Monday, June 17, 2024

Microsoft’s Shocking Move: Hands Over Activision Blizzard Cloud Gaming Rights to Ubisoft! Will This Change the Gaming Landscape Forever?

Microsoft is revising its proposed Activision Blizzard agreement to transfer Ubisoft the cloud gaming rights for both existing and future Activision Blizzard titles.
The transfer of rights is intended to assuage UK regulators who are worried about how Microsoft’s proposed $68.7 billion deal will affect the market for cloud gaming. A new regulatory investigation in the UK has been sparked by the restructured deal and could continue through October 18.

According to Microsoft President Brad Smith, “we are restructuring the transaction to acquire a narrower set of rights” in order to allay concerns raised by the UK Competition and Markets Authority regarding the proposed acquisition’s potential impact on cloud game streaming. This includes concluding an agreement that will go into effect upon the completion of our merger and transfer to Ubisoft Entertainment SA, a renowned international game publisher, the cloud streaming rights for all new and existing Activision Blizzard PC and console games released over the ensuing 15 years. The rights will last forever.

The restructured agreement prevents Microsoft from releasing Activision Blizzard games exclusively on Xbox Cloud Gaming, even if the proposed acquisition by Microsoft is approved. Activision Blizzard games on competing services will not be subject to Microsoft’s exclusive control over their licensing terms.
Instead, Ubisoft will be in charge of the Activision Blizzard games that can be streamed outside of the EU and will license the games back to Microsoft so that they can be part of Xbox Cloud Gaming.

According to Smith, “Ubisoft will pay Microsoft through a one-time payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage, for the cloud streaming rights to Activision Blizzard’s games.” Additionally, it will allow Ubisoft to make Activision Blizzard games available to cloud gaming services using non-Windows operating systems.

The Ubisoft Plus Multi Access subscription, which is accessible on PC, Xbox, Amazon Luna, and PlayStation via Ubisoft Plus Classics, will now include Activision
Blizzard games.

Following the Federal Trade Commission’s (FTC) defeat in a US federal court last month, the UK’s Competition and Markets Authority (CMA) agreed to negotiations with the maker of the Xbox. The CMA had initially blocked Microsoft’s deal in April due to concerns about cloud gaming. Due to Microsoft’s restructured agreement, the CMA has now begun a new phase of its investigation, with a statutory deadline of October 18th. This is the same deadline that Microsoft recently agreed to in its extension of the deal closing date with Activision. According to a source with knowledge of Microsoft’s plans, the company currently doesn’t anticipate being able to close its Activision Blizzard deal until early October.

As the CMA looks into this new restructuring of the proposed Activision Blizzard acquisition, it has now issued a final order prohibiting Microsoft’s original deal globally. According to the CMA, “Ubisoft will also be able, for a fee, to require Microsoft to adapt Activision’s titles to operating systems other than Windows, such as Linux, if it decides to use or license out the cloud streaming rights to Activision’s titles to a cloud gaming service that runs a non-Windows operating system.”

Microsoft’s obligations to the European Commission won’t be impacted by the restructured transaction, though. A free license provided to EU citizens would allow them
to stream all current and upcoming Activision Blizzard PC and console games for which they have a license via “any cloud game streaming services of their choice,
” according to EU regulators, who approved Microsoft’s Activision Blizzard deal.

According to Smith, “the deal with Ubisoft has been structured so that Microsoft will still obtain the rights necessary to honor fully its legal obligations under its commitments to the European Commission, as well as its existing contractual obligations to other cloud game streaming providers, including Nvidia, Boosteroid, Ubitus and Nware.”

The CMA will now evaluate the revised agreement over the ensuing weeks and issue a ruling by the deadline of October 18. The light is not green.
According to Sarah Cardell, chief executive of the CMA, “We will carefully and objectively assess the specifics of the restructured deal and its impact on competition, including in light of third-party comments.” “Our goal has not changed; any decision on this new agreement in the future will ensure that the expanding cloud gaming market continues to gain from open and effective competition that fosters innovation and choice.”

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