Microsoft accused its gaming rival Sony of trying to hurt the success of its subscription gaming platform by signing contracts with game developers that prohibit distribution through Xbox Game Pass, according to a new regulatory filing published in Brazil. The news was first reported by gaming outlet VGC on Wednesday.
“Microsoft’s ability to continue expanding Game Pass has been hampered by Sony’s desire to inhibit such growth,” Microsoft wrote in the filing to Brazil's Administrative Council for Economic Defense (CADE), which is dated Aug. 9 and translated from Portuguese (via The Verge). “Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”
Because gaming exclusivity and partnership deals are often kept secret under protection of non-disclosure agreements, we know very little about what these rights might entail, but Microsoft appears to be implying that Sony pays developers additional sums of money to keep them from releasing their products on Game Pass. In June, Sony launched a revamped version of its own subscription service, PlayStation Plus, in an attempt to better compete with Game Pass.
Neither Microsoft nor Sony immediately responded to a request for comment.
The filing and the accusation of so-called blocking rights is just the latest volley in an increasingly bitter public back-and-forth between the two console makers, which of late has centered around Microsoft's blockbuster acquisition of Activision Blizzard — maker of the Call of Duty and World of Warcraft franchises, among others — for close to $70 billion.
While the U.S. Federal Trade Commission continues to investigate the deal in private, foreign regulatory bodies, like Brazil's and New Zealand's, publish filings for public consumption. The acquisition is slated to close by next summer at the latest, though it may be subject to concessions the FTC or other regulatory bodies demand for the deal to get approved.
In its own filing to CADE published last week, Sony called Activision's Call of Duty franchise an "essential" product that is "so popular that it influences users’ choice of console." While Microsoft has pledged to honor Activision's existing agreements to publish the next few years' worth of Call of Duty games on PlayStation, there's no telling what types of perks or benefits Microsoft may reserve for Xbox players or for consumers who subscribe to Game Pass.
It's not clear what Sony's intention was in focusing on the importance of Call of Duty. Yet the PlayStation maker certainty stands to lose out on its cut of revenue from game sales and in-games purchases, as well as potential console sales, if Microsoft chooses to make certain Activision releases exclusive to the Xbox or Game Pass platforms.
Microsoft, however, seems to disagree. The company said Sony's resistance to the deal stems from the growth of subscription services like Game Pass. "Sony does not want attractive subscription services to threaten its dominance in the digital distribution market for console games," Microsoft wrote. "In other words, Sony rails against the introduction of new monetization models capable of challenging its business model.”
Microsoft also took issue with Sony's characterization of Call of Duty as being in a league of its own. "Sony’s own PlayStation, incidentally, has an established base of loyal brand players. Such a finding, however, does not lead to the conclusion that the PlayStation — or any branded product with loyal consumers — is a separate market from all other consoles," Microsoft argued. “Extrapolating from such a finding to the extreme conclusion that Call of Duty is a ‘category of games per se’ is simply unjustifiable under any quantitative or qualitative analysis.”
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