In 2019 Microsoft believed that the acquisitions should serve not only to strengthen the Xbox Game Pass by growing it, but also to prevent Sony to enter the market for subscription services.
In an email dating back to that period we can read that Matt Booty, the head of Xbox Game Studios, encouraged Tim Stuart, the CFO of Microsoft, to spend large sums on acquiring content in order to beat Sony in subscription services. The email emerged among the documents presented during the trial between Microsoft and the Federal Trade Commission, the US antitrust body, on the acquisition of Activision Blizzard.
Booty wrote, in reference to spending $2 billion or $3 billion in 2020 to prevent competitors from catching up on amounts of content at a later date: “We at Microsoft are in the unique position of being able to spend money to take Sony out of business. At this point it’s virtually impossible for anyone to start a new competitive video streaming service.” In the second sentence Booty refers to competitors such as Sony, Amazon and Google. According to the Xbox executive, however, only Sony could have created a service that could compete with the Game Pass:
“In video games, Google is three or four years away from having a functioning studio. Amazon has proven incapable of dealing with playful content. Content is the only protection we have, in the sense of a catalog that runs on machines current generation and with the ability to create new ones. Sony is really the only other competitor that could compete with Game Pass and we have a head start of 2 years and 10 million subscribers.’
The email is particularly interesting for written before major acquisitions by Microsoft, such as that of Zenimax and that of Activision Blizzard. It also has a potentially dangerous aspect to the process, albeit a very old one, because it shows Microsoft’s willingness to attack the market for video game-related subscription services to create a kind of monopoly, growing to the point of size where it is impossible for any other company to compete in the same field.
It is in light of this email that Microsoft’s attempts to acquire SEGA and Bungie also make sense.