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- CMA feared negative impact on video game and cloud gaming sectors
- Adjusted deal will see Ubisoft sell Activision catalogue outside EEA
Microsoft has altered its US$68.7 billion takeover of Activision Blizzard to include provisions for cloud gaming that should pave the way for the transaction to be approved in the UK.
The blockbuster acquisition, the largest ever in the video games industry, has divided regulators across the world.
While the European Union and up to 40 others have given their blessing, others fear the deal would limit choice for consumers by requiring players of key Activision games, including Call of Duty, to play on PC or Microsoft’s Xbox console.
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These include the Competition and Markets Authority (CMA) earlier this year amid concerns it would negatively affect the emerging cloud gaming market, reducing innovation and choice. However, the CMA reopened its investigation after the US Federal Trade Commission (FTC) failed in its attempts to block the transaction until it could complete its own probe into the matter.
Microsoft has taken advantage of the change in heart, submitting what it says is a “substantially different transaction”. Specifically, Microsoft will not release any existing or new Activision games on a cloud streaming service or have the ability to sell these titles to a competing platform. Instead, French publisher Ubisoft will sell the rights, including to Microsoft itself, in the UK.
The commitment lasts for 15 years and follows a pledge to release Call of Duty titles on rival platforms for the next ten years – a move which could appease the FTC.
“We believe that this development is positive for players, the progression of the cloud game streaming market, and for the growth of our industry,” said Microsoft president Brad Smith.
“And as we continue to navigate the review process with the CMA, we remain as committed as ever to bringing the incredible benefits of the acquisition to players, developers, and the industry. Today’s development brings us one step closer to bringing the joy of gaming to players everywhere.”
While Microsoft will also have to appease the FTC to get the deal over the line, approval in the UK would mean one less obstacle to completion – even if the CMA has said it isn’t a foregone conclusion.
“This is not a green light,” said Sarah Cardell, CMA chief executive. “We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments.
“Our goal has not changed – any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”
SportsPro says…
Although the dispute is ostensibly about the consumer video game market, the outcome will have an impact on the sports industry. Gaming is the largest entertainment category by revenue in the world. It’s also an important fan engagement channel for rights holders and esports is a rapidly growing sporting discipline in its own right.
The takeover would hand Microsoft control over some of the most popular titles in the esports world, whilst also strengthening the PC and Xbox ecosystem as a key platform. This would inevitably have a knock-on effect on the wider esports market, not just at a participatory level, but also at a regulatory level given many major competitions are at the jurisdiction of individual companies rather than governing bodies.
Microsoft was outraged at the initial ruling and its comments about the lack of a pro-investment regulatory environment spooked those within the UK government and the wider tech sector. The CMA will feel its about-turn will be justified on the grounds it has secured additional concessions from the tech giant.
