The third day of the hearing that sees Microsoft and Activision face the FTC in the case about the pending acquisition is ongoing, and Sony Interactive Entertainment CEO Jim Ryan presented his deposition.
Unlike Microsoft's executives, Ryan's deposition was presented via pre-recorded video and he shared a few interesting points, shared by Mlex's Michael Acton, FOSS Patents' Florian Mueller, and Axios' Stephen Totilo.
According to Ryan, Xbox consoles are more popular in the US than in other regions because many of their games involve an element of shooting and online multiplayer, which typically are more popular in the US compared to the rest of the world.
Ryan also admitted that Sony's own games tend to be exclusive as the company uses them as a point of difference when it comes to the decisions that gamers make about which consoles to buy.
We also hear from the executive that he believes Nintendo participates in a different market segment as opposed to Xbox and PlayStation, as Nintendo's hardware is less sophisticated, cheaper, and aimed at a generally younger Audience. Later in the deposition, he admitted that Nintendo is in the console market, but confirmed that he believes they're not Sony's direct competitors. According to his personal opinion, Nintendo's Audience enjoys Super Mario and The Legend of Zelda, but not Call of Duty.
Ryan reiterated that Sony will not share PlayStation development kits in advance with Activision if it's owned by Microsoft, as it can't rely exclusively on contracts to avoid leaks of the console's feature sets to its principal competitor (Microsoft).
The executive also mentioned that an email from Phil Spencer aimed to reassure him about the acquisition did not actually have that effect.
Speaking of Call of Duty, Ryan believes that the strength of the series is in the fact that it's released annually and that the games are different and unique. There is "nothing like it in the industry." He also believes that Microsoft intends to use the series to disadvantage PlayStation in terms of availability and to drive PlayStation users to Xbox, specifically Game Pass. He continued by mentioning that it's very important that the version of the CoD games on PlayStation is equivalent to the one on Xbox, in terms of "release date, game quality, frequency of bugs, and there are other such vectors."
Ryan explains that as of May 2022, he believed it could be possible to reach an agreement with Xbox, and as of January he was not concerned about Activision's games being pulled off PlayStation. Speaking of the mail in which he expressed that lack of concern, Ryan mentioned that he meant that at the time. Yet, in August there was an email that "really set alarm bells ringing." He admitted he had a meeting with the British CMA in the summer, but he doesn't remember if it was before or after that email.
Asked whether he heard anyone at Sony say that the deal would really harm the company, Ryan responded that he does not know because he does not listen to the calls. He also doesn't know if he has ever told investors that Sony can't be competitive if the deal happens.
In February 2023 Activision Blizzard CEO Bobby Kotick asked to negotiate, but Ryan responded that he thought the deal was anticompetitive and he simply hoped that regulators would do their job and block it.
Ryan currently believes that Xbox would remove Call of Duty from PlayStation as they're incentivized to do so. Asked what he would do if the roles were reserved, he refused to answer as that's a hypothetical question. Pressed further, he answered that he doesn't have enough knowledge to answer.
Asked whether he has any evidence that Microsoft would pull CoD from PlayStation, he answered that he believes the stance Microsoft is taking about subscription service pricing is evidence at best of partial foreclosure.
Ryan also said he talked to all publishers and they unanimously dislike Game Pass because it's "value destructive" and this has been a commonly held view for many years. He also never asked Activision to release Call of Duty on PlayStation Plus, as it's about catalog games and Bobby Kotick has said that was not a path he intended for Activision's games.
The executive talked about PlayStation Now, saying it has 3 million users, and he believes that cloud tech will become a meaningful component of how gamers access games between 2025 and 2035.
If you're unfamiliar with the situation, the FTC has recently obtained a temporary restraining order against the acquisition until the federal court rules on the possible preliminary injunction. You can read our summaries of the first day and second day of the hearing.
On the other side of the Atlantic Ocean, Microsoft's appeal against the British CMA's decision to block the acquisition is ongoing, with the hearing starting on July 28.
Recently, the European Union approved the deal including proposed remedies to level the competitive playing field on the cloud market, which Microsoft agreed to. A few weeks ago, we learned that the deal was approved by the Chinese authority and South Korea's regulator bringing the number of countries that officially cleared the acquisition to 38.
The authority of New Zealand asked for further information addressing its possible concerns on the case in order to come to a conclusion in mid-July.
In an interview published a few days ago, Activision Blizzard CEO Bobby Kotick mentioned that Microsoft is “by far the best place" for the publisher, adding that the acquisition is "the right thing for the industry."
