It's pretty strange that the CMA is most concerned with a market that functionally doesn't exist right now, and may not ever be "a thing". Cloud gaming is still fundamentally not a great experience.
Having said that, I don't think the deal should go through anyway. Large companies should not be allowed to purchase other large companies within the same market as them.
> It's pretty strange that the CMA is most concerned with a market that functionally doesn't exist right now, and may not ever be "a thing".
Microsoft, Activision, and most competitors who were against the merger want it to be a thing, though. If the entire industry considers this to be an important future market, the CMA would be foolish to ignore that.
But you ignore all of the headwinds that it faces. We live in a world where players will shell out big bucks for ultra fast monitors with <1ms lag, where gamers measure their abilities in actions per second, and where first perspective shooters LIKE COD are the most popular games and demand split second reactions. How do you expect them to be ok with >100ms ping and dropped packets? I have google fiber with 4ms ping and I hate the experience when cloud gaming.
I'm not sure if the niche of hardcore competitive guys buying expensive low-latency monitors is really something to be concerned about.
But dropped packets/lag spikes are a real issue. I gave the Stadia trial a shot and never had a play session where I didn't have several instances where the game would start stuttering or straight-up freeze for a few seconds and I'd have to wait until it sorted itself out before I could continue playing. Maybe that's fine if you're playing a turn-based RPG or visual novel, but that's a complete dealbreaker for any game with real-time action (most of them).
And I don't know how you fix that issue without making internet infrastructure 100% perfect and reliable. Good luck with that.
> without making internet infrastructure 100% perfect and reliable
If this really takes off, I'd expect we'd see a further stratification of ISP offerings with QoS guarantees.
Currently, there's little incentive for ISPs to optimize for jitter, and yet they already often market their highest bandwidth offerings as "good for gaming."
The players buying <1ms monitors will continue to buy them. Its the other 95% gamers that are the targeted audience. An example: As a dad of two 3 year olds, i don't have time to game more then a couple of hours a week. Its not worth it for me to keep up with the hw trends for that amount of dedication. However, using Shadow to stream my games, i get between 30 and 50ms ping on wifi. Perfectly fine for the type of games i play.
I had a similar experience with GeforceNow and Stadia (40 to 60ms for them as their servers are farther away).
> How do you expect them to be ok with >100ms ping and dropped packets?
You don't. Cloud gaming is not aimed at those people. People like that, who want to compete at higher levels(that includes me) will not play in cloud competetively. But 99,9% other gamers won't care if the tech gets to sub 100ms delay. That's an insanely big market. You could just run any game you want, without worrying about your PC/console specs, there's huge value in that.
It's not the CMA's job to make that judgement, that's what expert testimony is for.
But:
- Residential broadband quality is stagnating in large parts of the world; theoretical peak speeds keep increasing, but so is overprovisioning, and latency is worsening due to increased reliance on 4G/5G for residential connections, leaving vast demographics incapable of having the required stable, low jitter, high bandwidth connection during the typical "prime entertainment" time slots. Noninteractive media can compensate for that easily, interactive… not so much.
- Externalizing energy and cooling costs to customers can be attractive, especially in high-cost locales like Western Europe. Additionally, space for data centres close to customers is limited, and competition is high. Microsoft has enough synergies with their other cloud offerings to make this feasible as long as demand is low-ish, but if it dramatically increases, they'll have to make tough decisions wrt pricing. And even if it comes out ahead… this is the sort of monopolist advantage that CMA is worried about. Sony etc. don't have this advantage. (Presumably one of the reasons why Sony's current cloud gaming offerings are noticeably worse in quality.)
- Game console manufacturers aren't doing much R&D these days, the machines are standard PCs/tablets with mildly modified off-the-shelf software on top. Customers, meanwhile, are much more likely to be loyal to and seek to justify their invest into the $500 box in the living room, than a service they can subscribe to when a new game comes out, and unsubscribe from at the end of the month when they're done with it.
- Leasing has been the dominant model for 10+ years. Steam and other game launcher do not let their customers own anything, and "subscribe to play the 5 most advertised games" services are highly popular. Cloud gaming is not required for this business model. Indeed, freeing these services from the requirement to own a $500 box would make it easier for users to keep switching to whoever has the best offering currently, which reduces profits.
- See above, game consoles are already highly standardized with little effort needed to port between them. And cloud gaming just adds more platforms, since each vendor will have his own (vendor lock in) optimized image formats/APIs/whatnots.
Its bad value if you only care about a few games. Its bad value if you have bad internet. Another issue is if people no longer have their own hardware then there will be much less incentive for providers to make cloud options cheap.
I have used it on my Series X and it's just not as good as playing it locally. I've got it hooked up to a 4K120Hz TV that supports VRR and ALLM, and the exeprience over the cloud will never be as good. It's very convenient that I don't have to download 50GB to play a game, but if it's a game I want to actually play, the 50GB is worth it.
I also have a PS5 with the PS+ Premium package, and their cloud offering is even worse.
For developing markets playing through a controller attached to their phone, its pretty killer. Especially if they get cell providers to bundle in the service with an unlimited plan or as a trial offer.
You need to think of Cloud as the mass-market play, and the enthusiasts will want to own a cloud node (Series X) in their own home. The enthusiast console market tends to top out at ~140 million people, very small compared to the number of smartphones out there.
That’s so hard for me to believe - what kind of awful degraded experience would that be?
Like is that your phone, with a controller Bluetoothed in - do you get a Bluetooth headset too? Or are you playing sound through the device speaker? Or wired through a headphone jack? Squinting at a tiny little screen in your lap? Or somehow on a stand up closer to your eyes? Do you cast your screen out to an external display or maybe pipe the video out through your charge port? Doesn’t all that murder the battery? I’m guessing you need it plugged in too? And what, you’re on wifi this whole time? Doesn’t using your smart phone as a nexus for all this put it through a wringer?
And at the end of all that, what are you doing - you’re pushing your phone to pretend it’s a gaming console? As compared to just using a low end laptop?
It’s just such an alien concept for me. Why such a tortured process to get to stream a game you don’t even own… when you could just use appropriate hardware and play a better suited game?
You attach your phone to the controller and the sound comes through your bluetooth headphones that you no doubt already own. It's basically like using a Switch or a Steamdeck. With fast 4G or 5G network performance is perfectly fine for game streaming. Given that Nintendo have sold roughly 400 million portable consoles so far, it seems many people don't particularly mind "squinting" at a small screen when playing games.
As compared to just using a low end laptop?
Modern phones have better screens and faster CPUs/GPUs than many low end laptops.
Because that hardware is $300-$500 and not portable. Most controllers are wired-in because they snap to the phone, like the Razer Kishi.
Probable using Airpods or other earbuds.
Since the processing isn't happening on the phone, it doesn't use much more battery than watching video.
Mobile is the predominant form of playing games these days. The goal is to allow the existing mobile players to access other types of games that won't run well natively on a phone. It's not aiming to convert existing hardcore gamers.
And I’ll add that this same discussion used to happen with pc gaming vs mobile gaming where purists thought it was crazy that anyone would play mobile games, but if you look at the markets now, mobile gaming is estimated as more than twice the size of PC gaming. A lot of that is because most people don’t have gaming PCs.
That doesn't mean that playing on the cloud is good though, does it? It's still a subpar experience in terms of reponsiveness and image quality, even on a 60Hz display.
It's not my internet connection either, as I have my Series X hooked up with an ethernet cable, and my line is a 500/500 fiber line from Bell, with at most 5ms latency. I should be the ideal customer for cloud gaming, and it's still not good.
Cloud gaming is fantastic. I use it daily as I don't have or want to buy a PC or console. I pay $10 a month to play Destiny's latest expansion and I can unsub when I'm done. 4 months of gaming worth $40 instead of the console/PC price. It's also extremely convenient to try new games with a very low barrier of entry. Fantastic service
My experience is that it's much better than the alternative of games running natively on your phone. I would say better than the switch too in most cases for me (more battery life, shorter load times) though may depend on the game.
I also noticed a significant improvement running it on WiFi after I upgraded to a mesh network. I've only tried over cloud a few times, can appreciate connection requirements may very high, but even being able to load it up wirelessly in different parts of the house or backyard is a big plus for me.
I am in the Midwest and have the opposite experience. Most of the time I can't tell the difference between playing on the cloud vs locally on my Series X.
Playing battle toads, forza, spelunky 2, etc... I'll sometimes get visual artifacting. I even played Wo Ling and it felt as good as playing locally. When I stream, it's in my Galaxy Fold 4 so resolution doesn't matter to me on that size screen.
Admittedly I haven't kept up with the PS5 but the PS4 Pro at least basically let you choose between 4k and 60fps and couldn't do both, and generally you're not going to get 4k120hz on any game, let alone at maximum graphics settings. I feel like the intersection between enthusiasts and console gamers is quite low because most people buy a PC.
whether someone can afford something and whether someone wants to use it consistently are two different things. I can afford a $3000 gaming PC, but I would never buy one since I'm not that into playing games at the highest settings.
I'm a fast twitch FPS person from the nineties so I expect low latency when playing a solo game. I played through Cyberpunk using GFN on a home connection in London (ping was 2, which is faster than my mouse latency) and it was fine.
Give the current uninspired bean-counter leadership at Activision and turmoil at their major studio Blizzard, this acquisition seemed like it would be a net positive to innovation and choice in gaming.
Microsoft is actually pretty good at games, has the deep pockets needed to make long-term investments in quality content that Blizzard at least seems to be struggling with atm (not sure about Activision’s other properties).
I don’t follow gaming that closely though, is there some reason this acquisition is a net negative and needs intervention by regulators? Or is this a case of regulators misunderstanding the situation and the market?
How long do you think Microsoft Activision would keep Call of Duty and Overwatch alive on other platforms? Or perhaps use discontinuing it as a threat to wrangle some concession out of Sony when it needs it.
Let's say the Windows or Internet Explorer days are far behind Microsoft and not relevant to games anyways. Well, remember their lock down attempt on the Xbox One ten years ago? https://news.xbox.com/en-us/2013/06/06/connected/ which was so bad they needed to back down in just two weeks.
Overall, the centralization of the gaming industry is worrisome. Sony in 2021 alone bought six studios including Valkyrie which also should've been blocked. Microsoft bought Zenimax, Nintendo bought Next Level but even Take Two bought up Zynga.
Also, this is a lot of money, even for Microsoft and if times get tough, they will squeeze Activision to get some of that back and creativity will go down.
Why do everybody treat Call of Duty like some sort of universal constant, even Microsoft, Sony and Activision? Does no one realize this is an artistic franchise that could be in a very different place in ten years?
It's as if someone was saying they were unfair because Disney refuses to release Star Wars to movie theaters. It changed into a bunch of TV shows, it went in a different direction!
Maybe the council environment is different, but I generally feel Microsoft has more often killed the PC game franchises that they have acquired, hurting innovation and choice.
The last 2 fallout games I can recall are a phone game and an MMO... And it took people bailing from the company (instead of the company supporting the initiative) to get Outer Worlds, which is the closest thing to Fallout. And then there's Skyrim... It's like MS acquires the intellectual property then goes DLC and/or MMO only.
I don't think many games that I loved for PC survived any acquisition.. at least before Blizzard (so far)
This is the second thread I've seen this take and I'm really curious why it's a popular statement. They completely dropped the ball with 343 Studios and Halo. Ruining their own tentpole franchise should ding them a few points. They haven't done much with Minecraft. Apparently games titled 'tell me why' and 'bleeding edge' were published by Microsoft in 2020, the latter being a multiplayer title abandoned 10 months after release. The Goldeneye remake was mediocre. Crackdown 3 took forever and was mediocre. They release so few games I am already in 2019 on their wikipedia page. And this is all after they've spent huge sums of money acquiring studios and publishing rights for games already in development.
They've certainly had some solid releases with games like Psychonauts 2 and the Forza Horizon series, and I'm thankful that their money got us Pentiment. But especially when it comes to the AAA titles you'd expect from a market leader with their own hardware platform, I don't personally see how Microsoft is that good at making games.
TBH, from my armchair expertise I might also agree that this acquisition isn't going to give MS unfair control over the market - but mainly because I don't expect MS could effectively manage Activision.
Like I said, I don't follow games that closely, but I was under the impression the whole Xbox system is overall pretty impressive, regardless of the occasional mistake they make with it. Maybe I'm wrong.
I agree. I was really hoping this would go through so Microsoft had some chance to keep Activision Blizzard from destroying itself. Dragonflight has been one of the best WoW expansions and yet the dev team continues to lose talent due to terrible management decisions from people who must neither understand video games nor people.
This is great for gamers. Bethesda/Zenimax Media and Bungie were ruined by Microsoft. Way too many of Microsoft acquisitions have actually made it harder to compete and stymied innovations https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...
I’d add Rare and Mojang to the list as well. Rare for obvious reasons (kinect, etc), and people are finally starting to realize that most of the additions to Minecraft in the last 5 years have been kinda terrible.
Because they want King for the mobile gaming aspect. They were preparing to launch a mobile game store on iOS once sideloading is allowed (rumored to be soon in Europe if not everywhere)
Then they should commission King to create content for their platform, or make their platform competitive with IOS/Play/Samsung stores to attract publishers.
Platforms buying their content creators to make them exclusives is anti-competitive so I'm glad the CMA has done something, wish they would do it more often.
Yes, which is why I don’t understand how ‘market forces’ ( I’m quoting the cma) will magically improve things for me, the end user/ consumer.
What I want is a simple regulation which says that if I buy a game, I should be able to run it locally, or on a rented box, whether operated by a third party or not.
Yes. If you have Gamepass on the Xbox you can, for many games, choose between installing a game locally or playing it "in the cloud". It's quite frankly a fantastic feature for all those time you want to try out a game, but don't want to clear 100 GB of free space on your Xbox hard drive to actually download the game.
maybe the CMA worded it wrongly in terms of cloud gaming.
but the gist of it remains the same. Microsoft wants to weaken Sony's exclusive moat by buying their own big property to make it an exclusive down the line, thereby either increasing the value proposition of Game Pass, or Xbox cloud gaming anywhere.
by now Microsoft already knows they're not going to catch up to Sony or Nintendo in terms of console sales.
game pass is probably one of the best deals in entertainment though, and by that I mean all forms of entertainment whether sports, film, music etc.
I don’t understand why Microsoft doesn’t build up their exclusive library the way Sony does. Yes, it’s riskier but so what. Sony could do it. Microsoft definitely has the money to do it.
Not to mention making former multi-platform franchises exclusive to their machines just makes everyone who isn’t in their camp hate them.
To my knowledge, Sony mostly fund the development of games and keep the rights to them - e.g. Demon Souls and Bloodborne were funded by them, they own the rights, and of course they are exclusive to PlayStation; maybe they will appear on PC if Sony feels like it.
It’s hit and miss. Some games become big hits. Some flop and they just wasted a few million.
IMHO it’s a better model. More games get created. No one loses out by having a franchise they have played for years denied to them because they own the wrong console.
They had a dedicated studio making or collaborating on many of their famous exclusives, Japan Studio[1].
Though in a 2021 org restructure they were seemingly merged into another first-party Sony studio, Team Asobi[2] who hasn't been credited with anything particularly noteworthy. Just a bunch of tech demos. Not sure what that move was about.
If you read the CMA's statement it is specifically about Cloud Gaming, so they didn't word it incorrectly. They are talking specifically about streaming games from a data center to a thin client.
Can someone explain to me how a UK regulator has the power to block a merger between two US companies - I get that they can say its blocked - but what kind of powers do they have to enforce it from not happening?
They can issue fines to Microsoft UK and ultimately block Microsoft from the market.
UK is 67 million people, so not as big as USA and EU, but significant enough that in balance it’s not worth the perpetual multi-year headache that Microsoft would have explaining the situation to shareholders if they were not to comply.
They would never be allowed to block Microsoft from the market though - the NHS runs on windows, and basically every other arm of our government - surely the fines wouldn't ever be more than the gain due to the merger?
In antitrust fines are generally not capped, since the whole point is to make giant companies pay attention. The EU fined Google 2.4B euros in 2017, then 4.3B again the following year. Even for Google, 7 billion USD isn’t play money.
A market block wouldn’t have to be all or nothing. Maybe start with the offending products: Activision games, Microsoft’s cloud gaming service, etc.
The CMA can block access to the UK market and impose fines amounting up to 10% of a firm's global revenue plus impose other requirements to restore access to the UK.
It's broader than that. The CMA considers impacts of mergers (and other competition-related concerns) on UK markets regardless of where an entity is headquartered. It has broad investigative and enforcement powers over any entity selling in UK markets with over $70M GBP in revenue from UK markets or 25% of market share in a given vertical. If Microsoft and Activision merged without making accommodations to satisfy the CMA, the CMA would be able to block their access to the UK market and fine them.
Presumably this is an option, but not a good one. I'm not sure what would happen to Activision IP in UK - Microsoft wouldn't be able to use any of their newly acquired Activision IP in the UK?
>If length is longer, you're supposed to condense it as truthfully to the original as possible.
But there are ways to do that not buy leaving out literally the most important word.
They are not concerned about the retail or digitial sales of games. They are concerned about the market share of GamePass and streaming market where after Google left pretty much only MS and Nvidia Geforce remained.
> The UK cloud gaming market is growing fast. Monthly active users in the UK more than tripled from the start of 2021 to the end of 2022. It is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026. By way of comparison, sales of recorded music in the UK in 2021 amounted to £1.1billion.
This seems disingenuous. Why not compare to the video game market as a whole? That appears to be currently worth around £8 billion in the UK.
Quick question, why was the UK selected for this process?
Also, Microsoft was directly involved in very successful games such as AoE, Flight Simulator, Dungeon Siege and Fable. I understand the management's desire to acquire every other IP in the industry but they really should focus on making their own stuff.
Since both Microsoft and Activision-Blizzard-King do business in the UK, they're subject to UK regulatory oversight, including the CMA reviewing this proposed merger.
Couldn't, in theory, Microsoft acquire a newly formed subsidary that is US based that owns Activision and its properties, also legally moved to the US, there by circumventing this?
Basically, Activision would lease its UK IPs to the newly founded company, maintaining access (with extra steps I imagine, never the less), and Activision UK would technically be a separate entity
While true, sometimes these loopholes aren't super enforceable to stop without explicit legislation in the US (see things like Texas Two Step bankruptcies). I however do not know how it works in the UK
Both buying publishers is a very, very bad thing for consumers. So very good decision! Want to make gamers happy? Stop with the exclusives, built better UX into the console and introduce cloud gaming. Consoles won't be a thing in 10 years anyway.
The conspiracy theorist in me can't help but think about the fact that most of the corporate/leadership power at Sony Playstation resides in Europe these days.
So, you're not the least bit concerned about a massive cloud company buying a huge competitive advantage? Sony uses Azure to host their own competitive offering, you don't think they're the least bit nervous that Microsoft can just pull the rug out from under them?
It doesn't need to be a conspiracy, there's plenty we should all be wary of with regards to mega mergers. Why is Microsoft so keen on making this happen? They're basically throwing mountains of money to make this happen and it's not out of the goodness of their hearts
The Azure thing you note is odd. Sony invested in Azure far after they knew MSFT would be competition. I’m sure they also realize the legal backlash to MS hampering them with Azire would be huge. And lastly Azure’s long-term play is much bigger than consoles. It would be stupid for MS to throw out the baby…
There are a plethora of other hosting companies Sony could choose to use. They obviously aren't worried about it, why should I be? If Microsoft kicked Sony off of their cloud all of a sudden without a really good explanation, it would be hugely damaging to their reputation.
