Boosteroid Expects to Reach 100 Million MAUs by 2026 (Page 298)

Boosteroid submitted that it intends to reach 100 million MAUs by 2026. This is expected to be primarily due to [REDACTED].

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Hate to say this about Boosteroid but this is an absolute insane projection, Lol.

Costs of Developing AAA Games Are Skyrocketing, Including Development and Marketing, Seasonal Updates Are Also Affected (Pages 309 - 310)

A report by IDG submitted by a third party [REDACTED] dated August 2021 notes that development budgets are reaching unprecedented ranges.

The report observes that while 5 years ago most AAA console/PC releases had development budgets between $50-150 million, on average, games that are greenlit today, with a potential release in 2024-2025, are being approved for development budgets of $200 million or higher. Also, the report says that some AAA franchises like CoD have development budgets already exceeding $300 million, and the next GTA and other future tent-poles are also expected to hit $250 million or higher.

Activision is also quoted in this report saying with reference to CoD: 'We have to make so much content for Call of Duty, that we can't even lean on one lead studio anymore. Now we need almost 1.5 lead studios for each annual CoD. That kind of bandwidth pressure is forcing us to use outsourcers more and more. I don't see that changing anytime soon.'

The above figures are consistent with submissions we received from other third parties. For instance:

(a) A publisher [REDACTED] mentioned that the overall figures for development and marketing costs for major brands and their recent instalments are approximately Euro 150 million for pre-launch development costs and approximately Euro 50 million for launch marketing campaign costs.

(b) Another publisher [REDACTED] reported development costs for its major AAA franchises ranging between more than $80 million to almost $350 million per title, and marketing costs reaching up to $310 million depending on the franchise.

 We received similar ranges from an additional publisher [REDACTED]. Specifically, it reported a total of development and marketing costs between about $110 million and almost $380 million for some of its latest major releases.

(d) A fourth publisher [REDACTED] submitted that the costs related to developing and regularly releasing new titles can vary significantly depending on the game type or business model of a particular studio. It provided an example that for one AAA game the development budget value could range between $90 million and $180 million, whereas the marketing budget could range between $50 million and $150 million. This publisher also submitted that for one of its major franchise's development costs reached $660 million and marketing costs peaked at almost $550 million.

(e) Finally, another publisher [REDACTED] estimated that its development costs for seasonal updates for one of its first party titles range from approximately $50 million to $65 million.

Activision Uses 15 Outsourcing/Co-development Partners for a $100 Million Game, and 20- 30 Different Partners for a Larger Game (Page 315)

Also, as noted above, a report by IDG submitted by a third party [REDACTED] quoted Activision Blizzard as saying that it has so much content for CoD that it needs almost 1.5 lead studios for each annual CoD. Further, Activision is claimed in the report to have said that it typically uses about 15 outsourcing/co-development partners for a $100 million game, and 20- 30 different partners for a larger game.

That matches with my suspicions at least, it definitely feels like Xbox had no faith in Redfall and just wanted to release it asap so that Arkane Austin could move on to a new project, instead of giving them the time they needed to either retool it into a more Arkane like game or to build a better looter shooter, feels like they just decided to release it unfinished so that Austin could move on. It was a project that was greenlit under Zenimax before the acquisition afterall, Xbox had no say in it's creation and likely would have known that trying to force an immersive sim studio to make a looter shooter was a bad idea.

One CoD Flop = Activision is Fucked.

My question would be...if they didn't believe in it...why give it such a huge marketing push? I've seen ads for this game all over the place. MS coulda just let it come and go if they didn't believe in it.

I agree... This is weird if true (and I would believe it is). Maybe they did not want to upset Bethesda too much right after the acquisition for a smoother integration.  Like by not cancelling half of their shit right away on top of telling them to stop developing for the Play Station :D 

Fair skepticism on MS intent yes but I hope they didn't overlook the legally binding implications and benefits consumer benefits. The intention might not be pure but the benefits are undeniable.

For cloud gaming 10-15 years seems the most reasonable, earlier than this seems optimistic and overly so for 5 years.

1 thing that seems to have been greatly overlooked though is that expanding on cloud gaming needs an extreme amount of investment. 1 actor that reached profitability while excluding hardware costs is not painting an accurate portrait of reality. One dominant aspect in reducing lag is server proximity this might need hundreds of $B of investment to achieve and those investments will predominantly be expanded by MS, Amazon, and Google to support both first-party service and 3rd party one (only third-party in case of Google). And out of those 3 MS looks to be the one that will take the lion's share of those investments regardless of the ABK deal. So the CMA here may be telling MS that it will have to do the investment without a way to greatly diminish the risk associated with these. That'll have direct implications regarding innovation for the sake of easing monitoring requirements and somehow they doubt their own ability to act upon an actual impact on the market when it materializes itself and so act upon uncertainty and speculation of a market they clearly don't fully grasp. 

My E3/Summer Showcase bingo card:

I'm pretty sure that CAT also told CMA once before as well that they're only allowed to make projections on the market over a 5 year period.

Eh, their 2021 CoD flopped pretty hard, CoD Vanguard, had the smallest CoD first week sales since Modern Warfare 1 in 2007 as I recall, so even lower than CoD World at War and CoD Infinite Warfare, and they still weathered through it thanks to CoD Battle Royale revenue.

MS and ABK Quickly Dismissed the Option of Divestment, Although the Cma Was Interested in Assessing It in More Detail ( 339 - 340)

Some third parties told us that a partial divestiture option had the potential to be effective.

Other third parties told us that partial divestiture would involve effectiveness risks relating to scope and composition of the divestiture package, availability of a suitable purchaser, shared intellectual property (IP) assets and other development resources. One third party told us that it could not see how partial divestiture could be better for competition and for gamers than the Merger completing. SIE told us that a partial divestiture remedy would be effective if the divested entity was able to compete viably, on a standalone basis, and without the support of those parts of Activision's business that remain with Microsoft (eg the King business).

However, Microsoft told us that any partial divestiture scenario would be [REDACTED]. Activision acknowledged Microsoft's position on partial divestiture, noting its understanding that [REDACTED].

Given our initial risk assessment, we consider that substantial additional evidence would be required from the Parties to enable us to assess whether the divestiture of part of Activision would, in practice, represent an effective remedy. We explained to the Parties that, without additional evidence from them, we would be unlikely to be able to conclude whether a partial divestiture is an effective remedy.

MS Accused Again the Cma to Rely on Evidence From a Third Party That Refused to Hold Any Discussions With Them (Sony, I Guess) (Page 348)

In its response to our Remedies Working Paper, in relation to the CMA's broader concern that, under the Microsoft Cloud Remedy, there may be a variety of ways in which user experience might worsen on competing platforms even with some form of licensing remedy in place, Microsoft told us that there was no basis for this concern as the titles which would be available for streaming would be the same which are available to purchase from the Microsoft Game Store or another Authorised Game Store on a royalty-free basis. Moreover, it told us that Microsoft was offering streaming rights in relation to titles irrespective of whether Microsoft itself decides to stream the titles. It added that the CMA relied on evidence from one third party ([REDACTED]) that had consistently refused to hold any discussions with Microsoft in order to address its concerns, and noted that the concerns raised have been rejected by the CMA in relation to console gaming. It told us that the Provisional Findings also presented no evidence to suggest that partial foreclosure of Activision content could foreclose cloud gaming rivals.

According to MS, the Cloud Remedy Wasn’t Limited to b2p and Byog (Page 349)

Microsoft submitted that the Microsoft Cloud Remedy is not limited in scope to BYOG and B2P. It told us that the definition of Streaming Service includes all business models, including MGS. It submitted that it is sufficient that MGS is treated in the same way as other potential business models and submitted its view that we have presented no evidence to suggest that Activision would have contemplated placing its content on a MGS cloud gaming service. It submitted that we have not found Activision content to be an important input for MGS. Microsoft submitted that the evidence is limited to CoD and that WoW is only 'notable'. It told us that the fact that future games may have been placed on cloud services in the future does not mean that they would be an important input. Microsoft submitted that the Provisional Findings are consistent with MGS growing without access to Activision titles and that the CMA ruled out the concept of Activision content playing a role in the growth of cloud gaming MGS. On this basis, Microsoft submitted that this cannot be seen as a distortion. Further, Microsoft submitted that it would be disproportionate and unnecessary for the scope of the remedy to include a commitment to make Eligible Games available via MGS in order to address the SLC identified by the CMA.

The Cloud Remedy Does Not Cover Non-windows OS, According to the Cma (Page 364)

The Microsoft Cloud Remedy applies only to the PC and console versions of a defined list of games (the Eligible Games). The PC versions are those which are developed to run on a Windows OS.

This means that any cloud gaming service wishing to stream these games would have to use, or be compatible with, the Windows OS version of those games. This would exclude or restrict providers that may wish to provide cloud gaming services using other OSs, either now or in the future. This could exclude, for example, Apple, which has its own proprietary OS, as well as Linux OS-based cloud gaming services and potential new entrants using a different OS. We have found that Microsoft would have the ability and incentive to foreclose rival cloud gaming service providers post-Merger.

This means that cloud gaming services using other OSs would either need to switch to Windows (and incur Windows licensing fees, which we found to be a high proportion of overall costs for cloud gaming providers) or seek to adapt the Windows version of the game to run on their alternative OS (eg through the use of a compatibility layer such as Proton, which we have already found is not sufficiently effective to overcome Microsoft's advantage through Windows). This has the potential to make it significantly more difficult for such providers to enter, grow and compete against Microsoft.

In response to these concerns, Microsoft told us that it would grant streaming rights for MacOS and other PC OS versions of the Eligible Games 'as may be released during the term of the Microsoft Cloud Remedy'. It noted that Activision had previously released MacOS versions of a small number of games.

While this commitment brings non-Windows PC versions within the scope of the Microsoft Cloud Remedy, it only covers games for which Microsoft chooses to make alternative versions. In the absence of the Merger, Activision would seek to maximise the value that it was able to derive from these games, which would have involved consideration of making nonWindows PC versions of its games (as it already has done in some cases). In our view, it is likely that Activision would continue to develop non-Windows PC versions of at least some of its games absent the Merger, and the incentives to do so would increase if demand for cloud gaming services that use PC operating systems other than Windows were to grow.