Microsoft President Brad Smith Says He Had A Deal With Sony In His Pocket, Ready To Sign

Microsoft President Brad Smith made a surprising revelation in a press conference in Brussels today.

As reported by Christopher Dring for Games Industry Biz, Brad revealed that he had an envelope in his pocket on that press con, which had a deal for Sony ready to sign.

Of course, that legal document didn’t get signed that day, when Brad did have an opportunity to talk to and convince SIE president Jim Ryan. Before the press conference, Brad and Jim faced a closed hearing by the European Commission. In this meeting, the EU sought the arguments from the companies in the industry about the Microsoft deal to buy Activision Blizzard King.

This is what Brad had to say about this:

“We haven’t agreed a deal with Sony, but I hope we will.

I hope today is a day that will advance our industry and regulation in a responsible way.”

“Sony can spend all its energy trying to block this deal, which will reduce competition and slow the evolution of the market. Or they can sit down with us, and hammer out a deal.”

Sony’s argument to regulators against allowing the deal to push through has focused on Call of Duty. Sony argued that Call of Duty is so important to the video game market, that if Microsoft were allowed to buy it, it would foreclose, AKA, harm competition in that market.

Before Brad Smith got publicly and directly involved, Microsoft was already trying to hammer out a deal with Sony. Specifically, Microsoft had been offering a ten year contract with Sony so that they could both have Call of Duty games on their platforms, with parity for features and release dates.

We now know that there is a particular detail in Sony’s current deal with Activision for Call of Duty that they don’t expect to replicate when Microsoft takes control of the company. As Sony themselves revealed, they receive a discounted third party margin for every copy of Call of Duty that is sold under PlayStation. In other words, they get a higher percentage of sales from Activision than Microsoft or Valve does.

The back and forth between the two companies has heated up in the past few months, but last week, there was speculation that Microsoft executives took a flight to Seattle, after meeting with the CMA in London, to directly negotiate a deal with Sony.

Some had expressed doubts that this was sufficient proof that they even met Sony at all that day, but it is an indication of how much interest there is in this deal. If Sony finally concludes that they can no longer stop or delay the deal, they are likely to make a deal with Microsoft themselves. If they are waiting for Microsoft or regulators to make that deal for them, that would be a foolish gamble as they can lose so much more than what Microsoft is willing to offer now.