Sony and Activision – One Week On

It’s been interesting to hear the discussions about how the Activision purchase will help out Microsoft and Xbox. It’s almost been more interesting to think about how it’ll impact on Sony.

Yes, this means more games for Game Pass. It means a higher incentive to buy into the Xbox ecosystem – even if that means just buying their games on PC. All those are obvious.

But all of that is something of a given. It’s why Microsoft spent nearly $70b – they want to grow their place in the industry and their subscription service.

How Sony will react to the purchase is far less certain.

Recap – Microsoft buys Activision

There was no leaking, no hints from insiders. On an early Tuesday in January Microsoft just popped on their website that they were buying Activision and that’s how the biggest deal in gaming history was announced.

The internet broke down.

Here are the facts: they will spend $68b and change (the change being $700,000,000). Microsoft will honour their contracts – which appears to include two full editions of Call of Duty and Warzone 2 on PlayStation – and then it’s anybody’s guess what happens next.

We have the Bethesda deal to draw our guesses from. Games will probably be exclusive to places where Game Pass is available. That means everywhere except PlayStation and Switch. And given Activision’s spotty release history on Switch, that mostly means PlayStation.

The deal willl be closed within 18 months – by the end of the financial year ending in 2023. Companies usually have 12 months to close a deal, with possible extensions depending on if there are delays due to the deal being examined by legislators.

There’s every chance it is done far quicker and every chance it takes the full 18 months, but that will depend on a lot of things we can’t fully foresee.

Sony’s Love of Third Parties

Sony’s strategy has always been a big reliance on third parties. In fact, up until the end of the PS3 era, the bulk of their output was partnered with third parties. Crash Bandicoot and Spyro were developed and owned externally. Tekken was co-published with Namco in certain territories. Tomb Raider – while associated with the PlayStation – was a money hat, with the original title releasing on the Saturn. Final Fantasy had a long association with Nintendo before making the switch.

Only a few major franchises were made in-house. Gran Turismo is the PS1 era, Jak and Daxter, Ratchet and Clank, God of War and Sly Cooper in the PS2 era. And that’s not meant as an exhaustive list, because it’s so easy to miss titles. But of dozens of games Sony published or co-published, the majority were made with third parties.

Because when you have awesome others party support, it doesn’t necessarily matter what your first party looks like. On the other hand, maybe that’s not as true today as it was then.

Sega and Nintendo was starved of third party content. If you wanted to play the biggest games on the 90s, you needed to have a PlayStation AND a N64, or AND a Dreamcast.

This wasn’t necessarily because the PlayStation was the best device. In the PS2 era, that certainly wasn’t true. It was because Sony had more money than the competition. They could afford to throw money around, and their competitors moved too late.

Sega died a death. It didn’t help that their execs made mistake after mistake. Nintendo tried to compete with the GameCube but sold only about 20m units. The Wii was their attempt to differentiate themselves from the main consoles, and that’s been a pretty good strategy for Nintendo so far.

The HD Years

Then Microsoft entered the conversation. The original Xbox was a powerhouse, but the 360 was revolutionary. It had all sorts of online capabilities, achievements, a digital store. It helped that it had released a year earlier too.

Microsoft was nowhere near all in at this point, but what money there was got thrown around mercilessly. Call of Duty was best on Xbox, thanks to DLC moneyhatting. Bioshock was exclusive. Lost Planet was shown on every demo screen in the UK when the Xbox 360 came out. Ninja Gaiden for the hardcore, Braid and Limbo for fans of the new Arcade. That’s without forgetting Mass Effect, of course.

These were all major games for varying reasons. Sony, on the other hand, kept the Japanese market, but had lost Final Fantasy, lost Crash Bandicoot, lost Tekken, lost Tomb Raider. They overpriced their console, said vibration was impossible, removed features to bring down the price, then had their network hacked.

It was only when they picked up their first party offerings that things started to change.

Is First Party Enough?

It should seem pretty obvious at this point that Sony has always had a good relationship with third parties – and that the change in those relationships hurts them.

So what happens when Sony lose access to Call of Duty? It’s one of, if not their biggest, service earner. What happens when they lose access to the rest of the Activision catalogue, and to Bethesda too?

There have been a couple of takes – some more doom-mongering than others.

The first question is whether or not Sony’s first party can sustain them. Some say yes, I say no.

That’s not a comment on Sony’s output, but they are a different beast to Nintendo. Nintendo don’t operate on spectacle. You buy a Nintendo game because you know what you’re getting. Sony’s games aren’t a mile off from what the competition are putting out, except that they’re always very high quality and are always exclusive.

If you can’t access Horizon, there’s probably an Ubisoft game that’ll just about tick the box. If you can’t get to Gran Turismo, Forza is available on everything else. All it takes is for a good clone to take the place of a Sony exclusive, and they lose mindshare.

There is no Pokemon clone taking over from Nintendo’s offerings. There are no Mario killers in the making. Metroid is one of a kind.

Is A Plague Tale as good as The Last of Us? Could it be?

Sony needs big budgets and big crowds of people buying to make their games work. Nintendo does not. Thanks to Game Pass, Microsoft doesn’t either. If something changes for Sony, then they must change their output.

And that’s fine. It isn’t the first time they’ve done it. Maybe they release less games. Maybe they move focus to smaller titles. And maybe that pays off for them or it doesn’t. No one company is the face of gaming, and no one company will be around forever.

Buying Up Publishers

The easy answer – and the one that some Sony fans seem to be hoping for – is that Sony buys something in response to Microsoft. The usual call is Capcom or Square.

This is a possibility, although not one I’m giving much weight to. There’s a couple of reasons – PlayStation is a huge part of the Sony business and it needs feeding. But either of those purchases would be a big risk. Sony execs are still hurting from the PlayStation hack. The PS3 was financially difficult. I don’t know that they’ll pay billions and billions of dollars unless they absolutely have to.

There’s also the question of monopoly. Sony is the biggest name in the console space. Their plan is to sell 50 per cent of all consoles this generation. It would be harder for them to buy a publisher than Microsoft (although, let’s face it, if they want it bad enough it’d happen).

They’re an American company and while it’s a myth that American companies can’t buy Japanese ones, it might add some interesting hurdles on top of the above.

What about someone buying Sony? It’s been mentioned that a smooth way into the industry for Apple or Google would be to bite the bullet and take over PlayStation. This isn’t ideal, because they you do really end up in a two-horse race, and I’m not convinced Sony would sell unless it was too late.

It’s an interesting thought experiment, but not much else.

So What’s the Answer?

This generation is going to be one of change. Microsoft will be making the most money in this space within the next five years, and Sony may well be a distant second.

But that’s a good thing. Sony has been in front for too long, and this will light a fire under them. They must focus on good games. Not successful games, or games that will sell a billion copies, but good, solid games. Microsoft will do that too – Game Pass allows them to take much bigger risks. But having both consoles is viable for a huge amount of the gaming community.

The Activision purchase is huge. It will take the race between Sony and Microsoft to a tighter place than it has been in a long time.

And with third party support or not, Sony will live to fight another day.