The UK Competition and Markets Authority (CMA) has given its approval to Microsoft (NASDAQ:MSFT)'s $69 billion acquisition of Activision Blizzard (NASDAQ:ATVI), following a restructuring that excludes Activision's cloud gaming rights. The rights are instead being sold to Ubisoft Entertainment before the merger is completed. This move positions Ubisoft as a significant content supplier to cloud gaming services.
The CMA insisted on the sale of Activision's cloud streaming rights prior to the merger, viewing it as crucial for promoting competition in the rapidly growing cloud gaming market. Microsoft has seen its shares surge by 36.7% year-to-date.
As part of its strategy, Activision is focusing on its major franchises such as Call of Duty and Warcraft. Nevertheless, some popular titles might not be immediately available on Xbox Game Pass after the merger, with plans to add these games to the service in 2024.
After receiving approval from EU regulators, Microsoft will retain cloud streaming rights in the European Economic Area, marking the end of a 20-month regulatory approval process. This decision allows EU consumers to stream Activision games through any cloud gaming service.
As part of the deal, Ubisoft will hold the cloud gaming rights to Activision Blizzard titles outside the EU for 15 years. This arrangement enables Ubisoft to license these titles back to Microsoft for Xbox Cloud Gaming and offer games directly to consumers.
Microsoft has made commitments to ensure that Activision Blizzard games remain available on rival consoles, including Sony (NYSE:SONY), and other cloud streaming platforms. It has also signed agreements with Nintendo and Nvidia (NASDAQ:NVDA) to keep Activision games on their platforms for at least 10 years and pledged support for game emulators.
Meanwhile, Microsoft is facing a $28.9 billion IRS back tax demand. The company's financial results for Q1 fiscal 2024 are expected soon, with revenues projected at $54.42 billion and earnings at $2.65 per share.
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