By Reuters | Updated: 27 May 2023

Microsoft is challenging Britain’s decision to block its $69 billion takeover of Call of Duty maker Activision Blizzard on the grounds of “fundamental errors” in the assessment of Microsoft’s cloud gaming services.

Britain’s anti-trust regulator, the Competition and Markets Authority (CMA), vetoed the deal in April, saying it could hurt competition in the nascent cloud gaming market.

Microsoft confirmed on Wednesday it had filed an appeal against the ruling to the Competition Appeal Tribunal (CAT), and a summary of its arguments was published on Friday.

It said the CMA’s conclusion that the deal would lead to a substantial lessening of competition in the United Kingdom’s cloud gaming market was wrong, according to the summary.

The CMA “made fundamental errors in its calculation and assessment of market share data for cloud gaming services”, Microsoft will say at the Competition Appeal Tribunal.

Microsoft set out five grounds for appeal in total.

The CMA’s shock decision to block the biggest ever deal in gaming drew a furious response from both companies.

Last week, Microsoft evaded a potential early legal obstacle in its $69 billion (nearly Rs. 5,71,730 crore) deal to acquire Call of Duty video game maker Activision Blizzard, when a US judge refused to allow gamers in a private suit to preliminarily block the acquisition.

The private plaintiffs sued Microsoft in California federal court in December to enjoin the deal, which they called harmful to competition.

US District Judge Jacqueline Scott Corley in San Francisco federal court said in a ruling issued late on Friday night that the video gamers had not shown they would be “irreparably harmed” if the merger were allowed to proceed before she rules on the merits of their case.

© Thomson Reuters 2023

By Reuters | Updated: 23 May 2023

Online gaming companies will be required to deduct taxes at source if players claim their net winnings, including bonuses or incentives, according to guidelines issued by the Central Board of Direct Taxes.

However, bonuses or incentives will not be taxed if they are not claimed or withdrawn, the agency said.

Net winnings will be calculated by subtracting the amount withdrawn by a customer from the sum total of deposits in the account and opening balance at the beginning of the year.

The net winnings of a player on online gaming platforms are currently taxed at 30 percent.

Online gaming companies will not be required to deduct taxes on winnings withdrawn by a player if the amount is less than Rs. 100 ($1.22) a month.

Back in December 2022, it was reported that a panel of state finance ministers were yet to submit its report on taxation of the booming online gaming sector which is crucial to a final decision on how the levies should be imposed.

The panel deliberated for weeks on how it should tax online gaming companies — and whether federal tax should be imposed on only the profits of firms or on the value of the entire pool of money collected from participants.

At the time, officials said the panel was unlikely to reach a consensus in December.

Real-money online games have become hugely popular in the country, prompting foreign investors like Tiger Global and Sequoia Capital to back local gaming startups Dream11 and Mobile Premier League, popular for their fantasy cricket games.

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By Reuters | Updated: 18 May 2023

Take-Two Interactive Software on Wednesday beat analyst estimates for quarterly adjusted sales on strong demand from legacy titles NBA 2K and Grand Theft Auto, sending the video game publisher’s shares up 8 percent in extended trading.

The company also said it expects to deliver 36 video game titles through 2025 and 2026, and forecast $8 billion (roughly Rs. 65,975 crore) in 2025 net bookings and over $1 billion (roughly Rs. 8,250 crore) in operating cash flow.

Wedbush analyst Michael Pachter said “that’s enough to send the stock higher”.

Take-Two, however, did not make any announcements about its highly anticipated title Grand Theft Auto VI.

Its results follow an upbeat performance from peer Electronic Arts and Call of Duty maker Activision Blizzard, confirming signs of the video gaming industry rebounding from a sluggish 2022 due to decades-high inflation.

Take-Two has established itself as one of the dominant players in the US with strong sales from its successful video game franchises and a solid pipeline including titles like Star Wars Hunters.

Its fourth-quarter adjusted sales grew 65 percent to $1.39 billion (roughly Rs. 11,467 crore), compared with Wall Street’s estimate of $1.34 billion (roughly Rs. 11,055 crore), according to Refinitiv data. But the company missed profit estimates, on acquisition-related charges.

During an earnings call with analysts, Chief Executive Strauss Zelnick said Take-Two was assuming a continuation of the current challenging consumer backdrop within its forecast.

Its annual adjusted revenue forecast between $5.45 billion (roughly Rs. 44,965 crore) and $5.55 billion (roughly Rs. 45,790 crore) came below Street’s estimate of $6.07 billion (roughly Rs. 50,090 crore).

“Additionally, the development time lines of some of our titles lengthened especially as we strive to redefine the creative standards of excellence of our industry, which affect our release slate for the year,” Zelnick added.

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By Reuters | Updated: 9 May 2023

Nintendo on Tuesday said it sees a further slide in sales of its aging Switch console to 15 million units in the financial year to end-March 2024, a 17 percent annual drop that would mark a third consecutive year of decline.

The Kyoto-based gaming firm acknowledged the slowing demand for Switch, now in its seventh year on the market, even as supply chain snarls have eased and the company bolsters its games lineup.

“It’s difficult for Switch hardware and software sales to maintain the same pace,” Nintendo President Shuntaro Furukawa told a press conference, adding that he still sees room for new users to come to the hybrid home/portable device.

With Switch sales slowing, investor attention is focused on a potential successor to the device, which has sold more than 125 million units.

“Based on the guidance, it is crystal clear the launch of a Switch 2 or entirely new piece of hardware can be ruled out this fiscal year,” said Serkan Toto, founder of the Kantan Games consultancy.

The robust appeal of Nintendo’s roster of characters has been underscored in recent weeks by the box office success of The Super Mario Bros. Movie, which is helping the company diversify beyond its core console business.

The movie has outperformed expectations, Furukawa said.

On Friday Nintendo launches The Legend of Zelda: Tears of the Kingdom, one of the most widely anticipated games of the year. Orders for the game are progressing well, Furukawa said.

Meanwhile Nintendo said operating profit fell 15 percent year-on-year to 504.38 billion yen ($3.73 billion) in the year ended March. The company forecast profit will fall 11 percent to 450 billion yen for the current financial year.

© Thomson Reuters 2023

By Press Trust of India | Updated: 3 May 2023

Finance Minister Nirmala Sitharaman on Tuesday said the GST Council is deliberating on taxation policy for online gaming and exuded confidence that the sector will attract investment once it is finalised.

She was responding to a question from a Korean gaming company Krafton on what are India’s plans to attract foreign investment in gaming companies.

The minister said the discussion is going on at the ministerial level in the GST Council into various aspects of online gaming, including taxation and regulation.

The Goods and Services Tax Council is chaired by Sitharaman and comprises finance ministers of states.

“Once the policy certainty arrives, taxation becomes more … clear, it will attract investors,” Sitharaman said while addressing the Indian diaspora in Seoul.

Online gaming witnessed a spurt during the time of the Covid lockdown, with the number of users in India rising substantially. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.

The vexed issue of levying Goods and Services Tax (GST) on online games has been hanging fire for nearly two years now with many states pitching for a lower tax rate on those online games which require skill. They are of the opinion that games of skill should not be treated at par with games of chance.

A final decision on the taxation on online gaming is expected to be taken by the GST Council in its next meeting, which is likely either this month or in June.

Last month, the Ministry of Electronics and IT notified norms for the online gaming sector, which categorically prohibits all such games involving betting and wagering.

The online gaming sector will follow a self-regulation model and will initially notify three self-regulatory organisations (SROs) that will approve the games that can operate in the country as per the rules.

Responding to Krafton’s question, Sitharaman, in a lighter vein, said she likes to watch memes and also animes of Japan and Korea.

“I’d love them to come to India…The mastery with which the story weaving happens, there is so much positivity…That’s what we want for adults today,” she said. PTI DP JD CS The correspondent is in Seoul on invitation of Asian Development Bank (ADB).

By Reuters | Updated: 28 April 2023

A new game released by Genshin Impact developer miHoYo this week has become China’s top downloaded app, reflecting pent-up demand as gaming giants restart flagship launches with a crackdown on the industry easing.

The blockbuster debut bodes well for several other games due to launch this summer in the world’s largest video games market.

As of Thursday, the Shanghai-based company’s strategy game “Honkai: Star Rail”, where anime characters battle space monsters, had amassed 20 million downloads across smartphones and personal computers, miHoYo said.

The game scored more than 1.6 million downloads on smartphones in China within five hours after it was published on Wednesday, according to data firm App Magic, and had garnered 5.8 million downloads on smartphones worldwide.

It has also become the most downloaded game on Apple’s devices across 21 different markets including the US and Japan, according to another data firm SensorTower.

“It’s already broken records by reaching no. 1 on the iOS game download chart in more countries than any prior game,” Niko Partners analyst Daniel Ahmad said on Twitter.

Honkai: Star Rail has already surpassed 20 million downloads, just 1 day after its release.

This is the latest title from Genshin Impact developer miHoYo for those unaware.https://t.co/L6piWjrigY pic.twitter.com/jkytwNbVbS— Daniel Ahmad (@ZhugeEX) April 28, 2023

“Honkai: Star Rail” received its publishing license from Beijing in January, after authorities ended a suspension on game approvals, imposed in 2021 after the sector was accused of fueling gaming addiction among the country’s youth.

Regulators resumed handing out game approvals in April 2022, including for flagship titles from industry giants Tencent Holdings and NetEase which are now gearing up for big summer launches.

“2023 is set to be a strong growth year for Chinese gaming companies, especially those that have obtained licenses for blockbuster titles,” said Ivan Su, analyst at Morningstar.

Tencent, the world’s largest gaming company that was a major target of the crackdown, in February released a new shooting game called “Undawn” that featured US movie star Will Smith as its ambassador. The game has raked in more than $20 million (roughly Rs 163 crore) since launch.

It is scheduled to test action game Valorant in May ahead of its official release this year. Tencent will invest in launching an esports league in China for the game.

“Honkai: Star Rail” comes nearly three years after privately-owned miHoYo released its last flagship game Genshin Impact, an action game that made more than $4 billion (roughly Rs. 32,700 crore) in revenue by 2022, according to SensorTower, making it one of the world’s most profitable games.