In a bid to secure approval for the video gaming industry's largest-ever merger, Microsoft has undertaken a significant restructuring of its proposed acquisition of Activision Blizzard. The move comes in response to concerns raised by regulatory authorities in the UK regarding competition in the cloud gaming market.
The Restructured Deal:
Microsoft's President, Brad Smith, announced the restructuring of the deal to address the concerns raised by the UK Competition and Markets Authority (CMA). The revised agreement includes transferring the cloud streaming rights for all current and future Activision Blizzard PC and console games over the next 15 years to Ubisoft Entertainment SA, a prominent global game publisher. Notably, these rights will be perpetual.
Impact on Exclusive Rights:
One of the significant consequences of this restructuring is that Microsoft will no longer have the exclusive rights to release Activision Blizzard games on Xbox Cloud Gaming. Additionally, the control over licensing terms for these games on rival platforms will shift away from Microsoft. Instead, Ubisoft will be responsible for managing the streaming rights to Activision Blizzard games outside of the European Union.
Compensation and Licensing:
Ubisoft's involvement in this revised deal includes compensating Microsoft for the cloud streaming rights to Activision Blizzard's games through a one-time payment and a market-based wholesale pricing mechanism. This pricing mechanism may also include options based on usage. Furthermore, Ubisoft gains the opportunity to offer these games to cloud gaming services operating on non-Windows operating systems.
Ubisoft Plus Multi Access Subscription:
Ubisoft plans to add Activision Blizzard games to its Ubisoft Plus Multi Access subscription service. This move will extend access to these games across various platforms, including PC, Xbox, Amazon Luna, and even PlayStation via Ubisoft Plus Classics.
The UK's Regulatory Stand:
The UK's Competition and Markets Authority (CMA) initially blocked Microsoft's original deal in April, citing concerns about cloud gaming competition. Following negotiations and a US federal court ruling, the CMA initiated a new investigation phase due to Microsoft's restructured deal. A statutory deadline of October 18th has been set for the CMA's decision.
Obligations to the European Commission:
Importantly, Microsoft's obligations to the European Commission remain unaffected by this restructuring. The European Union approved the Activision Blizzard deal with certain commitments, ensuring consumers in EU countries can access these games through various cloud game streaming services.
Regulatory Challenge Addressed:
Microsoft's restructured deal with Activision Blizzard represents a significant step in addressing regulatory concerns in the UK. The involvement of Ubisoft and the transfer of cloud gaming rights aim to promote competition and innovation in the cloud gaming market. However, the ultimate decision rests with the UK's Competition and Markets Authority, which will continue to assess the deal's impact on competition.
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