Yesterday marked the first day of legal proceedings between Microsoft and the US Federal Trade Commission (FTC) over the IT giant’s acquisition of Activision Blizzard for an unprecedented $69 billion. In documents released during the hearing, Microsoft said that Xbox was officially “lost” in the console wars.
According to a section of the document Microsoft filed, the company has outperformed Sony and Nintendo since 2001, when the company entered the gaming console market with the original Xbox, and has regularly lost the “console wars” ever since.
Xbox is third in sales after PlayStation and Nintendo solutions. Notably, in 2021, Xbox accounted for just 16% of sales, with Sony and Nintendo products sharing the rest, although the exact figures remain hidden from the public. The same applies to the share of sales from consoles and the share of consoles used – the Xbox accounts for only 21% in the latter case.
According to Microsoft, the company is pursuing its own strategy of selling games rather than consoles, actually selling the hardware itself at a loss, and “subsidizing” gamers’ purchases of hardware solutions in hopes of taking their toll on gaming accessories.
All of the arguments are part of Microsoft’s defense strategy against the FTC, which wants at least to stay Activision’s purchase of Microsoft after obtaining an injunction, which the company is fighting in court. If the ban goes into effect, it will prevent the deal from closing until the evidence hearing begins on August 2, when the deal was supposed to close on July 18. Because of this, the parties may need to renegotiate the terms of purchase.
The FTC intends to stop the merger on the grounds that it will allow Microsoft to dominate the market by making the popular Call of Duty franchise exclusive to Xbox and PC. Sony also complained about the probability, Microsoft denied this possibility. In turn, the company complained that its small share of the console market required it to buy Activision in order for the IT giant’s gaming business to become a full-fledged competitor to its more successful rivals.