Activision has put forward an interesting theory about cloud gaming, on which they clearly disagree with with Microsoft.
On pages eight to nine of the CMA document titled ACTIVISION BLIZZARD’S RESPONSE TO THE PROVISIONAL FINDINGS, dated March 2, 2023, Activision elaborated on why they believe, in their own words, “Cloud gaming will be taken over by the power of local processing.” In their own words:
Activision Blizzard believes that cloud gaming’s relevance, [REDACTED]. The computing power of consumer electronics hardware – in particular mobile phones – is developing so rapidly that it will [REDACTED].
All forms of local processing (e.g. smart TVs, laptops, tablets and phones) have increasingly powerful processing capabilities, making streaming inefficient, unnecessary and undesirable.
Smart TVs today are promoted explicitly to gamers and services such as Utomik promote subscription download of a game to a PC or other device. Today’s iPhones are up to 20x more powerful than ten years ago.
Consumers are, today, very comfortable playing games on their mobile devices: 94% of all gamers globally do so. New game systems are everywhere.”
Activision elaborates further on page 10. In particular, they have strong hopes on the increased power of smartphones.
“Native mobile gaming (i.e. playing a game via an app on a mobile phone) already [REDACTED] in terms of quality of consumer experience, and Activision Blizzard, from its position as an independent company, [REDACTED]. All of the evidence before the CMA supports this.
- Bobby Kotick explained during the CMA Main Parties Hearing that cloud gaming [REDACTED.
- Bobby Kotick also referred to the superiority of local processing in his testimony to the FTC: “[…] [REDACTED]
- Armin Zerza confirmed to the CMA at the Main Parties Hearing that local processing is, in Activision Blizzard’s view, [REDACTED].
If you look at the most powerful smartphones on the market today, such as the Red Magic line or the Samsung S23 Ultra, there is no doubt that these games have grown more than capable of running games with graphics that match those of their console brethren.
However, the most popular and successful games are still built around a lower scale of mobile power, in proportion to how many of their players can play. This also factors in some reasonable guesswork as to which segment of the mobile gaming population the whales are coming from.
Activision could make a version of Call of Duty: Modern Warfare 2 that runs on mobile. After all, they are set to launch a Call of Duty Warzone Mobile. But for now, the audience that would buy that mobile version of their console game would probably not justify it getting produced. Most mobile gamers now expect the free-to-play monetization model, as they value the ability to freely try games out more, than spending less money on a complete package.
But Activision doesn’t think cloud gaming has a place in between all of this. They’ve shown their research to the CMA, which ironically runs counter to Microsoft’s experience. After the transaction, Activision Blizzard may be compelled to work with cloud gaming, and there’s a real possibility they won’t have the enthusiasm to make it work.
But if Microsoft is so confident in their case for buying Activision Blizzard that they’re willing to let Activision air this disagreement out in public, maybe they also believe they have a better plan for cloud gaming than Activision does.
This is certainly one of those curious details that could easily get lost in the back and forth between Sony and Microsoft over the deal. It will be interesting to find out how Microsoft resolves this disagreement with the game studio they’re buying after the deal goes through.
