Sony's Jim Ryan: Kotick asked to negotiate Call of Duty to 'cover himself' if merger fails

Sony Interactive Entertainment CEO Jim Ryan tells federal courts that he believes Activision CEO Bobby Kotick wanted to make a separate side deal to ensure Activision games, including Call of Duty, would continue shipping on PlayStation if the $68.7 billion merger with Microsoft fell through.

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In 2022, the bosses of some of the most powerful forces in gaming came together in Brussels to share their opinions of the Microsoft-Activision merger with the European Commission. Among them was PlayStation CEO Jim Ryan and Activision CEO Bobby Kotick, two men that have enjoyed a prolonged business relationship that has spiraled upward into a multi-billion dollar arrangement.

In private, Ryan allegedly told Kotick:"I don't want a new Call of Duty deal. I just want to block your merger." Now in today's recent evidentiary hearing in the FTC v Microsoft federal case, Ryan clarifies on what led up to that eye-opening statement.

It turns out that the Activision CEO wanted to stay behind and talk to Ryan about a potential Call of Duty deal. Ryan says this didn't concern the Call of Duty deal (the 10-year Call of Duty licensing deal that Microsoft had offered to Sony). Ryan believes Kotick wanted to make a side deal with PlayStation and negotiate a new Publisher Licensing Agreement (PLA) as a backup plan just in case the Microsoft merger fell apart.

Activision's deal with Sony expires in 2024, so in order to ship new games on PlayStation, Activision will have to negotiate a new deal. This could be problematic, however PlayStation does indeed depend on hundreds of millions of dollars in revenue from Activision games on an annual basis. I've asserted that Microsoft and Sony are likely to agree on mutually beneficial terms and iron out a PLA if the merger goes through. Given the stakes involved, this should also be true for Activision and Sony in the event the merger is not consummated.

Below we have a line of questioning between SIE CEO Jim Ryan and Microsoft lawyer Beth Wilkinson:

Q Did Kotick say he would stay afterwards to talk about negotiating a deal?

He said he was interested in doing a deal. I told him that i thought the transaction was anti-competitive and that i hoped the regulators would block it. My comment was specifically in the context.

I think Kotick wanted to cover himself in negotiating a deal with PlayStation in the event the deal does not go through.

Elsewhere in his testimony, Ryan said that he believed Microsoft would use Call of Duty and other Activision games to harm PlayStation, and also confirmed that select Activision games were not included in the 10-year licensing arrangement that Microsoft had offer Sony, including Blizzard game Overwatch 2.

Ryan also says that Activision CEO Bobby Kotick made a separate assertion that "Call of Duty would continue to be made on PlayStation," matching up with early comments from Phil Spencer that were made shortly after the acquisition plans were announced.

The PlayStation CEO goes on to clarify that he had never asked Bobby Kotick to make Call of Duty game releases exclusive to PlayStation, however it's worth noting that Sony does have a substantial multi-year contract on exclusive Call of Duty content.

It remains to be seen what a non-merger deal would look like between PlayStation and Activision, and it's worth mentioning that Activision has used its superior advantageous as the top independent non-Chinese game publisher in order to negotiate an 80-20 revenue split with Microsoft, with 80% in Activision's favor.