Microsoft’s Attempted $69 Billion Takeover of Activision Blizzard Takes a Strange Turn as Streaming Rights are Sold to Ubisoft
In a surprising twist, Microsoft has announced that it will sell the streaming rights for popular games such as Call of Duty and Overwatch to rival publisher Ubisoft. This move is part of Microsoft’s final attempt to convince UK regulators to approve its $69 billion takeover of Activision Blizzard.
The decision to sell the streaming rights comes in response to concerns raised by the UK Competition and Markets Authority (CMA) about the potential impact of the acquisition on cloud game streaming. Microsoft President Brad Smith explained in a blog post on August 22 that the company is restructuring the transaction to acquire a narrower set of rights, including transferring the cloud streaming rights for all current and future Activision Blizzard PC and console games released over the next 15 years to Ubisoft.
Ubisoft has confirmed in its own blog post that this means games like Modern Warfare II will soon be added to its Ubisoft+ Multi Access subscription service, as well as its Ubisoft+ Classics add-on for PlayStation users. While these games can still be licensed for Microsoft’s Game Pass subscription service, they will not become exclusive to any one cloud gaming platform. It remains to be seen how this side-deal will transform Ubisoft+.
The details of the divestiture are still being worked out. According to the CMA, Ubisoft will compensate Microsoft through a “one-off payment” and a “wholesale pricing mechanism” that includes the option to pay based on usage. Ubisoft will also have the ability to license out the games to other subscription services and pay a fee to force Microsoft to port Activision games to competing PC gaming operating systems like Linux.
The Microsoft-Activision Blizzard merger has faced various roadblocks and delays. While it gained regulatory approval in the European Union, the deal was blocked by the CMA in April, citing concerns about the potential for Microsoft to create exclusivity for games like Call of Duty on Game Pass, giving them a competitive advantage in the cloud gaming market. The Federal Trade Commission in the US also sued to try and prevent the deal, but the judge ultimately ruled in favor of Microsoft.
Following the failure of the FTC’s lawsuit, Microsoft and the CMA resumed negotiations on potential remedies, leading to the new and more complex version of the deal announced today. Additionally, Microsoft and Activision Blizzard have signed an agreement with Sony to ensure ongoing access to Call of Duty games on PlayStation 5 and future consoles for the next 10 years. The CMA will review the new terms before the merger agreement expires on October 18.
CMA chief executive Sarah Cardell emphasized that this is not a green light for the deal and that they will carefully assess the details and its impact on competition. The goal is to ensure that the growing cloud gaming market continues to benefit from open competition and drive innovation and choice.