Microsoft may lose $1 billion a year making Call of Duty exclusive

Based on Activision-Blizzard's recent financials, Microsoft may lose out on over $1 billion in sales revenue if it keeps Call of Duty off of PlayStation hardware.

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Recent financials show that making Call of Duty exclusive to Xbox platforms will have a significant material impact on earnings and revenues generated by Activision. Microsoft could lose out on over $1 billion in revenues, and Sony in turn could lose out on some $500 million every year. That's not a whole lot of loss for Sony, who has made $10.2 billion in FY21 so far, but it's not nothing either.

This could lead to the FTC making a provision in the Activision-Blizzard buyout mandating Microsoft to keep Call of Duty cross-platform in perpetuity.

A quick look at Activision-Blizzard's recent annual report shows some interesting figures.

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The totals for 2021's revenues from customers, for example, were as follows:

• Apple - $1.496 bn
• Google - $1.496 bn
• Sony - $1.320 bn
• Microsoft - <$880 m
• Total - $5,192 from top customers (does not include Nintendo, or retailers like Best Buy, Walmart, etc)

So we know that Activision made $1.320 billion from Sony in 2021. That's after the revenue split that Sony takes.

A bit of math reveals how much Sony kept. While it's likely Sony gives Activision-Blizzard a negotiated cut of revenues, let's just say that Sony applies the standard 70-30 split, with Sony keeping 30% of revenues.

Activision received $1.320 billion from Sony in 2021. That means the actual value was about $1.885 billion.

Based on this, Sony kept roughly $565.71 million for itself. If Microsoft makes Call of Duty exclusive to Xbox, Sony will not get these kinds of revenues. We don't know how much of this is from Call of Duty, but a good portion of it likely is.

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Activision also confirmed that it made $2.637 billion in console platform revenues. Thus, Sony made 50% of console revenues for 2021.

Most of Activision-Blizzard's 2021 console revenues were from the Activision segment, which made $2.502 billion in the year. Blizzard, on the other hand, made up $135 million.

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While we don't know how much Sony made just from Call of Duty, we do know other data, Activision says that 3 of its top franchises, Call of Duty, Candy Crush, and Warcraft, made up 82% of its consolidated 2021 net revenues. This equals to roughly $7.22 billion.

Only 1 of Activision's top 3 franchises are available on Sony platforms--Call of Duty. Since we don't know the % split between these franchises, we can't extrapolate proper relation data (remember, I am referring to Activision's segment, which does not include Blizzard games).

But it is fair to say that most of Sony's paid-out revenues were from Call of Duty, especially since other franchises like Overwatch and Diablo made less than 10% of net revenues.

Smaller franchises available on Sony's platforms include Overwatch, Diablo, Tony Hawk Pro Skater, and Spyro.