Microsoft to sell off Activision cloud streaming rights to Ubisoft

Microsoft said it will give Ubisoft Entertainment the cloud streaming rights for all of Activision Blizzard’s console games released in the next 15 years in order to placate regulators reviewing its $69bn deal for the Call of Duty maker.

Under the arrangement, French gamemaker Ubisoft will get exclusive worldwide rights to stream Activision titles and non-exclusive streaming rights in the European Economic Area, after Microsoft’s deal for Activision is completed, the Redmond, Washington-based company said in a statement on Tuesday.

Separately, the UK’s antitrust watchdog said it opened a fresh probe into the Microsoft-Activision transaction after the tech giant submitted a substantially different deal, giving the acquisition a rare second chance to appease regulators.

The Competition and Markets Authority had vetoed the deal in April on the grounds that it could harm the nascent market for cloud gaming. The US Federal Trade Commission also objected to the transaction, but failed to convince a judge to block it.

The restructured transaction

“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,” Microsoft said in the statement.

As it navigated regulatory obstacles, Microsoft missed the July 18 deadline in the original agreement — signed in January 2022 — to close the acquisition. Activision agreed to extend the timeline until October 18 to give more time to iron out the remaining hurdles.

Microsoft asked the UK regulator in July to reconsider its April veto on the grounds that the situation had “materially changed,” given the US court decision and a subsequent deal it reached to license Activision blockbuster title Call of Duty to rival Sony Group. The divestiture proposal may obviate the need for the CMA to rule on that request.

The CMA has said it prefers structural remedies to address concerns about mergers that hinder competition.

To satisfy that preference, Microsoft and Activision have been seeking a divestiture that wins over regulators without harming what Microsoft considers the key parts of the acquisition. The software giant has publicly ruled out selling the Call of Duty franchise, for example.

While potentially promising for the future, cloud gaming — or games played via streaming to devices — is a money-loser for Microsoft, and the company and rivals in the space are still trying to find ways to make it appealing to a large number of gamers.

Streaming games requires pricey cloud-computing power and the technology still subjects players to latency that impacts quality, which means the technology doesn’t work well for fast-paced, graphics-intensive titles.

Also read: Microsoft executive vows to keep ‘Call of Duty’ on Sony PlayStations