Microsoft’s unconventional move: Ubisoft acquires streaming rights for Activision Blizzard games amid regulatory hurdles

UKRAINE - 2023/06/15: In this photo illustration, Microsoft and Activision Blizzard logos are seen on a smartphone and Federal Trade Commission (FTC) logo on a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
UKRAINE - 2023/06/15: In this photo illustration, Microsoft and Activision Blizzard logos are seen on a smartphone and Federal Trade Commission (FTC) logo on a pc screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images) /

In a surprising twist to the ongoing saga of Microsoft’s attempted $69 billion acquisition of Activision Blizzard, the tech giant has taken a peculiar step to address regulatory concerns in the UK. Microsoft has announced that it will sell the streaming rights for popular game titles, including Call of Duty and Overwatch, to rival publisher Ubisoft. This unexpected move is part of Microsoft’s final bid to secure approval from UK regulators for the acquisition.

In an August 22 blog post, Microsoft President Brad Smith explained the rationale behind this unconventional maneuver. The UK Competition and Markets Authority (CMA) had expressed concerns about the impact of the proposed acquisition on cloud game streaming. In response, Microsoft has restructured the deal to acquire a narrower set of rights. These rights include cloud streaming for all current and future Activision Blizzard PC and console games over the next 15 years, which will now be owned by Ubisoft Entertainment SA.

Ubisoft has confirmed that this arrangement will result in the inclusion of Activision Blizzard games, such as Modern Warfare II, in its Ubisoft+ Multi Access subscription service. This aligns with Ubisoft’s existing blockbuster offerings like Assassin’s Creed and Far Cry. However, the inclusion of Activision Blizzard titles will likely reshape the Ubisoft+ service and introduce new dynamics to the subscription gaming landscape.

The mechanics of this complex divestiture involve compensation from Ubisoft to Microsoft. Ubisoft will make a “one-off payment” and establish a “wholesale pricing mechanism” based on usage. This setup allows Ubisoft to license the acquired game titles to other subscription services while also ensuring compatibility across various gaming platforms, including non-Microsoft systems like Linux.

The Microsoft-Activision Blizzard deal has faced significant hurdles in both the US and UK. Despite receiving approval from the European Union, the acquisition encountered opposition from the US Federal Trade Commission (FTC) and the UK’s CMA. The FTC sued to halt the deal, but the court ruled in favor of Microsoft. Meanwhile, the CMA blocked the deal in April, citing concerns about potential exclusivity for Call of Duty on Microsoft’s Game Pass.

The revised agreement between Microsoft and Ubisoft seeks to address these concerns while maintaining competition and innovation in the cloud gaming market. Microsoft’s strategic partnership with Sony to secure Call of Duty access for PlayStation consoles further illustrates the complexity of the deal. The extension of the merger agreement with Activision Blizzard, expiring on October 18, grants the CMA time to review the updated terms.

CMA Chief Executive Sarah Cardell emphasized that the new deal is not an immediate approval. The CMA’s goal remains to ensure a competitive gaming landscape that fosters innovation and choice in the growing cloud gaming market. As this intricate tale unfolds, the gaming industry watches closely, awaiting the final verdict on a deal that could have lasting implications for the sector’s future.

However, Microsoft’s latest move has introduced a new layer of complexity to an already convoluted situation. The decision to sell off streaming rights to Ubisoft underscores the lengths to which tech giants are willing to go to navigate regulatory challenges and secure their positions in a rapidly evolving industry.

The inclusion of Activision Blizzard titles within Ubisoft’s subscription service raises questions about the future landscape of gaming subscriptions. Ubisoft+, already boasting a collection of high-profile game franchises, could become an even more enticing proposition for gamers seeking a diverse library of content. This move could potentially reshape the competitive dynamics between subscription services, as Ubisoft+ now has the opportunity to cater to a wider audience with the addition of Activision Blizzard titles.

Despite the complexities and uncertainties, one thing is clear: the gaming industry is undergoing a transformation. The ongoing negotiations, legal battles, and strategic alliances highlight the increasing significance of cloud gaming and subscription models. As players and stakeholders eagerly await regulatory decisions and the final outcome of the Microsoft-Activision Blizzard deal, the entire industry is on the cusp of change.

The CMA’s statement that the revised deal is not a green light underscores the careful scrutiny that regulators will apply to ensure a level playing field. The convergence of gaming and technology, alongside the ever-expanding realm of cloud-based gaming, has drawn the attention of regulatory bodies worldwide. The decisions made in these complex cases will undoubtedly shape the industry’s future landscape and set precedents for future deals and partnerships.

In the end, Microsoft’s unexpected move to sell streaming rights to Ubisoft reflects the intricate dance between industry giants, regulatory bodies, and the pursuit of innovation and competition. As the timeline unfolds, it remains to be seen whether this unique approach will successfully address regulatory concerns and pave the way for a transformative deal that could redefine the gaming industry for years to come. The gaming world watches with bated breath as this remarkable chapter in the Microsoft-Activision Blizzard saga continues to unfold.