty spent an average of 296 hours on the franchise.
Sony accidentally revealed how much money Call of Duty is worth to the PS4, which may explain the revenue impact. We already knew the figure was over a billion dollars, but the document suggests CoD was worth $800 million for PlayStation revenue in just the US during 2021 — and we think the document says $1.5 billion globally. And that’s just the game alone, but when you count accessories, subscriptions, and everything else, then that jumps to (what appears to our eyes) to be $15.9 billion a year — or perhaps $13.9 billion. It is a huge amount.
According to SIE internal surveys, almost half of PlayStation 5 owners in the United States also own a Nintendo Switch, while less than 20% of PlayStation 5 owners in the United States also own an Xbox Series X or S.
