Microsoft Says Xbox Has "Lost The Console Wars" As Part Of FTC Arguments

Microsoft has begun defending its plan to acquire Activision Blizzard in front of the Federal Trade Commission. As part of its strategy, the company says that it has lost the "console war" against Sony and Nintendo. While the industry is dominated by the big three, Microsoft claims to be in a very distant third place when compared to its rivals.

"Xbox has lost the console wars, and its rivals are positioned to continue to dominate" Microsoft argued in its court filing (via The Verge), adding that Xbox had 16% of console sales in 2021, and overall, a console install base of 21%.

"In 2001, Microsoft entered the gaming industry with the launch of its first Xbox video game console, in competition with established incumbents Sony and Nintendo. In that 'generation,' Sony and Nintendo outsold Xbox by a significant margin. With every succeeding generation over the 20 years since, Sony, Nintendo, and Xbox have remained the three major console producers, and have been engaged in what the industry refers to as the 'console wars.'"

Microsoft added that "Sony is the dominant player in consoles" and that its consumer base was consistently higher than Xbox across multiple generations. "Xbox's console has consistently ranked third (of three) behind PlayStation and Nintendo in sales," Microsoft explained.

Historically, Microsoft has always remained tight-lipped over exact sales figures for Xbox, but since it declared its intent to purchase Activision Blizzard for $68.7 billion, more details about the inner workings of Xbox have slowly been revealed as part of its applications to various global regulatory bodies.

While numerous countries have approved the deal, Microsoft faces stiff opposition in the UK and the US. This week is the start of a five-day hearing into Microsoft's proposed acquisition as the FTC attempts to block the merger, and recently, a federal court issued a temporary restraining order against the company until it can consider a preliminary injunction. The UK's Competition and Market's Authority has blocked the merger, but that decision is now being appealed by both Microsoft and Activision Blizzard.