Microsoft has made another shocking move to get their merger acquisition deal regulator approval.
As discussed in an official Microsoft Blog, Microsoft has now signed a new deal, to give cloud streaming rights to all Activision Blizzard games to competitor Ubisoft. This arrangement applies to all games that Activision Blizzard made from today, and their next few games for the next fifteen years. Those cloud streaming rights will be going to Ubisoft for perpetuity.
It should be noted that all of the prior arrangements Microsoft made with other cloud gaming providers, Nvidia, Boosteroid, and Ubitus, still remain in effect. As it turns out, those commitments were strictly for gaming in the EU. This new deal is for all countries and regions outside the EU, so yes, Americans will also have to use Ubisoft’s services to stream Activision Blizzard games in the future.
If one wonders why Microsoft would make such a drastic change to their deal, the reason would be easy to guess. Yes, the CMA decided to reject Microsoft’s original deal, even after Microsoft negotiated to leave the appeals process, giving the regulator leeway to approve the deal while saving face.
Ubisoft also talked about this new deal, explaining its implications in their own blog:
“With a single subscription to Ubisoft+ Multi Access, players will soon be able to play their favorite Ubisoft and Activision Blizzard games across multiple platforms including PC, Xbox consoles and Amazon Luna, and on the PlayStation platform through Ubisoft+ Classics. The agreement will offer players even greater access to a large library of beloved and classic titles as well as the newest releases, all through cloud streaming.”
And therein lies the rationale for this deal. With Ubisoft now involved, Microsoft is no longer in a position to dominate the cloud gaming industry by selling their games through their cloud gaming services. Ubisoft is in the position to sell Activision Blizzard cloud gaming rights to subscription services and other models.
Subsequently, the CMA has decided to start a new Phase 1 investigation of the deal, noting the statutory decision deadline of October 18, 2023.
If I could add a word in here, this new deal seems to be an immediate disaster for the consumers, regardless of what the CMA would conclude or Microsoft could claim. This splits the physical game, download game and cloud streaming rights for these games, so that consumers who would want to stream their Activision Blizzard games in a pinch, say, stream Overwatch 2 on their phones, would have to sign up to a new service, potentially Ubisoft.
And whatever the business model, this opens up the possibility that consumers will have to pay for games multiple times over. Using the Overwatch 2 example, having to keep the game profitable might mean raising the prices of premium battles passes for that game. Or, even less satisfyingly, the cloud gaming and download versions of the game may not have cross save / cross progression compatibility.
We wouldn’t be in this position where Microsoft has to deprecate their potential Activision Blizzard products and services, if the CMA wasn’t so stubborn on their arguments for cloud gaming, that is out of sync with the conclusions the overwhelming majority of other countries and regions have made. On the flip side, the EU’s cloud gaming industry, and not the UK’s, now looks poised to benefit greatly from the deal, at a level different from the rest of the world.