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The CMA Didn’t Consider the Agreement With Nintendo as Evidence That MS Was Interested in Distributing Cod to More Platforms Because the Agreement Was Entered During the Review Process (Page 186)
Regarding the Nintendo agreement, in addition to noting that this theory of harm is primarily focussed on SIE for reasons already explained, we also consider the points discussed in the ability assessment regarding the uncertainty created by certain terms of this agreement also apply to our incentive analysis. With regards to Microsoft's submission that this agreement demonstrates a general intention to distribute CoD on more consoles, we note that this agreement has been entered into during the course of our Merger investigation (and those of other authorities). We therefore do not consider this is reliable evidence of what Microsoft's incentives would otherwise be in the ordinary course.
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Probably fair to have scepticism here.
MS Considers That Cloud Gaming on Mobile Is Unlikely to Be Common Due to the Increase in Computational Power of Mobile Devices (Page 196)
It submitted that cloud gaming on mobile devices had been unsuccessful, citing the performance of Fortnite on xCloud as an example of difficulty in attracting and retaining gamers. It also submitted that with the increasing computational power of mobile devices, many gaming companies are increasingly developing native mobile games, meaning there is unlikely to be material demand for cloud gaming on mobile devices (which Microsoft also submitted depends on the user having a stable internet connection).
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Agreed with Microsoft here, as phones increase in power, Cloud is becoming more irrelevant, and phones are increasing in power by a lot.
Then we look at handhelds, Asus is releasing an absolute beast, you don't need Cloud for that.
It's hard to see where Cloud stands if on-the-go devices become natively powerful enough for native ports.
And yes, it depends on ISPs, Cloud Gaming has nowhere to go until ISPs get serious about improving their internet and removing data caps.
In July/August 2022, MS Was Discussing Opportunities in VR (Page 198)
Emails from [REDACTED] in July/August 2022, primarily discussing opportunities in VR, note the opportunities and Microsoft's strength in cloud. In the emails he states that he sees [REDACTED]. He also notes that in relation to Microsoft's game development studios, [REDACTED].
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Interesting tid-bit.
A Cloud Gaming Provider Reached Profitability in 2022, Having Started in 2019; Expects Cloud Gaming Being Common in a Decade (Page 201)
Another provider [REDACTED] submitted that it had reached profitability in 2022 having started operating in 2019, although this excludes hardware expenses. It stated that it has high capital expenditure due to hardware investments, and that a hardware solution with efficient balance between cost and performance is key to profitability in cloud gaming. This provider also stated that cloud gaming will be the main way users access gaming content in 7-10 years.
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Excluding hardware expenses is a bit deceptive and a big fat doubt on Cloud Gaming being the main way users access gaming content in 10 years.
Third Party Publishers Doesn’t Seem So Sure About the Impact of Cloud Gaming in the Short-Mid Term (Pages 202 - 203)
A third party publisher [REDACTED] indicated that it did not expect cloud gaming to replace console in the near future, but that it would become an alternative for some consumers. It noted that it has not yet reached mass adoption, with one of the main reasons being that it can still be associated with 'lag' or latency. It described how to replace console, cloud gaming services needed to prove that the latency question has been addressed, and that internet coverage and data plans need to improve. It stated that it is interested in developing games for cloud gaming services where the 'quality of service is there' with respect to eg latency and bandwidth, [REDACTED].
Another third party publisher [REDACTED] stated that it thought it likely that cloud gaming can support a transition away from PC and console gaming, although noting that is still an emerging technology and its development is associated with uncertainties, and it is therefore difficult to estimate approximate timescales. It described the main challenges for such a transition as mainly technical, including the requirement for low latency.
Other major third party publishers also expressed opinions about the future development of cloud gaming.
(a) [REDACTED] noted that cloud gaming is a developing technology and that if it continues to develop it will likely further increase the competitive nature of game development and benefit consumers unable to purchase the hardware for console or PC gaming. It also noted the need for stable, high-speed internet access.
(b) [REDACTED] stated that cloud gaming is still nascent, and cloud gaming service providers are currently in the early adopter stage. It noted that in deciding whether to publish on a cloud gaming service it would, among other things, evaluate whether it has the capacity to provide users with a good gaming experience. It also noted that it has published games on GFN and xCloud.
[REDACTED] described cloud gaming as still nascent. It stated that it would consider the in-game player experience including latency when evaluating opportunities to publish a game on a cloud gaming service, and has published a select number of games on GFN, xCloud and Stadia. It also stated that it thinks cloud gaming offers one possible route to device agnostic gaming in the future.
(d) [REDACTED] stated that is likely that cloud gaming services will grow especially in markets with free fast internet access and low console penetration. It noted that in the UK 'machine gaming' (ie on console or PC) is most popular as there is no latency. It described cloud gaming as being early in its life cycle, and that as a rough guess it could be 10-15 years before cloud gaming replaces consoles.
(e) [REDACTED] stated that it did not think it was likely that cloud gaming would overtake console gaming in the next five years due to latency concerns. It however stated that it did anticipate that cloud gaming will be a viable alternative to native devices in major markets within five years.
