Today is Day 5, the last day of the evidentiary hearing.

We'll hear from Microsoft CFO Amy Hood, who will tell us that the Activision deal model did not include any mention of removing Call of Duty from PlayStation (among other things).

Day 5 will begin soon! Going live soon!

Day 4 of the FTC v Microsoft evidentiary hearing is about to begin!

I will do my best to live transcribe what is said. Q What about cloud services?

No I'm not.

Q Can we agree that there are circumstances that Activision would agree to put its content on subscription services?

I heard Mr Kotick and believe him when he testified, I believe there are a limited set of circumstances where he did… twitter.com/i/web/status/1…

Day 3 of the FTC v Microsoft evidentiary hearing will begin soon.

We'll hear from:

• SIE CEO Jim Ryan
• Nvidia
• Robin S. Lee, Professor of Economics at Harvard
University Q Here in the foreclosure model, one input that is different is the conversation rate

Share model does not have conversion rate. Vertical foreclosure model uses conversion rate that predicts a lower share shift.

Continuing with the Microsoft statement of fact analysis for a bit. Microsoft and Activision say that Diablo and Overwatch made less than $1 billion in revenues in 2022.

Counsel provides figures for Call of Duty, World of Warcraft, Candy Crush, Diablo, and Overwatch.

All of the values are redacted.

Today was a big day for the FTC vs merger case.

We learned some interesting info about Xbox, ZeniMax, Activision, and gaming as a whole. Putting together a quick thread summary. ⚖️ • Jim Ryan email "I don't think this is an exclusivity play at all"

• U.S. market share sans Nintendo: PlayStation has 56%, Xbox has 46%

• Putting COD on Switch could require dramatic changes in performance/graphics, ATVI proprietary engine not optimized for Switch

Unfortunately I missed the million counts for the platforms Microsoft wants to buy Activision to align with trends of gamers using mobile devices, Wilkinson said.

Wants to use KING's mobile expertise how to bring games to mobile and market them on mobile.

That's something that Xbox has not been able to do in the past.

Just tuning into the CAT Tribunal hearing, I'll outline few notes here as I hear them. Here's a link to the CAT Tribunal livestream: catribunal.uk/1590

PC gaming is not yet a substantial part of Sony's overall PlayStation games business, but it's growing fast.

tweaktown.com/news/91624/pc-… Sony's latest business briefing confirms that it made $250 million from PC gaming in FY22, down $50 million from Sony's original $300 million forecast.

Actual earnings (left) vs forecast (right)

More info on the CMA's cloud gaming assessment:

One third-party (possible Google, Amazon, or even Sony) submitted an independent analyst report that estimated revenues generated from cloud services.

PS Now was in the lead in 2021, and xCloud made less than $50 million. This analyst firm notes that cloud streaming did not generate very much revenue in 2021, estimating that cloud streaming services made less than $400 million throughout the year.

One thing to note about Amazon Luna is that secondary Prime accounts can't use the service. Only primaries can.

For example, I am a secondary on my family's primary Prime sub and I can't play the Luna games that are available for Prime subscribers.

luna.amazon.com/detail/B0BTRVR… Okay wait, I guess I can access the free Prime games after all. Just booted up Resident Evil 2.

So secondary accounts can play the 4x free Prime games, but not the games offered on Luna+

Gamers offered on Luna+ are only for primary Prime accounts I guess.

Just minutes ago I erroneously Tweeted that FTC's law judge ordered Nintendo to comply with Complaint Counsel's subpoena.

This isn't the case. I made the mistake (again) of assuming the document was an order.

It wasn't an order, but a response from the FTC's lawyers. This, however, is the order. So Nintendo is indeed ordered to testify before the FTC, but the documents that I linked to were not included in the order from the FTC's Judge Chappell.

ftc.gov/system/files/f…

Sad to see more news outlets shut down. BTW, I dont really agree with the concept of "social reporting" or "citizen journalism" because it's a lot like ChatGPT, where people just scrape actual news stories anyway without properly sourcing or backlinking. Everyday people can share stories and info, sure, but it's not a good idea to assume everyone can be a journalist, reporter, or researcher. Anyone can do these things, but the distinction is just more experience and understanding of topics.

Society needs the press.

Sony has decreased its strategic investment budget to allocate more working capital for its divisions, including PlayStation gaming.

The new working capital increase will help fund first-party games and content, and FY23's 25 million PS5 shipment target.

tweaktown.com/news/91281/son… Based on what Sony Corp. President Hiroki Totoki has said in the past regarding the current budget remainder, we can now calculate that Sony has around $3.6 billion left to spend on strategic investments through the end of FY23 (March 2024).

Google can actually offer regulators a unique perspective in cloud gaming.

Google is among the only recent companies to utterly fail in its attempts to innovate on the B2P (buy-to-play) cloud gaming business model, which combined a storefront with exclusive streaming access. So far as I can tell, a core part of the CMA's argument on SLC cloud gaming effects arising in the MSFT-ATVI merger centers around BYOG and MGS becoming and staying the near-universal biz model for cloud, and stifling any innovations in B2P cloud models.

Quick analysis:

What would happen if Activision ($ATVI) signed an exclusivity licensing deal with Xbox similar to the current ones it has with PlayStation? All the PR-speak and controversy aside, Activision-Blizzard heavily relies on PlayStation to generate its console revenues, which were $1.754bn in 2022.

However, its Mobile and PC segments could help weather any potential loss from an Xbox COD exclusivity/licensing deal.

I think everyone already knew this, but it's still good to have clarification.

To make the quizzical 80-20 pie chart, Microsoft used the FTC's new "High-Performance Console Market" designation that removes Nintendo from the Big 3 console market.

tweaktown.com/news/90696/mic… Here's what Microsoft President Brad Smith said during the Feb. 21 press conference in Brussels, as per this video:

I'd like to expand on some points regarding Microsoft and the Xbox business.

We don't know what Microsoft is planning next.

They've hinted at what could happen, but we probably won't ever know. Regulators, on the other hand, probably have access to this information. History has proven that no one should ever underestimate Microsoft.

Their Xbox strategies have led to significant disruption and innovation in the video games industry, in terms of both technology and business models.

Regarding the merger, one thing that seems clear to me is that ATVI would transform the Xbox business in many ways.

I don't mean just content-wise.

This would open up business models that are both obvious (mobile) and not obvious (the next major expansion of XGP ecosystem). Microsoft could use ABK properties to accelerate its plans for a storefront that competes against Google and Apple, breaking up a duopoly.

MSFT could also use ABK to help justify new XGP pricing tiers (which may happen regardless if the merger doesn't close).

How long is 10 years really?

If Activision continues its current business model, 10 years is:

• 10 Call of Duty games
• Multiple WoW expansions
• Tens of billions of dollars in revenues
• More time to execute (and expand) four-part plan strategies Microsoft's plans for ABK will inherently disrupt the publisher's business model at the start, but it's possible Microsoft could further evolve the synergies in Activision's four-part plan and its service-first model.

I can't really guess as to what MSFT and ATVI have planned.

Sony counsel argues that Microsoft could knowingly release an inferior version of Call of Duty on PlayStation in order to harm Sony's chances at competition.

The theoretical downgrade would be so bad that PlayStation COD gamers could move to Xbox.

tweaktown.com/news/90656/son… While Microsoft has stated in the past that it wants newly-acquired Bethesda games to be "first, better, or best" on Xbox platforms, this partial foreclosure strategy appears to be significantly counter-intuitive to Xbox's core business.

It sounds like Microsoft wants to charge Sony a lot for the Call of Duty license.

Sony indicates they would have to raise PS Plus prices in order to offer Call of Duty on the service. Sony counsel makes a fair point here. Negotiating with an independent Activision would be different than an acquired Activision.

However I think we all know that MSFT would not "benefit from a failure to distribute Call of Duty on PlayStation" at least in the short term.