Shares of French video game publisher Ubisoft Entertainment climbed by 7.3% following Microsoft’s announcement that it would transfer various gaming rights to Ubisoft. This move is a component of a fresh deal presented to British regulators as part of Microsoft’s acquisition of Activision Blizzard.
Microsoft, is making changes to its planned deal with Activision Blizzard. They’re transferring the rights for cloud gaming of both current and upcoming games from Activision Blizzard to Ubisoft. This adjustment is happening because UK regulators are worried about how Microsoft’s $68.7 billion acquisition could harm competition in cloud gaming. This led to a new investigation in the UK, which might last until October 18th.
Brad Smith, Microsoft’s President, said they are addressing concerns from the UK Competition and Markets Authority (CMA) about the impact of the merger on cloud game streaming. They are restructuring the deal to have fewer rights.
This involves a contract that transfers cloud streaming rights for all existing and upcoming Activision Blizzard games for PC and consoles, over the next 15 years, to Ubisoft Entertainment SA. These rights will be in place indefinitely.
With this new setup, Microsoft, if completes the acquisition, they won’t be able to exclusively release Activision Blizzard games only on Xbox Cloud Gaming. They also won’t have complete control over licensing conditions for these games on other platforms. Ubisoft will take care of streaming privileges for Activision Blizzard games outside of the EU, then license the titles back to Microsoft for Xbox Cloud Gaming.
Microsoft’s Activision Blizzard Acquisition and Ubisoft Partnership
Brad Smith explained that Ubisoft will pay Microsoft for the cloud streaming rights to Activision Blizzard’s games. This payment will be a lump sum and a pricing mechanism based on market standards, even including an option tied to actual usage.
This arrangement also allows Ubisoft to potentially offer Activision Blizzard’s games on cloud gaming platforms that don’t use Windows.
Ubisoft plans to include Activision Blizzard games in its Ubisoft Plus Multi Access subscription. This subscription works on platforms like PC, Xbox, Amazon Luna, and PlayStation through Ubisoft Plus Classics.
The UK’s CMA initially stopped Microsoft’s acquisition in April due to cloud gaming worries. Following a setback for the Federal Trade Commission (FTC) in a US court last month, the CMA talked with Microsoft.
Now, with Microsoft’s new deal structure, the CMA has started a new investigation phase. There’s a deadline of October 18th for this phase, matching the recent extension of the deal closing date with Activision. Someone familiar with Microsoft’s plans told The Verge that the Activision Blizzard deal might not be finished before the start of October.
The CMA has officially prohibited Microsoft’s initial agreement and is looking into the new proposal for acquiring Activision Blizzard.
The CMA noted that Ubisoft can require Microsoft, for a fee, to make Activision’s games compatible with operating systems other than Windows, like Linux. This would happen if Ubisoft chooses to use or license the cloud streaming rights for non-Windows cloud gaming services.
However, this change won’t affect Microsoft’s obligations to the European Commission. Microsoft has made other cloud gaming agreements and EU regulators approved the Activision Blizzard deal, thanks to a license that lets consumers in EU countries stream all current and future Activision Blizzard PC and console games on any cloud gaming service they want.
Regulatory Assessment and Decision Timeline
“The deal with Ubisoft has been designed so that Microsoft still has the rights necessary to meet its legal commitments to the European Commission and its existing contracts with other cloud gaming providers, including Nvidia, Boosteroid, Ubitus, and Nware,” Brad Smith explained.
Over the next few weeks, the CMA will evaluate the new agreement and make a decision by the October 18th deadline. Sarah Cardell, the CMA’s Chief Executive, emphasized that this evaluation doesn’t mean the deal is approved.
The CMA plans to thoroughly review the details of the new agreement and its impact on competition. This assessment will consider input from external sources too. Cardell restated that the CMA’s main goal remains unchanged: ensuring that any decision maintains a competitive environment that encourages innovation and choice in the expanding world of cloud gaming.
Conclusion
In response to Microsoft’s altered agreement, Ubisoft’s shares rose by 7.3%. This change is part of Microsoft’s strategy to secure regulatory approval for its acquisition of Activision Blizzard. The company’s restructuring aims to address UK regulators’ concerns over competition in cloud gaming. The regulatory process will continue, and the outcome will influence the future of cloud gaming innovation and options.
