Microsoft, Activision to sell streaming rights to secure biggest video gaming deal

Sales of streaming rights by Microsoft and Activision will result in the largest video game agreement

Activision Blizzard, the company behind “Call of Duty,” will transfer its streaming rights to Ubisoft Entertainment in a new bid to obtain the British anti-trust regulator’s blessing for its $69 billion sale to Microsoft.

Early in 2022, Microsoft announced the largest gaming contract in history. However, the deal was halted by Britain’s competition watchdog because of worries that the American tech giant would have too much control over the burgeoning cloud gaming market.

The Competition and Markets Authority (CMA) announced on Tuesday that it had maintained its original decision to block the acquisition after months of back and forth, requiring Microsoft to submit new terms.

Microsoft will not be able to exclusively manage the license terms for competing services under the terms of the revised agreement, nor will it be able to release Activision games like “Overwatch” and “Diablo” on its own cloud streaming service, Xbox Cloud Gaming.

Instead, Activision will sell the cloud streaming rights to all of its current PC and console titles as well as any new games it releases in the next 15 years to French gaming rival Ubisoft. Globally, that will be the case, but not in Europe, where Brussels had already approved the initial agreement.

Ubisoft will receive a non-exclusive license for Activision’s rights in Europe so that it can sell those titles there as well.

The acquisition currently appears to be going through, according to Tom Smith, a partner at the law firm Geradin Partners and a former legal director at the CMA. We shouldn’t expect big tech mergers to close easily these days, he told Reuters. “The process has been torturous, and there’s still potential for the wheels to come off.”

Microsoft stated on Tuesday that it thought its latest plan was “substantially different” and that it anticipated the CMA will assess it by October 18.

The UK regulator will now extensively examine the new agreement, including getting input from other parties, according to CMA Chief Executive Sarah Cardell.

“Our goal has not changed,” she said in a statement. “Any decision made in the future about this new deal will ensure that the expanding cloud gaming market continues to benefit from free and effective competition driving innovation and choice.

The significant settlement reached by Microsoft, which might have provided a comparable remedy during the initial investigation, is a victory for the British Competition and Markets Authority (CMA), which has been tough on tech agreements since it became a standalone regulator following Britain’s exit from the European Union.

The American Federal Trade Commission opposed the agreement as well, but it was unable to stop it. However, the European Union approved it after acknowledging Microsoft’s promises to license Activision’s games for use on other platforms.

The CMA initially declared that it would obstruct the deal in April and was getting ready to defend its position in court.

But in July, after Microsoft claimed that commitments made to the European Union and a new contract with Sony constituted a fundamental change, it took the unusual step of reopening its investigation.

After reviewing those modifications, the CMA stated on Tuesday that it did not agree with them and would block the original agreement, requiring the American giant to resubmit its original conditions.

Microsoft stated that Ubisoft would purchase the rights through a one-time payment and a wholesale price system based on the market, with the ability to accommodate usage-based pricing.

At 0950 GMT, the Paris-listed shares of Ubisoft were up more than 7%, making them the STOXX 600 index’s top gainer throughout all of Europe.



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