Sony agrees to a Call of Duty deal with Microsoft

Sony has agreed to a deal for Call of Duty with Microsoft to keep the franchise on PlayStation after the proposed Activision Blizzard acquisition. Microsoft Gaming CEO Phil Spencer says Sony and Microsoft have agreed to a “binding agreement” to keep Call of Duty on PlayStation. It’s not immediately clear if this is a 10-year deal, like Microsoft has signed with Nintendo and other cloud providers.

This ends a bitter battle between the companies that has been waged both privately and publicly over the past year after Microsoft announced its proposed acquisition of Activision Blizzard in January 2022.

The deal could be similar to a 10-year agreement between Microsoft and Nintendo as well as the various deals Microsoft has struck with cloud gaming platforms to bring Call of Duty to rival services, but Microsoft isn’t commenting on the terms of the deal right now.

Sony had resisted signing a Call of Duty deal with Microsoft after the company first offered a 10-year contract in December 2022. Instead, in filings to regulators, Sony has repeatedly maintained that it fears Microsoft could make Call of Duty exclusive to Xbox or even sabotage the PlayStation versions of the game.

But we heard a bombshell email from PlayStation chief Ryan read out in court during the FTC v. Microsoft hearing, revealing that he wasn’t actually worried about Call of Duty exclusivity and was “pretty sure we will continue to see Call of Duty on PlayStation for many years to come.” Microsoft’s lawyers argued Ryan didn’t initially have concerns about the deal and had spoken to Xbox chief Phil Spencer to seek assurances about Call of Duty in January 2022.

The deal comes after months of discussions and counteroffers over the past 18 months between Microsoft and Sony over the future of Activision content on PlayStation. During the FTC v. Microsoft hearing, it was also revealed that an August 26th email from Xbox chief Spencer to PlayStation chief Ryan included a list of Activision games that would remain on PlayStation, and Ryan wasn’t happy:

“It was not a meaningful list. This list represented a particular selection of older titles that would remain on PlayStation, for example Overwatch is on there but Overwatch 2 is not on there, the current version of the game.

This email clearly led to a breakdown in communications between Spencer and Ryan. Just days after it was sent, Spencer told The Verge that Call of Duty would remain on PlayStation “for at least several more years beyond the current Sony contract.” Ryan wasn’t happy about Spencer going public with contract negotiations and said the offer was “inadequate on many levels and failed to take account of the impact on our gamers.”

Ryan also said at the time that he “hadn’t intended to comment on what I understood to be a private business discussion, but I feel the need to set the record straight because Phil Spencer brought this into the public forum.”

Tensions over the fate of Microsoft’s Activision Blizzard deal really came to a head when Jim Ryan spoke to Activision CEO Bobby Kotick on February 21st, 2023 — the same day Microsoft, Activision, Sony, and others were meeting with EU regulators.

Ryan said to Kotick, “I don’t want a new Call of Duty deal. I just want to block your merger.” Jim Ryan confirmed the meeting during testimony in the FTC v. Microsoft hearing. “I told him [Bobby Kotick] that I thought the transaction was anti-competitive, I hoped that the regulators would do their job and block it.” Kotick had apparently wanted to “cover himself” with an extended Call of Duty deal with Sony just in case the Microsoft transaction didn’t go through.

Microsoft has always maintained it would keep Call of Duty on PlayStation, arguing it doesn’t make financial sense to pull the game from Sony’s consoles. Xbox chief Spencer tried to settle the argument in November before appearing in court last month and reiterating, under oath, that Call of Duty would remain on PlayStation 5.

All eyes are now on the regulatory situation in the UK, after Microsoft’s proposed deal was blocked there earlier this year. Microsoft is participating in a case management conference at the UK’s Competition Appeal Tribunal (CAT) tomorrow, alongside the Competition and Markets Authority’s (CMA). The conference has been called “to consider the application made jointly by all parties to adjourn these proceedings pending further discussions between the CMA and Microsoft.”

Both the CMA and Microsoft agreed earlier this week to pause their legal battles to negotiate how the transaction might be modified in order to address the CMA’s cloud gaming concerns. The CMA also warned earlier this week that Microsoft’s proposals may “lead to a new merger investigation” and that discussions with Microsoft were at an early stage.

Despite that, the CMA went on to issue a notice of extension for its overall investigation into the deal, moving the date for a final order from July 18th to August 29th. Microsoft is hoping to close its Activision deal by its July 18th deadline, but it’s possible we’ll see a small delay to the close to allow for the UK situation to be resolved.