Microsoft says Activision Blizzard merger not viable without Call of Duty

The big picture: Microsoft has made it clear that it isn’t interested in acquiring Activision Blizzard unless the Call of Duty franchise is part of the deal. Earlier this month, UK regulators expressed concerns about Microsoft’s proposed acquisition of Activision Blizzard. One potential avenue to ease anxiety would be for Activision Blizzard to sell off the highly successful Call of Duty franchise, but Microsoft isn’t keen on the detour.

Following a closed door meeting with European Union regulators on Tuesday, Microsoft President Brad Smith was asked if losing the Call of Duty franchise would compromise the deal. Smith said they “don’t think it’s feasible or realistic to think one game or one slice can be carved out from the rest.”

Pressed on the matter, Smith said he believes the Competition and Markets Authority (CMA) will need to make a decision.

“Do you want to kill a deal and cement Sony’s position in its 80 percent share in the EU, or say 70 percent share globally, in a market where it’s been a super dominant company for 20 years?

“Or do you want to let the future go forward with behavioral guardrails and remedies, and bring this title to 150 million more people? I think that’s the fundamental choice that most regulators are going to need to address around the world.”

Smith’s figures are in reference to Microsoft’s insistence that Sony’s PlayStation console has a much larger market share than its own Xbox.

Opponents of the Microsoft / Activision Blizzard merger, including Sony, worry that Microsoft could make titles like Call of Duty exclusive to the Xbox and effectively thwart competition. A survey conducted by the CMA found that 24 percent of PlayStation CoD players would switch consoles if the franchise became an Xbox exclusive.

Microsoft is not sitting by idly. Already this week, Microsoft struck a 10-year agreement with Nintendo to bring Xbox games to Nintendo platforms. A separate deal with Nvidia, meanwhile, would allow GeForce Now players to stream Xbox PC games.

Back in December, the FTC filed a complaint to block Microsoft’s $69 billion acquisition.

In a related report, sources told GamesIndustry.biz that Sony continues to push back against Microsoft’s proposed acquisition. The two sides apparently are not close to coming to a mutual agreement on the merger, people familiar with the matter said.

Image credit: lalesh aldarwish