Home Business Microsoft’s new Call of Duty contract for UK clearance

Microsoft’s new Call of Duty contract for UK clearance

  1. Microsoft’s Bid for Activision Nears UK Approval
  2. “Call of Duty” Cloud Rights
  3. CMA Reviews Restructured Deal

The UK’s competition watchdog, the Competition Markets Authority (CMA), has expressed optimism regarding Microsoft’s updated offer to acquire Activision Blizzard, the creator of the popular “Call of Duty” franchise. The CMA’s recent statement suggests that this revised proposal may pave the way for the deal’s clearance in the UK.

The original $69 billion (£59 billion) deal faced opposition from UK regulators, resulting in its rejection. The primary concern was the potential negative impact on competition within the cloud gaming sector in the UK.

In response to these concerns, Microsoft submitted a restructured proposal, which notably excludes the acquisition of cloud gaming rights held by Activision Blizzard. Instead, the tech giant has agreed to transfer the rights to stream “Call of Duty” and other Activision games from the cloud to the French video game publisher Ubisoft, for a duration of 15 years.

Microsoft's new Call of Duty contract for UK clearance

This strategic move ensures that the cloud streaming of iconic titles such as “Call of Duty,” “Overwatch,” and “World of Warcraft” will remain outside Microsoft’s control.

Sarah Cardell, CEO of the CMA, reaffirmed the authority’s commitment to preserving competition, innovation, and choice in cloud gaming. She stated, “The CMA’s position has been consistent throughout – this merger could only go ahead if competition, innovation, and choice in cloud gaming were preserved.”

The CMA plans to open a consultation period before making a final decision on the deal, recognizing its significance and potential implications.

Microsoft’s pursuit of Activision Blizzard, the largest takeover in the gaming industry’s history, has faced scrutiny and mixed responses from global regulators. While it received approval from regulators in the European Union earlier this year, the U.S. competition watchdog’s attempt to halt the acquisition was rejected by an appeals court.

The fact that the deal is now on the verge of approval in the UK is seen as a significant achievement, considering the earlier concerns that led to its potential collapse.

However, Ms. Cardell expressed the view that it would have been preferable if Microsoft had presented this restructuring proposal during the initial investigation. She emphasized that this is not a minor adjustment but rather a fundamental restructuring of the deal.

Sony, a competitor in the gaming industry, had also expressed objections to the deal due to concerns that Microsoft could limit access to major games on its PlayStation platform.

The CMA has added extra protections to ensure gamers have various ways to access Activision’s games, including through cloud-based multi-game subscription services. It noted that the revised deal safeguards the cloud distribution of these crucial games under Ubisoft’s independent control, rather than Microsoft’s.

This decision marks a pivotal moment for the CMA, demonstrating how competition rules can operate in the UK post-Brexit, with the authority gaining enhanced powers.

Microsoft wants the deal to bolster Xbox and game subscription sales. Brad Smith, Microsoft’s Vice Chairman and President, expressed optimism and stated that the company had presented solutions to address the CMA’s remaining concerns related to cloud game streaming.

The consultation process will conclude on October 6, and Microsoft hopes for a final decision on the revised bid next month. The global fate of the deal hinges on the CMA’s approval.

Activision welcomed the preliminary approval, expressing enthusiasm for its future with Microsoft. The deal’s completion awaits the conclusion of the regulatory review process.

As Microsoft gains control over a significant portion of the gaming industry, industry experts speculate about the possibilities. Gareth Sutcliffe, a senior games analyst at Enders Analysis, emphasized Microsoft’s unique position, with access to Activision’s mobile gaming studio. This move positions Microsoft to cover all gaming platforms, including mobile, consoles, and PC, providing a comprehensive gaming experience.

While specific game announcements and updates remain undisclosed, industry observers anticipate Microsoft’s strategic moves in the world of gaming.

Additionally, recent leaks hint at Microsoft’s plans to refresh its Xbox Series S and Series X consoles in 2024, with a glimpse into a next-generation console in 2028, although details remain limited. The leak also alluded to past considerations of acquiring Nintendo, predating the bid for Activision.

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