Three days after Microsoft's communications lead called out Sony on misrepresenting the "parity" aspect of the ten-year Call of Duty license it has been offered, his counterpart at Activision Blizzard (NASDAQ:ATVI) has also tweeted some information that is relevant in the merger context:
The Last of Us is produced by Sony Pictures Television and PlayStation Productions.
— Lulu Cheng Meservey (@lulumeservey) January 30, 2023
It’s based on a best-selling video game developed by a Sony-owned studio and published by Sony as a PlayStation exclusive.
Why does this matter?
According to Wikipedia, The Last of Us premiered on television about two weeks ago and is based on the 2013 action adventure game. Its developer, Naughty Dog (formerly JAM Software), was founded in 1984 and acquired by Sony Computer Entertainment in 2001. The Last of Us is a PlayStation-exclusive game. Given that PlayStation maker Sony owns the studio that created The Last of Us, this is called a first-party title.
In the Federal Trade Commission's in-house adjudicative proceeding, Sony appears reluctant to provide documents and/or fact witnesses relating to its heavily content-centric strategy. But absent an agreement that allows the acquisition to be consummated, Sony will inevitably have to produce and testify. The FTC yesterday published a Friday order (PDF) by Chief Administrative Law Judge D. Michael Chappell granting Sony a generous extension until tomorrow (February 1) for a potential motion to quash or limit Microsoft's subpoena.
While I sharply disagree with Mrs. Meservey's categorization as "nonsense" of Epic's Section 1 claims concerning agreements between Google and various game makers including Activision Blizzard, she does have a point about the success of The Last of Us reflecting Sony's enormous cross-media market power. Many people who watch that TV series will get interested in the game, and it's available only for Sony's PlayStation, which is the market-leading video game console anyway.
Other games have also been "cinematized" and that includes Microsoft as well as Activision Blizzard titles. But Sony is a leader in a whole range of audiovisual media categories: games, movies, TV, and music. It can do this without even having to find, and share revenues with, partner companies in other industry segments. Mrs. Meservey is right that Sony "will be just fine without the FTC’s protection." And that applies not only to the FTC but also to other competition authorities.
The European Commission has to decide on a potential Statement of Objections (SO) this week or next based on my understanding of a Politico article, and the UK Competition & Markets Authority (CMA) announced is provisional findings for late January or early February.
