Shares of Ubisoft Surge on Microsoft’s Revised Takeover Deal
Shares of the French game maker Ubisoft rose by 9% in European trading on Tuesday following Microsoft’s submission of a new deal for the acquisition of Activision Blizzard. This move by Microsoft aims to address concerns raised by U.K. regulators.
U.K. Regulator Blocks Microsoft’s Initial $69 Billion Takeover Bid
The U.K.’s Competition and Markets Authority (CMA) had previously blocked Microsoft’s original $69 billion deal proposed in January 2022. This acquisition has faced regulatory challenges in the U.S. and Europe as well. However, the CMA has been particularly critical, expressing worries about potential competition limitations in the emerging cloud gaming market.
New Restructured Deal and Investigation by the CMA
The CMA announced that Microsoft and Activision Blizzard have agreed to a new and revised agreement. The CMA will now investigate this agreement, with a decision deadline set for October 18. As part of the new deal, Microsoft will not acquire cloud rights for existing and new games from Activision Blizzard. Instead, these rights will be divested to Ubisoft before Microsoft’s acquisition of Activision Blizzard.
Opportunity for Ubisoft and Cloud Gaming
Microsoft’s President, Brad Smith, stated that the agreement offers Ubisoft a unique opportunity to distribute games through cloud streaming. This arrangement will enable Ubisoft to innovate and introduce different business models for licensing and pricing games on cloud streaming services worldwide. Ubisoft is known for publishing popular games from franchises such as Assassin’s Creed, Tom Clancy’s Rainbow Six, and Far Cry.
Independent Third Party and Competition in Cloud Gaming
The restructured deal allows an independent third party to offer Activision Blizzard’s gaming content to all cloud gaming service providers, including Microsoft itself. Ubisoft already offers cloud games on platforms like Amazon Luna and Nvidia’s GeForce Now, which compete with Microsoft’s Xbox streaming service.
Compensation and Pricing Mechanism
Microsoft will be compensated by Ubisoft through a one-off payment and a market-based wholesale pricing mechanism. The pricing options will be based on usage of the gaming content.
