Microsoft has secured the final regulatory clearance to fully acquire gaming giant Activision Blizzard after a $68.7 billion deal. However, this acquisition comes with a significant concession. For the next 15 years, Microsoft is relinquishing cloud-streaming rights for all Activision games outside the European Economic Area (EEA). This means that French game publisher Ubisoft will have exclusive global streaming rights outside the EEA, while inside the EEA it will share streaming rights with rivals, including Microsoft/Activision. Let’s delve into the reasons behind this concession and how it affects the gaming market.
Key Takeaway
- Microsoft has relinquished cloud-streaming rights for Activision games outside the EEA as a concession to secure regulatory approval for its acquisition of Activision Blizzard.
- French game publisher Ubisoft now holds exclusive global streaming rights for Activision games outside the EEA, while sharing rights with Microsoft/Activision within the EEA.
- Microsoft opted for a global concession to avoid having a monopolistic position and to create a level playing field in the gaming market.
- Ubisoft has acquired a perpetual license for cloud-streaming rights to Activision games, allowing for wider distribution and player access.
The CMA’s Conundrum and Microsoft’s Global Solution
The Competition and Markets Authority (CMA) in the U.K. was tasked with regulating the Microsoft-Activision deal. While the European Commission and the U.S. Federal Trade Commission had approved the acquisition with certain conditions, the CMA was concerned that the merger would “substantially weaken competition” in the cloud-gaming market. Although the CMA’s remit only applies to the U.K. market, Microsoft had to come up with a solution that would not disadvantage U.K. consumers.
To ensure a level playing field globally, Microsoft made the concession to relinquish cloud-streaming rights outside the EEA. This decision was influenced by the fact that Microsoft had already made a deal with the European Commission allowing Activision games to be streamed via any other provider for the next 10 years. As a result, Ubisoft emerged as the winner, gaining exclusive rights to cloud-stream Activision games worldwide, including popular franchises like Call of Duty, Overwatch, and World of Warcraft.
Why a U.K.-Only Solution Was Impractical
Restricting the deal to the U.K. alone would have been impractical and commercially unappealing. Microsoft would have needed to find a third-party to acquire the cloud-streaming rights, and limiting the market to the U.K. would not have made the deal attractive enough. Additionally, geo-restricting content presents technical challenges, and Microsoft wanted to avoid having a monopolistic position in the rest of the world. By extending the concession to be global, Microsoft addressed these concerns and created a more balanced arrangement.
Ubisoft’s Exclusive and Perpetual License
Ultimately, Ubisoft secured full and exclusive cloud-streaming rights to all current and future commercially available Activision games for the next 15 years. This license is perpetual, meaning it will never expire as long as Microsoft/Activision continues to make these games commercially available. Ubisoft can even sublicense access to the Activision Blizzard catalog to other companies, incentivizing further distribution and ensuring broader accessibility for players.
