Mutually Beneficial Resolution Expected in Call of Duty Negotiations: Sony Relies on COD, Microsoft Relies on Sony

Sony Relies on COD, Microsoft Relies on Sony

Negotiations surrounding Call of Duty are expected to conclude in a mutually beneficial agreement between Microsoft and Sony, despite existing friction. Assessments from key industry figures, along with testimonies from Xbox CEO Phil Spencer and a revealing email from Sony Interactive Entertainment CEO Jim Ryan, suggest that Sony is likely to strike a deal with Microsoft to ensure the popular $31 billion franchise remains on PlayStation.

Microsoft has expressed its desire to keep Call of Duty available on PlayStation, and Spencer's recent court testimony regarding the Activision merger reinforces this stance. The ongoing trial has provided valuable insights into the inner workings of the video game industry, shedding light on Microsoft's internal acronyms and the process behind the merger proposal.

Spencer and his team developed a "deal model" for the acquisition of Activision Blizzard King, which included strategic and financial analyses, asset value, and other crucial information. The financial model demonstrates the impact of maintaining Call of Duty on PlayStation and its significance to Activision's valuation.

While specific details of the negotiations remain undisclosed, it is evident that Sony holds leverage in determining whether Call of Duty will be available on its platform. The current Publisher Licensing Agreement (PLA) for Call of Duty is set to expire in 2024, and if Microsoft acquires Activision before that date, a new PLA will need to be negotiated with Sony.

Microsoft and Sony generally maintain a cooperative relationship when it comes to shipping games on PlayStation. Minecraft serves as an example of a game that has fostered a strong partnership between Xbox and PlayStation. While individual game agreements are not typical, Call of Duty stands apart. Microsoft has made a franchise-specific commitment to release Call of Duty on PlayStation with full feature parity and day-and-date support for a period of 10 years.

Sony has a direct financial interest in retaining Call of Duty on its platform. The franchise has played a crucial role in fueling the virtuous cycle business model of PlayStation, and Sony has invested significant resources in securing exclusive content and establishing licensing deals. Losing Call of Duty would disrupt this symbiotic relationship and impact Sony's revenue and player engagement.

Sony's opposition in the ongoing case revolves around the potential loss of Call of Duty and the perceived threat of exclusivity from the Microsoft-Activision merger. However, evidence, including Ryan's email, indicates that Sony remains optimistic about retaining the franchise on PlayStation.

Given the importance of Call of Duty to both companies and the potential financial repercussions, it is likely that Microsoft and Sony will work together to reach a mutually beneficial agreement. Microsoft has a vested interest in securing Call of Duty for PlayStation, and Sony recognizes the value of the franchise for its ecosystem. Failure to reach a deal would require Microsoft to revise its internal model, and Sony would lose substantial annual revenue and player engagement. Therefore, a negotiated agreement is highly probable.