The proposed $69 billion acquisition of Activision Blizzard by Microsoft has led to a legal tussle with the Federal Trade Commission (FTC). The focus of the dispute is on Xbox, but on day two of the proceedings, the Nintendo Switch was brought into the fight as well. The FTC has been arguing that the Switch is a different platform and experience from the Xbox Series X and PlayStation 5, and hence not part of the same market. They have compared the technical capabilities of the devices, including their framerate and GPU teraflops, to make their point.
However, Phil Spencer, the head of gaming at Microsoft and Xbox chief, has contested the FTC’s claim. He called it “incorrect” to say that “Nintendo isn’t a competitor” because it occupies the same space and hosts the same and similar third-party content. He pointed out that Microsoft has already entered into 10-year deals with several parties, including Nintendo, to host Call of Duty on their respective platforms if the acquisition is approved. This clearly shows that Nintendo and the Switch are in the same market as Sony and Xbox.
The Dominance of the Nintendo Switch
The FTC’s argument that Nintendo won’t be impacted like PlayStation by the acquisition is not convincing, given the dominance of the Nintendo Switch. Since its arrival in 2017, the hybrid system supporting both console and handheld play has sold over 125 million units as of March 2023, with software sales surpassing the billion mark in May of this year. This makes it a strong competitor, even if Nintendo chooses not to directly compete with the high-end specs and games on Microsoft and Sony’s systems.
In April of this year, the UK’s Competition and Markets Authority (CMA) suggested that the Switch was not “technically capable” of running Call of Duty games. This claim is amusing given the number of “impossible ports” that have been released during the Switch’s lifetime. Moreover, past Nintendo systems, including the Wii U, have had CoD games released on them.
The FTC’s argument that the Nintendo Switch is not part of the same market as Xbox and PlayStation 5 does not hold water. Microsoft’s deals with Nintendo and the dominance of the Switch in the video game hardware space make it clear that Nintendo is a strong competitor.