Microsoft has claimed that Sony is paying for “blocking rights” to prevent developers from adding their content to Xbox Game Pass. The explosive claims are part of documents (Word document) filed with Brazil’s national competition regulator and part of a review of Microsoft’s acquisition of Activision Blizzard.
“Microsoft’s ability to continue to expand Game Pass has been hampered by Sony’s desire to inhibit that growth,” Microsoft said in an Aug. 9 filing with the Administrative Council for Economic Defense (CADE), as translated from portuguese “Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”
Does this mean that Sony is evil and that Microsoft is casually here revealing some dastardly business practices? The reality is likely to be a bit more complicated on both sides. Sony could simply be paying for exclusive rights to its own streaming services, or it may have clauses in some publishing contracts that prevent some games it publishes from being published on rival subscription services.
It’s not clear what Microsoft is referring to here, but contracts for publishing games can be complex, especially when rights to streaming and subscription services are involved. Documents presented to Epic Games vs. Apple Last year’s trial revealed that Microsoft had considered reducing its share of PC game revenue “in exchange for granting streaming rights to Microsoft.”
If Microsoft had followed through with its plans, this could have led to the company securing exclusive streaming rights to some games, preventing them from being available on rival streaming services. It all depends on how the publishing contracts are written, and both Microsoft and Sony regularly secure game exclusives that involve scheduled releases, console exclusivity and lots of marketing dollars.
Microsoft is trying to convince Brazil’s CADE regulator that it should step down over its proposed $68.7 billion acquisition of Activision Blizzard. Although the Federal Trade Commission (FTC) is analyzing Microsoft documents about its acquisition in the US, this correspondence is private. That’s not the case in Brazil, where its competition regulator is offering public documents that provide a unique insight into the business competition between Microsoft and Sony.
Xbox and PlayStation fans have been poring over documents from Brazil’s CADE for the past week, with posters on ResetEra highlighting the juicy bits. The regulator has been asking Sony and other Microsoft rivals about the Activision Blizzard acquisition. Sony previously responded to Brazil’s regulator by claiming that it would be difficult for other developers to create a franchise to rival Activision’s. Call of Duty and which stands out “as a category of games on its own”.
Naturally, Microsoft disagrees and Ubisoft, Riot Games, Bandai Namco and Google have highlighted the competition for Call of Duty in the form of Apex Legends, battlefield, PUBGand more
Microsoft also claims that adding Activision Blizzard content to Xbox Game Pass will increase the competition in some way. “The inclusion of Activision Blizzard content in Game Pass does not harm the ability of other players to compete in the digital game distribution market,” Microsoft says in a filing, where the company also argues that it increases competition by ” high quality content”. with lower immediate costs”.
Sony has yet to respond to this specific point, but at $9.99 per month for Xbox Game Pass, it’s easy to imagine consumers choosing this option to play titles like Call of Duty instead of paying $60 or more to buy and own the game.
Microsoft also argues that it does not distribute games like Call of Duty on rival console stores “simply wouldn’t be profitable” for the company. Microsoft has already made it clear that it will remain Call of Duty on PlayStation. Microsoft says a strategy of not distributing Activision Blizzard games to rival consoles would only be profitable if the games could attract a large number of players to the Xbox ecosystem, generating revenue to offset losses from not selling those titles on rival consoles.
Whether or not Microsoft’s claims about “blocking rights” are accurate, it wouldn’t be the first time Sony has used financial incentives to block game developers. Sony held back PS4 cross-platform play for years and implemented a cross-play revenue share for publishers who wanted to enable cross-play in their games.
Sony’s cross-platform revenue share required publishers to pay Sony a royalty whenever PlayStation players contributed more than a certain percentage to a cross-platform game’s bottom line to “make up for Sony’s reduced revenue” which allowed for cross-play. Epic Games CEO Tim Sweeney stated last year that Sony was the only platform holder that required such cross-play compensation.
We’ve reached out to Sony for comment on Microsoft’s claims, and to Microsoft to clarify what’s allegedly blocking Sony. We have yet to hear back from either company, and we don’t expect anyone to comment on these explosive details. But we’ll be looking closely at Brazil’s CADE documents over the next few days to see if or how Sony responds to Microsoft’s claims.