In a recent turn of events, Microsoft’s initial bid to acquire Activision hit a roadblock, but they’re not throwing in the towel just yet. Microsoft has presented a revised deal structure to the UK’s Competition and Markets Authority (CMA), and it paints an intriguing picture of the future of cloud gaming.
CMA Stands Firm
Initially, the CMA blocked Microsoft’s original deal to purchase Activision, citing worries over “innovation and choice in cloud gaming.” Microsoft sought a reconsideration of this verdict. Despite some speculating that the CMA might have yielded due to the FTC’s recent setback in a US court, the CMA appears to remain firm.
A Twist in the Tale
Not one to be easily deterred, Microsoft proposed a new deal structure. The revised deal ensures Microsoft will not procure cloud streaming rights for existing Activision games, nor for any new releases in the upcoming 15 years—well, at least outside of the European Economic Area (EEA).
Enter Ubisoft
In an unexpected twist, these rights will be sold off to Ubisoft Entertainment SA prior to the completion of Microsoft’s acquisition of Activision. This essentially means Ubisoft will hold the power to license out Activision’s rich gaming content to all cloud gaming service providers, Microsoft included. Moreover, the deal facilitates Ubisoft’s ability to request Microsoft to make Activision games compatible with non-Windows operating systems.
Driving Competition Cloud Gaming
Sarah Cardell, Chief Executive of the CMA, emphasized that the restructuring doesn’t equate to automatic approval. The CMA’s objective remains consistent: ensuring that the burgeoning cloud gaming industry continues thriving with open and robust competition, fostering innovation and choice.
Ubisoft’s Angle
In return for acquiring the cloud streaming rights, Ubisoft will compensate Microsoft through a one-time payment, followed by a market-based wholesale pricing mechanism. This new arrangement grants Ubisoft unparalleled freedom in deciding how they’d like to commercialize these rights, be it via direct sales, subscription models, or any other novel strategies they may conceive.
What’s next
In return for acquiring the cloud streaming rights, Ubisoft will compensate Microsoft through a one-time payment, followed by a market-based wholesale pricing mechanism. This new arrangement grants Ubisoft unparalleled freedom in deciding how they’d like to commercialize these rights, be it via direct sales, subscription models, or any other novel strategies they may conceive.
As the gaming world watches closely, the CMA’s decision on this restructured deal could have far-reaching implications for the industry. Microsoft and Activision’s fresh proposal seems to tick all the right boxes to appease regulators, but only time will tell if this approach will clear the hurdles. Notably, this new investigation will unfold in accordance with the CMA’s typical Phase 1 procedures, and all eyes will be on the set deadline: 18 October 2023. While the verdict is still out, the landscape of cloud gaming is set to undergo some tectonic shifts, and gamers, industry players, and stakeholders alike wait for the final outcome.
Note: The provided details are based on the official press release from the UK CMA
