For the sake of Acquisition of Activision Blizzard, Microsoft Sells Licenses to Competitors

In a groundbreaking strategic maneuver, tech giant Microsoft has recently announced its intention to sell the cloud gaming license of Activision Blizzard to its competitor, Ubisoft. This bold step comes with a condition – the approval of the acquisition process by the British government. Ubisoft, renowned for its game development and publishing prowess, hails from France and stands as a significant contender against Activision Blizzard. This strategic decision is an effort by Microsoft to gain the much-needed regulatory nod for its colossal $68.7 billion USD (approximately Rp 986 trillion) acquisition deal with Activision Blizzard. However, this deal has hit a roadblock in the form of regulatory approval from the UK government, particularly from the Competition & Markets Authority (CMA) of the UK. The reason cited is the potential negative impact on competition in the rapidly expanding cloud gaming market in the UK.

Microsoft's Dominance and CMA's Concerns

In a statement made last April, the CMA went as far as labeling Microsoft as the reigning champion of the cloud gaming market, commanding a global market share of around 60-70%. This dominance is fortified by Microsoft's Xbox services, PC Game Pass on Windows, and its sprawling global cloud computing infrastructure (Azure and Xbox Cloud Gaming). If the acquisition of Activision Blizzard goes through, CMA predicts Microsoft's position would only strengthen. This is because the acquisition would grant Microsoft control over popular titles such as Call of Duty, Overwatch, and World of Warcraft from Activision Blizzard. The potential danger lies in Microsoft monopolizing these games and rendering them exclusive to their platforms. Such a practice, if realized, could compromise healthy competition in the gaming industry.

Ubisoft's 15-Year Licensing Deal

Fast-forward to August 2023, and Microsoft has taken a different path by deciding to sell licenses for both existing and future Activision Blizzard games to Ubisoft. This shift is a part of a revised acquisition agreement. In the words of Microsoft's President, Brad Smith, "We have revised the transaction agreement to secure narrower rights, including transferring cloud streaming rights for all current and future PC and console games from Activision Blizzard to Ubisoft Entertainment SA, a leading global game publisher. These rights will remain in effect indefinitely."

This strategic shift signifies that post-acquisition, Microsoft will no longer exclusively release Activision Blizzard games through Xbox Cloud Gaming. Additionally, Microsoft will no longer hold exclusive control over the licensing terms for Activision Blizzard games on rival platforms. Instead, Ubisoft will control the streaming rights for Activision Blizzard games outside the European Union for a span of 15 years. This includes the authority to relicense Activision Blizzard games to Microsoft for inclusion in Xbox Cloud Gaming. Ubisoft has also confirmed its plans to integrate Activision Blizzard games into its subscription service, Ubisoft Plus Multi Access, available on PC, Xbox, Amazon Luna, and PlayStation through Ubisoft Plus Classics.

The Implications and Outlook

Microsoft's decision to sell the cloud gaming license of Activision Blizzard to Ubisoft is poised to reshape the gaming industry's landscape. This strategic move reflects Microsoft's dedication to overcoming regulatory hurdles and ensuring a competitive market. By allowing Ubisoft to assume control over cloud streaming rights, Microsoft is demonstrating a commitment to fostering a healthier ecosystem for both players and developers.

The acquisition, once finalized, will not only impact the availability of Activision Blizzard games but also the dynamics of the cloud gaming market. As Ubisoft gains access to iconic titles, players can anticipate a diverse array of gaming experiences on various platforms. However, concerns remain regarding Ubisoft's control over these licenses, which might have implications for exclusivity and market competition.

Conclusion

In conclusion, Microsoft's decision to sell the cloud gaming license of Activision Blizzard to Ubisoft marks a significant shift in the dynamics of the gaming industry. This move, driven by the need for regulatory approval and a balanced competitive landscape, demonstrates the complexity of the market's evolving ecosystem. As Ubisoft takes the reins of Activision Blizzard's gaming licenses, the future of cloud gaming becomes even more intriguing, promising innovation and competition that could reshape the industry for years to come. It remains to be seen how this strategic transaction will shape the future of gaming and impact players, developers, and the industry as a whole.

With the gaming industry's rapidly evolving nature, this acquisition signals the beginning of a new era, one that's shaped by the collaboration and competition of industry giants. Microsoft's strategic shift invites us to ponder the broader implications for gaming enthusiasts, developers, and the technological landscape as a whole.

In a world where gaming has become a global phenomenon, the intersection of technology, entertainment, and business strategies has never been more critical. Microsoft's venture into selling the cloud gaming license of Activision Blizzard to Ubisoft underscores the intricate balance companies strive to maintain while navigating regulations, consumer demands, and industry competition. The unfolding saga presents insights into how corporate giants adapt their strategies to align with evolving trends and norms.