Microsoft is still trying to get approval of its $69 billion acquisition of game publisher Activision Blizzard by UK and US regulators. To help get the greenlight, the Xbox-maker made a unique deal with another major game publisher, Ubisoft.
Cloud streaming rights for Activision Blizzard games will go to Ubisoft for the publisher’s subscription service, according to a release from Microsoft. This means for the next 15 years, current and new Activision games will be available for cloud streaming via Ubisoft services. This would include the publisher’s Ubisoft Plus service, which is available on PC, Xbox, PlayStation and Amazon Luna.
Microsoft will still have Activision Blizzard games on its equivalent Xbox Cloud Gaming service, but those titles will no longer be exclusive to the company’s platforms for streaming.
Microsoft first revealed plans to acquire Activision in January 2022. Closing the deal would turn Microsoft into one of the top three video game publishers, right behind rival Sony. Activision Blizzard is one of the largest third-party publishers, with some major franchises that would give a much-needed boost to Microsoft’s games catalog, including Call of Duty, Candy Crush and Overwatch.
Oct. 18 is the date Microsoft set to finalize its deal with Activision. The two companies moved the deadline to October from the original date of July 18, allowing more time to get approval from regulators. If the deal isn’t completed, there’s a termination, or “breakup,” fee that’s to be paid by Microsoft to Activision. The fee is set at $3 billion, but goes up to $3.5 billion on Aug. 29 and then $4.5 billion if the deal isn’t complete by Sept. 15.
Though Microsoft has won a few merger-related battles, it still has hurdles to clear. Here’s what you need to know about the deal and what it means for gamers.
Who’s left to approve the deal?
Microsoft still needs to convince British regulators to sign off on the acquisition. In April, the UK’s Competition and Markets Authority blocked the $69 billion deal, saying it would result in higher prices and fewer choices for gamers.
Microsoft’s appeal to that ruling says the CMA “made fundamental errors in its calculation and assessment of market share data for cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc).” This latest deal with Ubisoft is Microsoft’s attempt to address the anti-competitive concerns the CMA may still have.
In the US, the Federal Trade Commission has opposed the deal, saying the acquisition would hurt competition within the video game industry. But so far, its challenges have been unsuccessful.
A federal judge in early July declined to issue a preliminary injunction that would’ve paused the deal. The FTC was attempting to temporarily halt the merger until a separate, in-house administrative law proceeding played out. Now the FTC reportedly plans to put that in-house case on hold. In the past, the FTC has dropped opposition to deals if a federal judge has refused to grant an injunction.
Microsoft has continued to deny that the deal would hamper competition within the video game industry. It’s already received approval from the EU, China, Japan and other major countries.
What does this deal mean for gamers?
For Xbox Game Pass subscribers, a merger would mean Activision Blizzard’s catalog of games would be incorporated into the service, likely similar to how Bethesda games were when Microsoft acquired that company in 2020.
Critics of the deal are concerned that Microsoft could make future games developed by Activision unavailable on rival consoles, although the Ubisoft deal does offer a way to bring Activision games to the PlayStation platform via Ubisoft Plus.
Much of the concern surrounds Activision’s Call of Duty series, which is one of the bestselling games every year. Microsoft already agreed to a 10-year deal with Nintendo to bring Call of Duty games to its consoles, but Sony reportedly rejected a similar agreement when presented with it last year. However, Xbox boss Phil Spencer said on July 16 that Microsoft and Sony agreed to a 10-year “binding agreement” to keep Call of Duty on the PlayStation platform. It’s unclear if the newest arrangement was different to what Microsoft offered Sony last year.
Earlier this year, Microsoft made a 10-year agreement with Nvidia that ensures Nvidia’s cloud gaming platform GeForce Now continues to have access to games from both Microsoft and Activision.
Microsoft is using these agreements with its competitors to show regulators that there won’t be a lack of competition in the video game industry.