Free Access To Email Exclusive ContentGet notified and be the first to know when new & hot content drops
HomeBusiness NewsActivision Blizzard to Sell Streaming Rights to Ubisoft in Effort to Secure...

Activision Blizzard to Sell Streaming Rights to Ubisoft in Effort to Secure Microsoft Acquisition

Date:

In a bid to overcome regulatory hurdles, video game developer Activision Blizzard (ATVI.O) has unveiled a strategic move to sell its streaming rights to Ubisoft Entertainment (UBIP.PA). This maneuver is part of Activision’s renewed efforts to gain approval from Britain’s anti-trust regulator for its proposed $69 billion acquisition by tech giant Microsoft (MSFT.O).

Microsoft’s ambitious acquisition plan, announced in early 2022, faced significant opposition from Britain’s competition regulator due to concerns over the potential dominance of the nascent cloud gaming market by the American computing powerhouse. After prolonged negotiations and discussions, the Competition and Markets Authority (CMA) reaffirmed its decision to block the deal, prompting Microsoft to revise its terms.

Under the revised agreement, Microsoft will be prohibited from exclusively releasing Activision games such as “Overwatch” and “Diablo” on its own cloud streaming service, Xbox Cloud Gaming. Additionally, Microsoft won’t have exclusive control over the licensing terms for competing services. Instead, Ubisoft, a prominent French gaming rival, will acquire the cloud streaming rights for Activision’s existing PC and console games, as well as any upcoming titles released by Activision over the next 15 years. This arrangement will apply globally, except for Europe, where the original terms were accepted by Brussels.

In Europe, Ubisoft will gain a non-exclusive license for Activision’s gaming rights, enabling it to offer these games within the region. Industry experts and legal professionals expressed optimism about the revised deal’s chances of approval. Tom Smith, a partner at law firm Geradin Partners and former legal director at the CMA, noted, “The process has been torturous, and there’s still possibly scope for the wheels to come off, but we shouldn’t expect Big Tech deals to sail through nowadays,” in a conversation with Reuters.

See also  September Job Surge: U.S. Employment Rises Sharply, But Wage Growth Slows

Microsoft issued a statement indicating its belief that the new proposal represents a “substantially different” approach, with expectations for CMA review by October 18. The CMA confirmed it would evaluate the new terms using its customary Phase 1 process, with the conclusion expected by the same date. Should competition concerns persist, a more extensive Phase 2 examination could follow.

The deadline for the deal, originally set in stone, has been extended by three months to accommodate the extended regulatory process. Alex Haffner, competition partner at UK law firm Fladgate, suggested that Microsoft’s decision to propose the new terms implies confidence in their ability to gain CMA approval by the revised deadline.

CMA Chief Executive Sarah Cardell reaffirmed the regulator’s commitment to fostering open and effective competition in the growing cloud gaming market. She stated, “Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”

The pivotal concession by Microsoft signifies a triumph for the CMA’s rigorous stance on tech deals, particularly in the post-Brexit era. Notably, the Federal Trade Commission in the United States also expressed reservations about the acquisition, though its efforts to block the deal proved unsuccessful. Conversely, the European Union approved the acquisition, accepting Microsoft’s commitments to license Activision’s games to other platforms.

The CMA’s initial decision to block the deal was followed by a reopening of the investigation in July, sparked by Microsoft’s assertion that agreements with the European Union and Sony constituted material changes. Despite these amendments, the CMA maintained its opposition, prompting Microsoft to reevaluate the terms.

See also  Naira loses Value as CBN Floats the Foreign Exchange Market and How it Affects the Common Nigeria People

Microsoft revealed that Ubisoft would obtain the rights through a combination of a one-time payment and a market-based wholesale pricing mechanism. This mechanism includes an option to determine pricing based on usage. Following the announcement, Ubisoft’s shares experienced a surge of over 7%, making it the leading gainer on the pan-European STOXX 600 index.

The gaming industry and regulatory landscape eagerly anticipate the CMA’s review of the restructured deal, which will play a pivotal role in shaping the future of cloud gaming competition and innovation.

Free Access To Email Exclusive ContentGet notified and be the first to know when new & hot content drops

Trending

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Recommended for you