When I heard the news that Microsoft had dropped $68.7 billion to buy Activision Blizzard the voice that came into my head was, funnily enough, King Theoden's from The Lord of the Rings when faced with the overwhelming orc horde sent to destroy Helm's Deep.
"How did it come to this?"
Well, we answered that question actually over five years ago here a T3.com with this astonishingly prescient piece of reporting entitled: How the console war ends.
But, still, wow! Right? If there was a sign of where gaming is going then this deal is it. It also must be very concerning news for PlayStation's chief, Jim Ryan, who is without doubt now looking like a real life gaming industry King Theoden. Sony PlayStation now seems to be facing overwhelming odds in its fight against Microsoft Xbox and its horde of gaming studios.
$68.7 billion! That's a simply incredible amount of money to spend on an acquisition and beats off the next most expensive gaming deal by over $50 billion.
So why has Microsoft made such a radical move?
For the truth you need to carefully look at what Xbox chief Phil Spencer said on the announcement of the acquisition:
"We will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog. We also announced today that Game Pass now has more than 25 million subscribers. As always, we look forward to continuing to add more value and more great games to Game Pass."
That's FOUR mentions of Game Pass in one oration. Welcome to the war for the future of the video game industry that is playing out right now in the present – cloud-based gaming with online Netflix-for-games subscription services. And, well, to sell games subscription services you needs games, right? And, specifically, exclusive games.
As we explored recently, Microsoft has been planning for this Game Pass future for over a decade, with it actually laying the groundwork for it all the way back in 2005 with the launch of Xbox Live. The result is that it now has the infrastructure to support the most popular gaming subscription service on Earth and one that is growing rapidly (more than 25 million subscribers, as Phil said).
The future of the gaming industry isn't gamers going out and buying games from a store on day one, it's gamers getting the game as part of their online subscription service automatically on day one, delivered digitally and even playable remotely over the cloud.
Just look at how both Halo: Infinite and Forza Horizon 5 both launched on Xbox Game Pass for free. That's the new model. And that's why Microsoft just dropped an obscene amount of money to buy up all of Activision Blizzard's gaming properties. It safeguards their real cash cow, Xbox Game Pass.
All of which leads to the question of what Sony is going to do in response? As, if it wasn't left behind when Microsoft bought up Bethesda and locked its games away exclusively to Xbox Series X and Xbox Series S, then it sure feels like it is now, with the PS5 overnight losing Overwatch, Diablo, Call of Duty, World of Warcraft, StarCraft and many more popular gaming series.
Add in all the games PlayStation also isn't getting from the Bethesda portfolio, such as DOOM, Dishonored, Fallout, Prey, The Elder Scrolls, and RAGE, and that is a huge gaming void that Sony now needs to fill. After all, it's going to be hard to sell the incoming PlayStation Spartacus Xbox Game Pass rival with a fraction of the games on offer.
Surely, then, despite the Japanese firm's tendency to lean towards the conservative, it really does need to force its hand here and make some acquisitions of its own as, as much as I love PlayStation, I think there's only one choice now for the vast majority of gamers.
If a gamer came up to me and said, Rob, I've got $550 / £550 – should I buy a PS5 and one physical game or an Xbox Series X and a year's subscription to Xbox Game Pass Ultimate, I'd point them toward Xbox every time, as the value proposition is now just off the cards. It's also future proofed in terms of them getting all those exclusive Xbox games, which they likely won't have access to on PS5 regardless of if they buy the game physically or get it digitally.
Yes, sure, PlayStation has its own exclusives and those will no doubt be key factors in drawing certain gamers into buying PS5, but when the scales are getting so weighted in Xbox's favour, those gamers are going to be in an ever increasing smaller minority.
No, I feel Sony needs to act, and act now in bolstering its own ranks of studios – maybe starting with a purchase of Capcom, Square Enix or SNK. There's also long-running Japanese game studio Konami, too, of Metal Gear Solid and Castlevania fame, which looks like a smart choice. As while it is still dominating in terms of PS5 hardware sales this generation, it looks increasingly like it is winning the battle, but not the future console war.
