Microsoft signs 15-year cloud streaming deal with Ubisoft in latest bid to win Activision Blizzard approval

Microsoft has signed a 15-year deal to license Call of Duty and other Activision Blizzard games to Ubisoft in its latest bid to win antitrust approval for its $68.7 billion acquisition.

“In January 2022, Microsoft announced the proposed acquisition of Activision Blizzard to advance our goal to bring more creative and innovative games to players everywhere and on any device, said Brad Smith, president of Microsoft, in announcing the deal. “Today, we are taking another important step regarding this transaction. To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights.”

Activision Blizzard CEO Bobby Kotick also praised the agreement and said the integration plan is proceeding.

The United Kingdom is the last country where antitrust clearance is needed for the deal to go through. One of its concerns was whether Microsoft would have a monopoly on cloud streaming technology.

“This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment. The rights will be in perpetuity,” Smith said.

“As a result of the agreement with Ubisoft, Microsoft believes its proposed acquisition of Activision Blizzard presents a substantially different transaction under UK law than the transaction Microsoft submitted for the CMA’s consideration in 2022. As such, Microsoft today has notified the restructured transaction to the CMA and anticipates that the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on October 18,” Smith added.

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, Smith said.

The agreement provides Ubisoft with a unique opportunity to commercialize the distribution of games via cloud streaming. The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide. Ubisoft will compensate Microsoft for the cloud streaming rights to Activision Blizzard’s games through a one-off payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage. It will also give Ubisoft the opportunity to offer Activision Blizzard’s games to cloud gaming services running non-Windows operating systems.

Smith also said, “Of importance, Microsoft’s obligations to provide cloud streaming rights in the European Economic Area remain in place, in full compliance with Microsoft’s commitments to the European Commission. The agreement with Ubisoft has been structured so that Microsoft will still acquire the rights needed to honor fully its legal obligations under its commitments to the European Commission, as well as its existing contractual obligations to other cloud game streaming providers, including Nvidia, Boosteroid, Ubitus, and Nware. Microsoft is engaging closely with the European Commission to support the EC’s assessment of the agreement and confirmation that the commitments remain undisturbed.”

Rivals like Sony and Nintendo have also signed deals, and in a trial that Microsoft won, Sony voiced its objections to Microsoft gaining a monopoly over Call of Duty. The transaction has been approved in more than 40 countries, and Microsoft said it will be good for players and the industry.

Ubisoft said these rights will further strengthen Ubisoft’s content offering through its subscription service Ubisoft+, as well as allowing Ubisoft to license streaming access of the Activision Blizzard catalog of games, including future releases, to cloud gaming companies, service providers, and console makers. This will help expand access for players across all streaming services, the French company said.

“We’re dedicated to delivering amazing experiences to our players wherever they choose to play,” said Chris Early, senior vice president of strategic partnerships and business development at Ubisoft. “Over the past 15 years we’ve built and honed our online services and distribution ecosystem into one of the most complete in the industry. Today’s deal will give players even more opportunities to access and enjoy some of the biggest brands in gaming.”