Microsoft's Xbox claims defeat in console wars amidst FTC battle over Activision acquisition

Microsoft is locked in a court battle with the FTC over its proposed $69 billion acquisition of Activision Blizzard, where it boldly claims that Xbox has officially "lost the console wars." The submission to the court reveals that Xbox has consistently ranked third in sales since its entry into the gaming industry in 2001, trailing behind Sony's PlayStation and Nintendo consoles.

Citing market data, Microsoft highlights the significant disparity in market shares. In 2021, Xbox held a 16% share, while the exact figures for Nintendo and PlayStation remain undisclosed. The trend persists in terms of console revenues and user base, with Xbox capturing only 21% of the market.

To counter its third-place position, Microsoft has adopted a strategy focused on generating profits through game sales rather than console sales. The company acknowledges selling its consoles at a loss to make them more affordable for gamers, aiming to offset the loss through game and accessory sales.

These arguments form the crux of Microsoft's defense against the FTC's attempt to halt the Activision acquisition with a preliminary injunction. Microsoft is currently contesting the injunction, seeking to avoid a temporary suspension of the deal until an evidentiary hearing on August 2. The outcome of the court battle could potentially allow for renegotiation before the scheduled closing date of July 18, 2023.

The FTC's concern centers around Xbox potentially dominating the games market by securing exclusive titles like Call of Duty. However, Microsoft vehemently denies such intentions, asserting that the merger is vital for establishing itself as a competitive player against Sony and Nintendo, considering its perpetual third-place position in the console market.