The leak of documents exposing Xbox strategy was not only damaging for Microsoft, it was also damaging for PlayStation. It was a conversation with the brand’s president, Jim Ryan, that was made public by mistake.
Bungie vs Activision: PlayStation considers its acquisition more interesting
The source of the conversation is once again a document posted online by the FTC and which has been deleted a few days ago. But nothing really disappears on the internet, which allows us to discover a unique point of view on what the president of PlayStation thinks about the state of the market just after Microsoft announced its intention to buy Activision Blizzard.
Jim Ryan thus responded to various analysts and businessmen in February 2022, just after Sony announced the acquisition of Bungie and Microsoft that of Activision. These two earthquakes in video games will have consequences for years to come and Jim Ryan knows it and the man did not mince his words when asked if Sony had already had Activision as a takeover target, and if the latter ultimately wasn’t too big for PlayStation?
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We know Activision very well. It’s probably one of our main partners. In terms of Sony’s capital deployment. Comparing Activision’s $69 billion to Bungie’s $3.6 billion, we think Bungie can get us a lot more than a $69 billion acquisition of Activision. And that’s before considering the relative value of this particular transaction.
It is true that Sony’s acquisition of Bungie for $3.6 billion may seem very interesting considering the amounts invested by Microsoft, but it is worth remembering that the portfolios of the two companies really have nothing to do with each other.
Bungie specializes in one or two franchises with the upcoming release of Marathon, while Activision Blizzard has countless established franchises already known to everyone, with strong expertise in mobile gaming, a fast-growing market.
Developers Don’t Like Xbox Game Pass, Sony Says
Then comes the question of Xbox Game Pass, Microsoft’s flagship service. It is obvious that this type of attractive offer shakes up the market and the business model from Sony, used to releasing big games sold at full price.
The question is about Microsoft’s strategy. Should the latter provide minimum revenue guarantees if it wants big games to be offered in Game Pass, or rather buy other companies such as Activision to supply its catalog? Are these two valid options for Microsoft to gain critical mass and AAA publisher support for Game Pass?
Jim Ryan’s response is surprising to say the least, and undoubtedly a little in bad faith.
I can say with a very high degree of certainty that Microsoft tried the first route and it didn’t work at all. This is what pushed him to make this big acquisition.
I’ve spoken to all the publishers and they are unanimous in not liking Game Pass because it is destructive of value, not only for each game, but also for the entire industry.
The number of subscribers announced by Microsoft last January was 25 million. I’m sure everyone has their own opinion on the matter, but personally I expected a higher number considering all the money they spent. We have almost 50 million PS Plus subscribers. We believe we have a meaningful subscription service.
Even if opinions on Xbox Game Pass are obviously not all unanimous within the developer community, we have still found several times developers delighted to have offered their game in the service.
We know how developers make money with Xbox Game Pass and that the service is a discovery engine. Several developers have already shared their enthusiasm about this. We think in particular of the developers of Tunic, Oxenfree or The Epic.
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