The FTC VS Microsoft case has brought to light many interesting details about the games industry, including Microsoft CEO Satya Nadella’s dislike of exclusives.
Microsoft CEO Satya Nadella has voiced his frustration with the concept of console exclusives, attributing this competitive practice to Sony, the current leading player in the console market. Nadella’s comments came amidst the FTC hearings for Microsoft’s proposed acquisition of Activision Blizzard.
“If it was up to me I would love to get rid of the entire exclusives on consoles, but that’s not for me to define especially as a low share player in the console market,” Nadella declared. He went on to point out that “The dominant player there [Sony] has defined market competition using exclusives, so that’s the world we live in. I have no love for that world.”
This somewhat surprising expression of sentiment comes when Microsoft is looking to bolster its first-party studios and exclusive games line-up. Microsoft’s acquisition of Activision Blizzard is part of this strategy to enhance the company’s 23 first-party studios and its exclusive catalogue that already includes heavy hitters like Halo, Forza, and the forthcoming Starfield from Bethesda.
While it is true that Sony is the clear leader in the global console market, with approximately 45% of total spending across hardware, software, and services, it is not entirely accurate to lay the concept of exclusivity at Sony’s feet. The practice of console exclusivity is as old as the console industry itself, predating even the original PlayStation launched in 1994. Games like Sega’s Sonic the Hedgehog were created to compete with Nintendo’s Mario directly.
On another note, PlayStation boss Jim Ryan revealed during the hearing that “all publishers” he spoke with consider Xbox’s Game Pass to be “value destructive”. Ryan, however, did not comment on how Sony might operate if it were to acquire Activision Blizzard.
The FTC hearings have indeed unveiled some interesting perspectives from both Microsoft and Sony. In a twist of irony, while Microsoft wishes to do away with exclusives, they are on the cusp of an acquisition that could potentially increase their roster of exclusive titles. Similarly, as Sony continues to thrive on exclusives, they also challenge the value proposition of Microsoft’s Game Pass.
The legal and competitive dynamics of the console industry continue to evolve, with the final day of the FTC hearing currently underway. Meanwhile, Microsoft is also appealing a UK ruling that blocks the Activision Blizzard deal due to concerns about cloud gaming.
