As a response to the UK’s Competition and Markets Authority’s statement about Microsoft’s acquisition of Activision Blizzard, the Xbox maker has stated it has no intention of raising the price of Xbox Game Pass (via VGC).
“Prices for subscriptions can easily be revised, and Microsoft may have an incentive to do so once it adds content that is as popular as Activision’s, including CoD,” said the UK’s CMA as part of its provisional findings on the merger.
As a response to this, however, Microsoft has stated that the prices of Game Pass will not be raised as a result of the merger. Microsoft has also stated it will not be raising the price to offset the release of Activision Blizzard games on Game Pass.
“Game Pass prices will not increase as a result of the Merger, and certainly will not increase to a point that offsets the substantial benefits of Activision titles coming to Game Pass on a day and date basis,” Microsoft said in its response. “This is especially so given Game Pass will continue to be constrained by B2P [buy to play].”
To help its point, Microsoft pointed out how games released by Bethesda have not seen an increase in Game Pass prices, which includes major franchises like Fallout, Doom, Dishonored, and The Elder Scrolls. The company talks about its acquisition of Activision Blizzard going through would incentivise it to ensure better distribution of games as well as raise the output of games released on Game Pass.
“The integration of Activision and Microsoft will result in a classic elimination of double marginalization effect because Microsoft will be able to acquire these games at (opportunity) cost and will have incentives to distribute them more broadly and increase the output of Game Pass relative to its counterfactual level,” said Microsoft. “In order to increase output Microsoft will need to offer Game Pass at a lower quality-adjusted price.
“This is exactly what Microsoft has done when it has added content to Game Pass in the past with, for example, the ZeniMax transaction resulting in additional content but no increase in Game Pass subscription prices. This is especially so given that Game Pass users are price sensitive and an increase in the price of Game Pass would affect all users, including those that do not value or play CoD.
“Game Pass subscribers can cancel at any time after a month of play. As CoD titles are only released once a year, any impact would be short-lived as gamers who exhaust their enthusiasm for the new version of CoD within a few months will churn because of the higher price.
“As such any price increase would be counter-productive as it would increase subscriber churn rates. This is entirely at odds with the Provisional Finding’s assessment of Microsoft’s rationale for the Merger.”