More info from CADE on why Brazil approved the deal.
EXCLUSIVITY
In Consoles
As can be seen, the tables and graphs presented indicate that Sony is the leading company in the console market both worldwide and nationally, holding in 2021 a much higher share than Microsoft in this segment. It is also noted that, specifically in Brazil, the estimates in table 30 suggest that Sony has achieved market shares of over 60% at least since 2019, evidencing a clear preference of the Brazilian consumer for PlayStation consoles.
Sony's leadership in the console market is not restricted to recent times. In fact, according to data from Statista, PlayStation consoles sold more units worldwide than Xbox consoles in all their generations.
Considering that PlayStation and Xbox consoles traditionally have very similar technical specifications and third-party game catalogs in each iteration, one has to consider why Sony has maintained a consistent leadership in the segment over the years.
According to Microsoft's understanding, the reasons behind such favoritism would be the following: [RESTRICTED ACCESS TO CADE AND APPLICANTS].
Based on all the above, it can be inferred that the game catalog of each console (in terms of quantity, quality and variety) and the loyalty of players to established brands are factors that play, in the consumer decision tree , a more important role than the price and technical specifications of each device.
In the case of the dispute between PlayStation and Xbox – and, more specifically, between PlayStation 5 and Xbox Series X – there is a competition between two consoles that have similar technical specifications, similar prices and access to a set of games. from third-party publishers quite similar. Therefore, this SG/Cade believes that the best historical sales performance of Sony's consoles is probably due to other factors, such as: (i) the exclusive games in the ecosystem; and (ii) brand loyalty.
With the acquisition of a publisher such as Activision Blizzard, and considering the (theoretical) risk of the company's content becoming exclusive to Xbox, it is likely that the eventual conclusion of the Transaction will give Microsoft a considerable competitive advantage in the segment. of consoles. Even so, this SG/Cade does not see that such an advantage represents a risk of closing this market for current competitors. As already seen, Nintendo does not currently rely on any content from Activision Blizzard to compete in the market. In turn, Sony has several predicates - strength of the world's leading brand for more than 20 years, extensive experience in the sector, largest user base, largest installed base of consoles, robust catalog of exclusive games, partnerships with multiple publishers.third-party , brand loyal consumers, etc. – which should contribute to maintaining the competitiveness of PlayStation in a possible post-Operation scenario, even in the face of possible loss of access to Activision Blizzard content.
Furthermore, it is important to highlight that the central objective of CADE's activities is the protection of competition as a means of promoting the well-being of the Brazilian consumer, and not the defense of the particular interests of specific competitors . After all, one cannot lose sight of the fact that the holder of the legal assets protected by Law No. 12,529/2011 is the collectivity, and not the competitor/economic agent as an individual entity. In this sense, although it is recognized that part of PlayStation users may decide to migrate to Xbox in the event that Activision Blizzard games - and especially Call of Duty– become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.
NINTENDO
The observation of the table above shows that, while the list of best-selling Nintendo Switch games is dominated by exclusive titles published by Nintendo itself, the lists referring to consoles from Microsoft and Sony are very similar, with most of the games listed appearing simultaneously among the best sellers on Xbox and PlayStation. Exceptions to this rule essentially refer to titles exclusive to each platform, such as the Xbox-exclusive Forza Horizon and Halo series games , and PlayStation-exclusive franchises such as Marvel's Spider Man , Ghost of Tsushima , and Ratchet & Clank.
Indeed, Sony itself claims to consider Xbox as a closer rival to PlayStation than Nintendo's console.
Notwithstanding, although the greater proximity between the hardware manufactured by Sony and Microsoft is recognized in terms of competition, this SG/Cade believes that all game consoles compete with each other in the same market, and that the Nintendo console is capable of exert some competitive pressure on PlayStation and Xbox sales. Despite Sony touting the Switch as " more geared towards kids, family and casual games " than rivals, the fact is that many adults who buy consoles today grew up playing games from popular Nintendo franchises such as Mario , The Legend of Zelda , Pokemon , Donkey Kong and Metroid, so the company's brands and characters appeal strongly to consumers of all ages.
SONY
As noted earlier in this opinion, there are currently very few Activision Blizzard games available for the Nintendo Switch (none of them Call of Duty ), and none of these titles appear to be performing particularly well on the platform. Thus, strictly considering the players that currently operate in the console market, it is noted that Sony would be the only company that could be effectively harmed by an eventual Microsoft exclusivity over the Activision Blizzard catalogue.
In this regard, it is important to note that Phil Spencer, the executive who heads the games division at Microsoft, has already publicly stated that he intends to honor the commitments made by Activision Blizzard with Sony, and even keep the launches of Call of Duty and other titles on the market. PlayStation for "several years" beyond current commitments [ 187 ] . Indeed, [RESTRICTED ACCESS TO CADE AND THE APPLICANTS] [ 188 ] . There is, however, no [RESTRICTED ACCESS TO CADE AND THE APPLICANTS] to date
Despite the above, the fact is that, if the Transaction is concluded, the future of Activision Blizzard content on Sony consoles would be uncertain after the lapse of the "several years" mentioned by the CEO of Microsoft Gaming; and, even before that deadline, one cannot rule out the possibility of Microsoft changing the understanding expressed in the aforementioned "public commitment", starting to adopt a different commercial strategy in relation to its biggest rival. Therefore, conservatively, this SG/Cade understands that the analysis of the competitive effects of the Operation must consider the possibility of all Activision Blizzard games becoming exclusive to the Microsoft ecosystem (Xbox consoles, Windows OS, digital stores and subscription services) , despite any claim by the company to the contrary.
It can be seen, in this sense, that Activision Blizzard and Call of Duty represented a portion of the revenue earned by Sony from the sale of game content on PlayStation in 2021 that should not be disregarded. However, the reported percentages do not seem to reflect values whose loss could effectively limit the market leader's ability to continue to compete in the console segment; furthermore, they are not sufficiently representative to the point of characterizing Activision Blizzard's content as an "essential input" to Sony's business.
If on the one hand Activision Blizzard content proves to be important for PlayStation, there are indications that PlayStation [RESTRICTED ACCESS TO CADE] for Activision Blizzard content.
Considering the huge popularity of Call of Duty , it is reasonable to infer that if Activision Blizzard games were no longer available on Sony consoles, PlayStation users could decide to migrate to Xbox, or even a PC, to continue having access to franchise games. On the other hand, it's also reasonable to assume that if upcoming Call of Duty games became exclusive to the Microsoft ecosystem, players loyal to the PlayStation brand could simply abandon the series, migrating their demand to other games available on their favorite console.
This SG/Cade believes that the fact that Call of Duty has traditionally been a cross-platform game series has a significant influence on the number of users and the sales performance of the franchise. After all, it is a logical inference that the greater the number of hardware platforms on which a given game is playable, the greater the base of potential users and purchasers of that game. Given this context, it is likely that, at least in the short term, Call of Dutywould lose a significant amount of revenue and players if its games were no longer offered to users of the most popular console in the world. In fact, such a hypothetical scenario could not only negatively impact the franchise's numbers, but also favor other multiplatform games similar to Call of Duty that remain on PlayStation, such as competing series such as Battlefield (EA) and Tom Clancy's Rainbow Six (Ubisoft).
Conclusions about exclusivity
Specifically regarding the possibility of closing the game publishing market (upstream), it was found that, despite Microsoft having control of a relevant portion of the console and digital game distribution markets (downstream), the company would not have incentives to make it difficult for publishers competing with Activision Blizzard to access its platforms, as this would necessarily imply a reduction, in quantity and variety, of the catalog of games available in the Xbox ecosystem, making the company's products and services less attractive to consumers
With regard to the possibility of closing downstream markets , the analysis pointed out that, despite their relevance and popularity, Activision Blizzard games – and in particular the Call of Duty series– would not be essential assets to the performance of Microsoft's current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital stores and multiple game subscription services for PC and consoles). Thus, even if the Activision Blizzard game catalog were to become exclusive to the Microsoft ecosystem after the Transaction, SG/Cade considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
Finally, in relation to the existing complementarity between the activities of Microsoft and Activision Blizzard in the game publishing markets - and especially in the mobile games segment - and online advertising, it was found that the shares held by the Parties in these segments, in all scenarios examined, they are well below the minimum percentage considered for the purpose of presumption of the possibility of closing the market.
The Brazilian competition commission, apart from being transparent by publishing the works, has entered into all aspects and puts the user and workers above....
