Tom Warren

“Mobile is the largest, it’s about 70 percent” of the overall $150 billion gaming market. PC gaming is around $33 billion, console gaming at $28 billion. Xbox is “less than half a percent of mobile gaming revenue,” says Dr. Bailey. “Activision Blizzard is also very small in mobile gaming. So combined, they’ll have 3.8 percent of mobile gaming.”

That’s the opposite of what we heard from Dr. Lee earlier, and even Judge Corley described Call of Duty as a unicorn previously. Dr. Bailey says Dr. Lee’s markets are “too narrow” and that the merger will expand the reach of content.

“Did Activision agree to make these games available?” asks the FTC. “We worked with a contact at Blizzard, they were supportive of the games being available during beta.” Call of Duty games were also on GeForce Now during beta and were “one of the more popular games on the service.”

“We’ve found over time that we get closer and closer to the quality of playing locally. Our cloud gaming servers are more powerful than consoles, so we’re able to run higher frame rates and add more visual effects.”

In terms of latency improvements, Eisler says:

“Well, one one way is that we’ve improved the frame rate, so originally it was 30 frames per second and then we increased it to 60 and then 120 and up to 240.”

Microsoft had previously kept its own games off GeForce Now to not compete with xCloud, but the Xbox maker signed an important deal with Nvidia earlier this year to bring its Xbox PC games to GeForce Now.

• Oh god they’re arguing about the Nintendo Switch again, please make it stop

• Breaking down Dr. Lee’s models

• Will Microsoft make Activision games exclusive?

• Will Call of Duty be removed from PlayStation?

• Will Microsoft block Activision content on rival cloud and subscription services?

• Cloud with a chance of competition

Microsoft acquiring Activision content could have an impact on smaller cloud gaming services and emerging ones.

“The role that smaller entrants have can be greater than in other mature markets because if they can’t get access to content then harm from foreclosure could be magnified in the future,” says Dr. Lee.

The European Commission agreed a free license to consumers in EU countries that would allow them to stream via “any cloud game streaming services of their choice” all current and future Activision Blizzard PC and console games that they have a license for. Cloud providers will also be offered a free license to stream these games in EU markets. Microsoft has already claimed it will apply this automatic offer globally, but the FTC has largely dismissed Microsoft’s potential cloud agreements.

“It’s more likely because of the merger than absent the merger to engage in foreclosure of Activision content for library services and cloud streaming services,” says Dr. Lee.

So why didn’t Dr. Lee include cloud and subscriptions in his modeling? “Both are relatively nascent and new compared to console, and the lack of really good data for these services made it very difficult to perform something that I would review as reliable.”

Judge Corley wants to know about subscriptions being a separate market, as the FTC argues, because “aren’t they just a different way to pay for the same games?” Dr. Lee compares Xbox Game Pass to something like Netflix and whether Microsoft might be incentivized to raise prices if it has key content like Activision’s games and whether consumers would switch to another subscription or buy games individually.