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August 22, 2023

Microsoft offers up streaming rights in Activision Blizzard deal

The Competition Markets Authority is treating this as a new deal and so has launched a fresh investigation.

By Ryan Morrison

Microsoft has submitted a revised proposal to buy game developer Activision Blizzard to the UK Competition Markets Authority (CMA). To date, the CMA is the only major international regulator not to give approval for the $69bn deal. As part of its new proposal, Activision would sell its non-European game streaming rights to rival Ubisoft.

Microsoft has been battling with the Competition Markets Authority over its attempt to buy Activision (Photo: Sergei Elagin / Shutterstock)
Microsoft has been battling with the Competition Markets Authority over its attempt to buy Activision Blizzard. (Photo by Sergei Elagin/Shutterstock)

The Xbox maker’s attempt to acquire publisher Activision Blizzard was controversial from the moment it was announced, leading to concerns over reduced competition, Microsoft hoarding exclusive titles, streaming rights and the impact on the wider economy.

European and US regulators have since given approval for the deal but the CMA has continued to refuse to sanction the takeover. This is, in part, over concerns it will limit the scope of the growing cloud gaming market, giving Microsoft greater dominance than it already has and make it harder for others to compete. 

Microsoft says its new proposal is a completely restructured deal and so has been put forward for a new CMA investigation. The company says it is a “substantially different transaction” and expects the review to be completed before 18 October this year.

As part of the new deal, all cloud gaming rights for current and new Activision Blizzard games will be transferred to Ubisoft for the next 15 years, and the publisher will then retain those rights in perpetuity. “Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services,” said Microsoft president Brad Smith, in a blog post.

Non-EU streaming

Under the proposed deal, Ubisoft would also control the streaming rights to all Activision Blizzard games outside of the EU. This will include licencing titles back to Microsoft for inclusion in Xbox Cloud gaming. In return, Ubisoft will compensate Microsoft for the rights through a one-off payment and via market-based wholesale pricing. The exact costs have not been revealed but could include pricing based on usage.

The CMA first blocked the deal in April but agreed to listen to alternative proposals after the US Federal Trade Commission had its own attempt to reject the deal thrown out by the federal court in July. As part of the deal, Ubisoft also has the rights to adapt Activision titles to other operating systems such as Linux and MacOS, or licence them to cloud streaming platforms.

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Microsoft’s agreement with the European Commission will not change. EU regulators approved the deal after Microsoft agreed to a free licence for consumers to stream any Activision game via “any cloud game streaming service” if they already have a PC or console licence. This is why the new deal is for non-EU streaming rights.

The CMA says the fact it is launching a fresh investigation is “not a green light” for the deal between Microsoft and Activision. “We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments,” explained Sarah Cardell, chief executive of the CMA.

Read more: UK clears Broadcom’s $61bn takeover of VMware

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