Breaking down Dr. Lee’s models.
OK we’re really getting into the weeds of the deal models here from Dr. Lee. This is key, because it’s quantitative analysis of the impact of Microsoft’s deal on competition.
Dr. Lee has two models: share and foreclosure. Both have separate inputs and different data sets and are designed to predict the impact of withholding Call of Duty from PlayStation.
Share model
The share model measures overall North American gen 8 console sales (Xbox One / PS4) and then applies a likely outcome if Call of Duty was removed from PlayStation.
It predicts that in the console market there would be a share shift of 8.9 percentage points, based on past sales data of Xbox One and PS4 consoles.
This share model uses only North American market data and no assumed conversion rate. The share model doesn’t predict content library share shift, nor cloud gaming.
Foreclosure model
The foreclosure model measures global console sales that includes gen 9 (Xbox Series S / X and PS5) to predict the future. Inputs in the foreclosure model aren’t the same as share model, as it has a conversion rate that assumes 20 percent of Call of Duty players would convert to Xbox.
In this foreclosure model it predicts a share shift of 5.5 percentage points. The model is designed to work out at what point the benefits would exceed the cost if Microsoft were to withhold Call of Duty from PlayStation. The foreclosure model doesn’t predict content library share shift, nor cloud gaming.
What does it all mean?!
This is all a little hard to follow precisely as some numbers are being redacted in this deposition as they’re sensitive and Microsoft’s lawyer is drawing diagrams I can’t see. But Microsoft’s lawyer argues that if Dr. Lee is wrong about the 20 percent conversion rate in the foreclosure model, if it was 15 percent then “it doesn’t give Xbox a net positive for an incentive or reason” to withhold Call of Duty.