New CMA document explains how Microsoft-Activision deal could raise Xbox Game Pass prices

The report highlights how certain aspects of the deal could affect the Xbox Game Pass prices.

New CMA document explains how Microsoft-Activision deal could raise Xbox Game Pass prices

Credits: Microsoft

The recent report from the UK Competition and Market Authority has shed light on the potential impact of Microsoft’s acquisition of Activision Blizzard. According to the report, if the acquisition goes through, Microsoft’s Game Pass service would see its value increase with the addition of Activision Blizzard’s library of video game content. However, this would also give Microsoft an incentive to raise the price of the service. This could potentially make it more expensive for consumers.

The CMA report is over 400 pages long. It provides an extensive overview of Microsoft’s current business plans and how they would affect competitors. The report highlights the potential impact of adding Activision Blizzard’s content to Game Pass. It also highlights how this would give Microsoft an incentive to raise the price of the service.

Related: UK regulator CMA blocks Microsoft’s $69 billion deal for Activision Blizzard acquisition

Everything the CMA report reveals regarding the Microsoft-Activision deal

Microsoft
Credits: Xbox

The report states that adding new games to the Microsoft library is not the issue. Rather having Activision Blizzard’s games specifically, such as Call of Duty, would influence the catalog. Having Activision Blizzard’s content on Game Pass would represent a new option to pay for content that is already available on a buy-to-play basis on Xbox. It would only represent better value than the status quo for some consumers.

The report states that Microsoft would have the incentive to increase the price of Game Pass equivalent to the value enhancement of adding Activision Blizzard’s valuable content to it. Even a modest price increase would significantly reduce or eliminate any potential relevant customer benefits.

The CMA report also acknowledges that having Activision Blizzard’s content available on Game Pass is an attractive prospect for some customers. It may explain much of the support for the merger by those in favor of it. However, the report concludes that the potential harm to competition and ultimately consumers arising from the merger in the rapidly expanding market for cloud gaming services would outweigh the benefits.

As of now, Microsoft is seeking an appeal for the CMA decision to halt the merger. The decision to stop the acquisition has been steadily gaining traction ever since it was announced in February 2022. In addition to the potential impact on Game Pass, the CMA report also includes mentions of Nintendo’s current hardware. It includes how it may not be able to play current-gen Call of Duty games, which representatives from Activision Blizzard claimed it could do.

The CMA report highlights the potential impact of Microsoft’s acquisition of Activision Blizzard on the gaming industry. The addition of Activision Blizzard’s library of video game content would provide an attractive prospect for some customers. However, the potential harm to competition and consumers would outweigh the benefits. Ultimately, it remains to be seen how Microsoft will proceed with its appeal and how the gaming industry will respond to the outcome.

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