Microsoft Admits Xbox Has ‘Lost the Console Wars’ as It Battles for $69 Billion Activision Blizzard Buyout

In its proposing findings of fact submitted on the first day of Microsoft’s court battle with the FTC over the $69 billion acquisition of Activision Blizzard, Microsoft has claimed Xbox has officially “lost the console wars”.

A section of the document, submitted by Microsoft, describes its entry into the gaming industry in 2001, when its original Xbox console was outsold by both Sony and Nintendo by a “significant margin”. And, per Xbox, it hasn’t stopped “losing” the “console wars” ever since.

“Xbox’s console has consistently ranked third (of three) behind PlayStation and Nintendo in sales. In 2021, Xbox had a share of 16% while Nintendo and PlayStation had shares of [redacted] and [redacted], respectively. Likewise for console revenues and share of consoles currently in use by gamers (‘installed base’), Xbox trails with 21% while PlayStation and Nintendo have shares of [redacted] and [redacted], respectively.”

“Xbox’s console has consistently ranked third (of three) behind PlayStation and Nintendo in sales.”

Microsoft goes on to argue that as a result, it is “betting on a different strategy” by generating profit through game sales rather than console sales and selling its consoles at a loss, “effectively subsidizing gamers’ purchase of the hardware in hopes of making up the revenue through sales of games and accessories.”

All of these arguments are part of a much larger set-up in Microsoft’s defense against the FTC, which seeks to pause its $69 billion acquisition of Activision with a preliminary injunction, which Microsoft is battling against in court this week. If the injunction passes, it would halt the deal until an evidentiary hearing on August 2, which falls after the set date for the deal to close on July 18, 2023 and would potentially allow the parties to renegotiate the merger.

The FTC seeks to stop the merger due to concerns it would allow Xbox to dominate the games market in part by making games such as Call of Duty Xbox-exclusive, something Microsoft has vehemently denied it would do.

Microsoft, meanwhile, is arguing its status as the third-place gaming console makes the merger necessary to cement itself as a viable competitor at all with rivals such as Sony and Nintendo.

We’ll be covering the trial here on IGN to its conclusion, including daily recaps and news from all the newly-released documentation.

Rebekah Valentine is a senior reporter for IGN. You can find her on Twitter @duckvalentine.