[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Happy new week, crew! We’re back with a special new GameDiscoverCo newsletter looking into one of our favorite things - boring, boring legal documents. Except this time, they’re way less boring than normal. Huzzah!

Otherwise, we’re really into *flex* sports, so we spent the weekend watching the Financial Modeling World Cup, of course. It’s, uhh, Excel as eSports, and Ars Technica just did a fun write-up of it (with embedded videos). Anyhow, onwards..

The rumble in Brazil: Sony, MS clash on biz models!

(Us, use Blanka’s SFII stage as a metaphor, since he’s from Brazil? Not us, no!)

So, you may have seen stories about dueling filings in Brazil between Microsoft & Sony. This pertains to Microsoft’s intended acquisition of Activision Blizzard for $68.7 billion - and in Brazil, CADE is the gov agency set up to “ensure free competition”.

What’s interesting about CADE’s process is that - unlike the U.S. Federal Trade Commission, whose antitrust investigations with affected parties happen behind closed doors and confidentially - statements & replies are all public.

Thus, you get a public webpage showing the statements of all of the companies weighing in on the deal - including Ubisoft, Apple, Riot, Google, Bandai Namco, Sony and more - as well as Microsoft’s replies to their statements. It’s been Microsoft’s reply - posted on August 10th - which has caused a lot of the kerfuffle.

There’s been a lot of approximate and incomplete translation of the contents, so GameDiscoverCo reached out to Dodgeball Academia PT-BR translator Tiago Rech, and got him to translate all of the pertinent bits of Microsoft’s reply.

We’re making the document - which includes translated text in blue - available for all interested parties to peruse. There’s far too much detailed argument to feature here. But big-picture, here’s some of the headlines:

So far, so obvious. Much of the questioning of the Activision Blizzard acquisition seems to center around how important the Call Of Duty franchise is. It’s obviously important to the PlayStation, and Sony is worried about a rival getting its hands on it.

It’s worth noting that Microsoft again goes on the record re: Call Of Duty as saying “it is not part of Microsoft’s strategy to remove content from players”. And it also adds: “it is improbable that a significant number of PlayStation and Nintendo users would migrate to Xbox as a result of a hypothetical exclusivity strategy regarding Activision Blizzard games.”

(BTW, there’s quite a lot of juicy market-share information in the document that is - sadly - redacted, although general trends are hinted at. I suspect the ‘Xbox selling half’ comment was one that snuck by the lawyers’ red pens, actually.)

Who benefits from Game Pass’ aggressive sub strategy?

While it’s easy to get stuck in legal minutiae, there’s a bigger battle here - the one for subscription services becoming the normal in the console (and even PC?) game biz over time. That fight exists separately of whether Xbox buys ActiBlizz or not.

But one part of the document stood out to me. Sony claimed that “the lower immediate costs of subscription services to consumers may cause publishers who recoup significant investments in games by selling them for an upfront fee to become uncompetitive.”

Microsoft’s response? “Such a subjective critique of the Game Pass business model also reveals Sony's real concern: the fear that an innovative business model that gives consumers access to high quality content and lower immediate costs – something that should be praised rather than criticized – threatens its leading position in the gaming industry.” Hot tamale!

Well - I think there may be a lot of game publishers reading this newsletter who are hurting right now on ROI, and might question Xbox on whether the move to ‘lower immediate costs’ from a player perspective should always be praised. (I’ve written on the current supply/demand issues largely not being Game Pass-impelled, though.)

But wait, Microsoft went further, and decided to tell Sony how to conduct its business: “Sony could further increase the high quality of its first-party games by making them available on PlayStation Plus on launch day, a strategy that (i) could rapidly accelerate the growth of the service's user base in response to competitive pressure of Game Pass (or any other service) and (ii) that Sony does not currently adopt, even with respect to the new and updated PlayStation Plus. Such a move on Sony’s part could make PlayStation Plus even more attractive, rivaling any strategies of competitor game distributors - to the benefit of players.”

Just to remind everyone, that $68.7 billion that Microsoft is spending to pick up Activision Blizzard - that’s all money they generated from Game Pass, right? Oh… it’s windfall profits from the market dominance of Windows, Office and the rise of Azure that gives Xbox the financial backing to make this deal, you say?

There’s some obvious ‘level playing field’ issues here. These are a degree separated from whether the actual transaction is anticompetitive, though. But it’s pretty clear to me that Sony couldn’t move its first-party games to Day 1 on PS+ and retain ‘acceptable’ corporate profits in the short or medium-term. Which gets us to…

Conclusion: personas, motivations, & corporations

Talking of corporate personas, who can forget Segata Sanshiro?

This is an incredibly complex subject. And I have to admit I’m much amused by the messaging dissonance between the borderline evangelical public personas of Xbox’s Phil Spencer & Sarah Bond and these sharp lawyering words. (“Pay no attention to the box of spiders under the desk”, as they say.)

So when Sony says - “we really think people should be paying upfront for new games”, are they a) valiantly defending the ‘direct’ market (from the move to F2P/IAP ‘everything’, or third party bundlers), or b) trying to maintain the profitability of their previous, staid and slightly backward hardware biz model, while building the plane in mid-air to craft their own multiplatform GaaS hits?

And when Microsoft says “we want to unite the world of players with Game Pass” - are they a) creating a genuinely great new platform which is offering indies and AAAs legit amazing reach & monetization, or b) pivoting from a previous-gen failure, contributing to standalone game pricing pressures, and partially usurping the direct player/dev relationship too?

It’s a little from column A, and a little from column B, dawg. There’s no clean answer. But look - corporations want to swallow the world. Maybe I’m sensitive to this because I spent a long time helping to run GDC, where the issue of corporate vs. community motivations were writ large - and I was ‘stuck in the middle with you’.

But yes, I do think the ‘big getting bigger’ isn’t always a great dynamic. And if government regulation can’t solve for that - which frankly, it may not - we have to trust the platform middlemen to do the right thing for themselves, the players & the publishers and developers - all at the same time. Easy, right?

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your premium PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]