I'm happy to accept that viewpoint. As a result though, contrary to some stories, Sony have not been actively resisting or blocking MS beyond normal funding of titles - MS just weren't willing to spend what needed to be spent to compete effectively because they had no particular interest in it. Now their values have changed, which has little to do with Sony even. MS just ran with a 'console underdog' story as their strategy for appeasing regulators particularly in Europe, whereas Sony went with a 'we can't repel firepower of that magnitude' sob-story. Reality seems more MS is happy to hand Sony the console market on a plate while it chases far better revenues from other markets including mobile and cloud...although that latter, if accepted, then lends credence to the CMA's reservations. And Sony aren't really concerned with any particular move other than a massive fish swallowing up great swathes of market that could potentially affect their business.
Well sort of. Yes, I doubt Sony are negotiating exclusivity contracts purely due to malice. Without seeing actual contracts (which are redacted to protect Sony's business interests), we can't say for sure whether there is also wording that specifically bars a game from appearing on Xbox and only Xbox. But even that wouldn't necessarily be malicious.
It's just a side effect of exclusivity contracts being cheaper and more beneficial for dominant market players than smaller market players. Again, it's why regulators generally take a more lax stance WRT smaller market players than larger dominant market players who often face restrictions that smaller market players don't have to worry about.
In other words it's just Sony doing business, which means doing everything they can to maximize their revenue and profit stream. That this is harmful to their competition isn't a reflection or indication of harmful intent.
That said, those business practices can certainly put smaller competitors out of business by making it so costly to compete that there is no feasible way for them to regain enough market share quickly enough to avoid bankruptcy. SEGA isn't a small corporation by any definition, especially at the time they exited the console market. Sure, they bungled the Dreamcast launch and alienated EA, but that's not much worse than Sony bungling PS3's launch. However, PS3's launch was recoverable because they were coming from a market leading position unlike SEGA. SEGA at the Dreamcast launch was basically in a worse position than MS was in with the XBS consoles. So, SEGA was in no position to recover from that without spending so much money that it was deemed unrecoverable by them.
So, likewise, the ABK acquisition is certainly not malicious on Microsoft's part. Even Sony didn't feel that MS was doing it to deliberately harm PlayStation in any way, shape or form. Well, internally at least, although publicly they were certainly all doom and gloom and that the ABK acquisition might lead to Sony exiting the console business when presenting their case to the CMA, EU and FTC.
So, does it have the potential to harm a competitor? Sure. All business deals are potentially harmful to competitors. The dominant market player? An inconvenience at best considering that ABK itself isn't even the largest current gaming publisher (Tencent is the largest and even EA is larger than ABK) and Sony never thought MS were going to remove the most important ABK properties from PlayStation anyway.
Just like MS can't afford to compete on the basis of exclusivity (failed spectacularly in the XBO generation when they took a HUGE consumer PR hit with the Tomb Raider exclusivity deal, so not only did it hurt them financially, it backfired and likely hurt their chances of expanding the install base) they can't afford to buy ABK and then restrict its most lucrative titles to non-PlayStation platforms. Again, small market player has a significantly harder time competing, Sony doesn't have to worry about whether or not there's consumer backlash to buying exclusivity of a title in a multiplatform IP because the majority of players are on their platform, so it'll always be a small minority complaining and it's easier to just ignore them.
And keep in mind that all companies know that their deal will impact the competition, but it's not their job to care about how it affects their competition. Maximizing profits for your company
will impact your competition negatively because maximizing profits means maximizing revenue which generally means taking away consumers from your competitors and making it more difficult for them to compete.
It's not maliciousness, it's just part of doing business. To advance you generally have to hurt your competition.
Again, it's why regulators generally allow smaller market players to do things that they do not allow larger market players to do. The impact of actions of dominant market players is disproportionately large compared to the impact of actions of smaller market players.
Yes, the ABK deal is large. But the impact can't be as large as some fear (removal of key ABK existing IP form competing platforms) because then it means MS would be purposely throwing away money with any potential gain being far far less than the losses generated by limited the audience to a much smaller install base.
If you're going to go about generating losses in order to gain market share, exclusives is definitely the way to go. But the ABK deal is only partially about gaining market share, it's also about making a profit. And the market share they are more interested in (perhaps surprisingly so to some but shouldn't be) isn't the console space, it's in the subscription gaming space. But market share in subscription gaming is a long term play with small short term upside. So, it'd be litterally like shooting themselves in the head if they were to remove, for example, COD from PlayStation losing up to a billion USD a year (2022, COD brought in over 1.5 billion USD, at a 2:1 ratio that would be about 1 billion USD from PlayStation.
Sure, as Phil Spencer said, ABK becomes an asset of Microsoft (unlike say spending money on a 3rd party exclusive) WRT to not only IP but personnel and facilities. But the deal doesn't make any sense if you deliberately then just throw billions of USD a year away. "How's that different from Bethesda?" some might ask. It's a matter of scale. Bethesda didn't have an IP that was pretty much guaranteed to generate 1+ billion USD
every year which is reflected in how much Bethesda was worth versus how much ABK was worth. And keep in mind that Microsoft likely overpaid for both Bethesda and, if the deal goes through, ABK.
It's not so much handing the console market to Sony on a plate, it's admitting that to displace Sony, they would have to engage in loss generating strategies that investors would not approve of. IE - we'd be back to the days of investors loudly clamoring for Microsoft divest itself of the Xbox gaming division.
Or to put it another way the only way for Xbox to even have a chance of displacing PlayStation as the dominant market player is if Microsoft does something that would result in them closing the Xbox division.
It's why the Xbox division hasn't been focused on even attempting to "win" the console wars as it about making the Xbox division a profitable business. And they've shown enough of that plan to investors that major investors are now on board with Microsoft not only keeping the Xbox division but actually increasing funding for the Xbox division, something that was absolutely unheard of during the X360 years (when there was parity between Xbox and PS).
So yes, Microsoft doesn't care about whether or not they sell more consoles than Sony. They only care about whether or not Xbox is a profitable business and whether or not it can be scaled up to be closer to the profitability of Microsoft's other business segments.
Because of that, I honestly would not be surprised if Starfield ends up only being a timed exclusive on Xbox consoles. Also wouldn't be surprised if doesn't.
Regards,
SB
