U.K. regulator sees Microsoft-Activision deal harming consumers
“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.
This week’s biggest release is Electronic Arts’ (EA) action role-playing game “Wild Hearts.” The game launches February 17 for PC, Xbox Series X/S (MSFT), and PlayStation 5 (SONY). Also out this week is the PC port of 2021 PlayStation 5 exclusive “Returnal,” which is published by Sony. The port releases February 15 on Windows. In addition, Bandai Namco’s (NCBDY) “Tales of Symphonia Remastered,” a remake of the 2003 RPG of the same name, launches February 17 for PlayStation 4, Xbox One, and Nintendo Switch (NTDOY).
Microsoft’s attempts to get its proposed takeover of Activision Blizzard (ATVI) approved hit another snag last week, as the U.K.’s Competition and Markets Authority said it provisionally concluded that the deal could result in higher prices, fewer choices, or less innovation for players in the U.K. “The provisional findings from the Competition and Markets Authority follow a wide-ranging investigation conducted over the last five months to understand the market and potential impact of the deal. This has included holding site visits and hearings to hear directly from business leaders at Microsoft and Activision, analysing over 3 million internal documents from the two businesses to understand their views on the market, commissioning an independent survey of UK gamers, and gathering evidence from a range of other gaming console providers, game publishers, and cloud gaming service providers,” the regulator stated. “The CMA welcomes responses from interested parties to its provisional findings by 1 March 2023 and its notice of possible remedies, which sets out potential options for addressing its provisional concerns, by 22 February 2023. These will be considered ahead of the CMA issuing its final report, which is due by 26 April 2023,” the regulator added. The Fly notes that the deal is also being scrutinized by the U.S. Federal Trade Commission and the European Commission.
Following the announcement, Activision Blizzard CEO told CNBC in an interview that the CMA potentially blocking the transaction could make Great Britain a tech investment “Death Valley.” “Well, if you look at the U.K., and you think of the post-Brexit U.K., it’s probably the first country where you’re seeing a recession,” Kotick said. “The real severe consequences of recession. If you’re the U.K., with an incredibly educated workforce, places like Cambridge where the best AI and machine learning is, I would think you’d want to embrace a transaction like this where you’re going to see job creation and opportunity. It isn’t at all about whether it’s Sony or Microsoft’s platform, it’s about the future of technology. Rishi Sunak has said that he wants the U.K. to be seen as the Silicon Valley of Europe. If deals like this can’t get through, they’ll not be the Silicon Valley, they’ll be the Death Valley.”
Meanwhile, Sony has accused Microsoft of “obvious harassment,” Kotaku’s Luke Plunkett reported last week, citing Axios’ newsletter. Sony claims it didn’t supply all the information Microsoft had requested in the matter because the PlayStation maker was being asked for way too much, including thinks like access to internal performance reviews, the author said. Additionally, Gamesindustry.biz’s Brendan Sinclair reported that the Xbox maker admitted to the CMA that its Game Pass subscription service cannibalizes sales of games on the service. “Microsoft also submitted that its internal analysis shows a % decline in base game sales twelve months following their addition on Game Pass,” the CMA noted in its report on the Activision deal.
Click here to check out recent Media Buzz Sentiment on Activision Blizzard as measured by TipRanks.
NPD analyst Mat Piscatella said that U.S. consumer spending on video game content, hardware and accessories totaled $4.3B in January 2023, a decline of 5% when compared to a year ago. Video game hardware spending was flat, while content (-5%) and accessories (-14%) spending fell. January 2023 marks the first time the U.S. video game market experienced a year-on-year decline since September 2022, when consumer spending reached 4% below September 2021 levels. Drops in mobile content, physical console content and gamepad spending drove the January shortfall.
Activision Blizzard’s “Call of Duty: Modern Warfare 2” was the best-selling game of January, the 4th consecutive month the title has led the market in premium software dollar sales, Piscatella noted. Four new games ranked among the top 20 best-selling games of January led by Electronic Arts’ “Dead Space” remake, which was 2nd. Sony’s “The Last of Us: Part I” jumped from #36 on the chart in December to #11 in January, helped in part by the debut of “The Last of Us” HBO (WBD) series. U.S. video game hardware spending was flat compared to a year ago, at $393M. Growth in PlayStation 5 and Switch hardware spending was offset by declines across other platforms. PlayStation 5 was the U.S. market’s best-selling hardware platform of January 2023 in both unit and dollar sales, with Switch ranking 2nd across both measures. Other top-selling games for the month were EA’s “Madden NFL 23” and “FIFA 23,” Nintendo’s “Fire Emblem Engage,” Bandai Namco’s “Elden Ring,” and Square Enix’s (SQNXF) “Forspoken.”
2.24M video games were purchased across the U.K. last month, with sales down 4.4% year-over-year, Gamesindustry.biz’s Christopher Dring reported late last week, citing GSD data. The main reason for the decline is January 2022 saw the massive launch of Nintendo’s “Pokemon Legends: Arceus,” whereas Janauary 2023 did not see any release of a similar scale, the author noted. The top sellers in the U.K. for the month were EA’s “FIFA 23” and “Dead Space,” Take-Two’s (TTWO) “Grand Theft Auto V” and “Red Dead Redemption 2,” Activision Blizzard’s “Call of Duty: Modern Warfare 2,” Sony’s “God of War Ragnarok,” and Bandai Namco’s “Elden Ring.”
In addition, Dring noted that 125,000 video game consoles were sold in the U.K. in January, according to GfK panel data. PlayStation 5 was the leader, with sales rising 98% year-over-year. The Switch was in second place, though it continues to see sales slow as it approaches its sixth anniversary, Dring added.
OTHER STORIES TO WATCH:
- At its most recent Direct presentation, Nintendo announced the immediate release of “Metroid Prime Remastered,” confirmed release dates for “The Legend of Zelda: Tears of the Kingdom” and “Pikmin 4,” and announced the addition of Game Boy and Game Boy Advance games to its Nintendo Switch Online subscription service [read more]
- Nintendo told Game Informer’s Brian Shea that the increased price for the upcoming “Zelda” game is not necessarily the trend for all its new games going forward [read more]
- DZ Bank analyst Simon Begas downgraded Take-Two to Hold from Buy [read more]
- The Premier League extended its partnership with EA, Sky reports [read more]
- Cathie Wood’s ARK Investment bought 50,100 shares of Roblox (RBLX) last week [read more]
Originally Posted February 15, 2023 – What You Missed This Week in Video Games
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