Xbox |OT|

[Ryuu96]

Fourth, the FTC has literally no factual basis for its claim that the merger will harm competition in the supposed markets for multi-game library subscription and cloud gaming services. Among other things, there is absolutely no evidence that Activision content would put its content on these services without the deal. To the contrary, Activision views such a step as anathema to its business strategy. The transaction will thus benefit consumers by bringing Activision content to Xbox Game Pass for the first time. (Page 4)

Finally, the equities cut sharply against injunctive relief. The merger agreement expires on July 18, 2023. The injunction sought by the FTC would thus almost certainly scuttle the transaction. Moreover, there is no need for a preliminary injunction because the FTC could obtain effective relief at the end of the administrative process if it prevailed. Microsoft intends to operate Activision similarly to other recent acquisitions, whose studio and creative operations remained separate and continued to build games as they had done pre-acquisition. That means divestiture would be possible if it ever proved necessary. (Page 4)

As a result, the industry is exploring how to expand beyond the traditional model of selling individual games. Some companies have had great success with free-to- play games, which allow gamers to download the game and then decide whether to make in-game purchases such as costumes or special powers. Free-to-play games have allowed small independent companies to grow quickly. For example, Epic Games" valuation has increased from $1 billion in 2012 to over $30 billion, powered by the 2017 launch ofits flagship free-to-play game, Formite. Exs. 5, 6. Free-to-play games are a key part of Activision's strategic vision, and it has successfully launched free-to-play versions of popular games like COD. (Page 5)

Innovation is also occurring in distribution. In 2017, Xbox launched Game Pass, a subscription service allowing consumers to play a library of games for $9.99 a month rather than having to purchase each individual title. Xbox invests heavily in Game Pass, making its own new games available in the service immediately upon release (so-called "day and date" releases). Although this means Xbox loses revenue on the sales of individual game titles, Xbox believes that Game Pass will ultimately prompt subscribers to engage with a variety of games and spend more overall. But others in the industry are much more skeptical. REDACTED. Sony primarily puts old games in its service, forcing customers to pay high per-game fees to access new content. (Page 6)

Last, some companies are experimenting with delivery of games through cloud gaming "streaming," which runs games on remote servers that gamers can access on consoles, PCs, mobile devices, or TVs. The idea is to let gamers play games on less highly powered and more affordable devices, particularly salient in less developed nations. Several companies, including Xbox, Amazon, Nvidia, and smaller upstarts, have experimented with different forms of cloud gaming. But the technology remains challenging, particularly for latency-sensitive multiplayer games. Gameplay is balky, and it has proved hard to generate consumer demand or consistent profits. Here too, REDACTED. Likewise, Sony Group's CEO has admitted that cloud gaming faces substantial "technical difficulties" and is "very tricky" from both a financial and technological standpoint." (Page 6)

Last edited by Ryuu96 - on 17 June 2023