Microsoft insists Game Pass prices ‘will not increase as a result of Activision merger’

Microsoft has sought to reject any proposals it might make Xbox Game Pass prices should merge with $69 billion Activision Blizzard accept.

After releasing its preliminary findings on the proposed deal last month, the UK’s Competition and Markets Authority expressed concern that Microsoft could decide to raise the prices of its Game Pass subscription plans following the popular addition. Activision contents.

“Subscription prices can easily be revised, and Microsoft may have an incentive to do so when it adds content as popular as Activision’s, including CoD,” it suggested.

However, in a recently released response to the CMA’s findings, Microsoft said it would not raise Game Pass prices due to the loss of business, arguing that doing so would be counterproductive as it would lead to a drop in subscribers.

“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 games coming to Game Pass on a daily basis,” it wrote. “This is especially important because Game Pass will continue to be limited by B2P [buy to play].”

Microsoft went on to point out that it had not raised Game Pass prices since the popular launch Bethesda content to the service after it has purchased the publisher’s parent company ZeniMax Mediawhich took ownership of franchises such as The Elder Scrolls, Fallout, Doom and Dishonored.

“A merger between Activision and Microsoft leads to the classic elimination of the double marginalization effect, because Microsoft can acquire these games (potentially) at a price and has incentives to distribute them more widely and increase Game Pass revenue relative to the game. On a counterfactual level. To increase revenue, Microsoft must offer Game Pass at a lower price, qualitatively at a customized price.

“This is exactly what Microsoft has done when it has previously added content to Game Pass with, for example, the ZeniMax deal, which led to additional content, but did not increase Game Pass subscription prices. This is especially true because Game Pass users are price sensitive and an increase in the price of Game Pass would affect to all users, even those who don’t appreciate or play CoD.

“Game Pass subscribers can cancel at any time after a month of playing,” Microsoft continued. “Since CoD games are only released once a year, any impact would be short-lived, as players who wear out their enthusiasm for a new CoD version in a few months will be knocked over by the higher price.

“Then any price increase would be counterproductive because it would increase subscriber churn. This is completely inconsistent with the provisional view of the rationale behind the Microsoft merger.”

Sony has claimed in the past that if Microsoft and Activision are allowed to merge, their combination would significantly weaken PlayStation’s ability to compete with Xbox and would allow Microsoft to “increase the price of consoles and games for Xbox users (including those who switched from PlayStation); increase the price of Game Pass; and reduce innovation and quality”.

Elsewhere in its response to the CMA’s regulatory findings, Microsoft said it believed Call of Duty: Warzone and Modern Warfare 2 can be optimized to run natively on Nintendo Switch.

The CMA is due to issue a decision on the deal by April 26.