Microsoft’s Restructured Activision Blizzard Deal: What You Need to Know. In a significant move to address concerns from regulators, Microsoft has unveiled a restructured deal involving the transfer of cloud gaming rights for both current and future Activision Blizzard games to Ubisoft. The motive behind this alteration is to alleviate the apprehensions of UK regulators who are apprehensive about the potential impact of Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard on the competition within the cloud gaming arena. The reshaped deal has sparked a fresh round of regulatory scrutiny in the UK, which could extend until October 18th.
Microsoft’s Restructured Activision Blizzard Deal
The Regulatory Context
The UK’s Competition and Markets Authority (CMA) initially blocked Microsoft’s intended acquisition of Activision Blizzard in April, citing concerns specifically related to the burgeoning field of cloud gaming. This decision was influenced, in part, by the Federal Trade Commission’s recent defeat in a US federal court. Consequently, the CMA entered into negotiations with Microsoft. In response, Microsoft has now adjusted its proposal to transfer certain cloud gaming rights to Ubisoft.
A Narrower Set of Rights
Microsoft’s President, Brad Smith, outlined the revised strategy in a statement, stating, “To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights.” Under this new arrangement, Microsoft will transfer cloud streaming rights for all current and forthcoming Activision Blizzard PC and console games for the next 15 years to Ubisoft. Importantly, these rights will be held in perpetuity.
Implications for Exclusive Licensing
With this restructured deal in place, Microsoft will be unable to make Activision Blizzard games exclusive to its Xbox Cloud Gaming platform. Furthermore, Microsoft will not have exclusive control over the licensing terms for Activision Blizzard games on competing services. Instead, Ubisoft will manage the streaming rights for these games outside of the European Union. Ubisoft will then license the titles back to Microsoft for inclusion in the Xbox Cloud Gaming service.
Compensation and Collaboration
To make this transition, Ubisoft will compensate Microsoft through a combination of a one-off payment and a market-based wholesale pricing mechanism. This mechanism will also incorporate an option that allows pricing based on usage. In addition to compensation, Ubisoft gains the opportunity to offer Activision Blizzard games to cloud gaming services that run non-Windows operating systems.
Ubisoft’s Expanded Reach
Under this new arrangement, Ubisoft will integrate Activision Blizzard games into its Ubisoft Plus Multi Access subscription. This subscription service spans across various platforms, including PC, Xbox, Amazon Luna, and PlayStation through Ubisoft Plus Classics. This move is set to enhance Ubisoft’s content offering and potentially attract a broader audience of gamers.
Continued Regulatory Scrutiny
The revised deal has not completely assuaged regulatory concerns. The CMA has initiated a final review phase, which will continue over the coming weeks. A decision regarding the deal’s impact on competition and innovation within the cloud gaming market is expected to be delivered by the October 18th deadline. The CMA’s Chief Executive, Sarah Cardell, emphasized the goal of maintaining open and effective competition within the growing cloud gaming sector.
Microsoft’s Commitment to Obligations
Despite the restructuring, Microsoft’s existing commitments to the European Commission remain intact. EU regulators approved the Activision Blizzard deal due, in part, to Microsoft’s offer of a free license to consumers in EU countries. This license enables them to stream current and future Activision Blizzard games through any cloud game streaming service of their choice, provided they possess a valid license for the games.
The Way Forward
While this restructured deal marks a significant development in Microsoft’s pursuit of Activision Blizzard, its ultimate fate remains intertwined with the regulatory landscape. As the CMA assesses the new arrangement, the tech giant continues its efforts to navigate the evolving world of cloud gaming. The conclusion of this process, slated for October 18th, will not only shape the trajectory of Microsoft’s deal but could also have implications for the broader gaming industry.
Frequently Asked Questions
1. Why did Microsoft restructure the Activision Blizzard deal? Microsoft restructured the deal to address concerns from UK regulators about potential monopolistic practices and anti-competitive behavior in the cloud gaming market.
2. What does the restructured deal entail for Ubisoft? Ubisoft will acquire cloud streaming rights for all current and future Activision Blizzard games for the next 15 years. It will also have the opportunity to offer these games to non-Windows cloud gaming services.
3. Will Microsoft still have exclusive rights to Activision Blizzard games? No, under the restructured deal, Microsoft will not have exclusive rights to these games. Ubisoft will control the streaming rights outside of the European Union.
4. How will Ubisoft compensate Microsoft for the cloud streaming rights? Ubisoft will compensate Microsoft through a combination of a one-off payment and a market-based wholesale pricing mechanism, including options based on usage.
5. When can we expect a decision from the UK’s Competition and Markets Authority? The CMA is expected to deliver a decision regarding the restructured deal’s impact on competition and innovation within the cloud gaming market by the October 18th deadline.
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- Restructured Activision Blizzard Deal
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