Microsoft has recently announced a partnership with Ubisoft, a prominent French game publisher, which serves as a clear indication to investors about their long-term strategy for the videogame industry.
Previously, the U.K. regulator had halted the Microsoft-Activision merger due to concerns regarding potential anti-competitive practices in the emerging cloud gaming sector, specifically related to Microsoft's ability to leverage Activision's highly successful Call of Duty franchise.
In response to the regulator's concerns, Microsoft and Activision Blizzard have made significant concessions aimed at increasing the likelihood of approval. According to analyst Andrew Marok from Raymond James, these concessions have been particularly noteworthy.
One key concession involves Ubisoft acquiring exclusive cloud streaming rights for existing and future Activision Blizzard games outside of the European Union for a duration of 15 years. Notably, these rights will remain in perpetuity, meaning that Microsoft will only have exclusive rights to games published after the expiration of the 15-year timeline.
Despite overcoming numerous obstacles in gaining approval for the Activision acquisition, Microsoft has made the decision to proceed without exclusivity on Call of Duty games outside of the Europe Economic Area. This move demonstrates Microsoft's willingness to make short-term concessions in order to safeguard the long-term value of the merger, according to Marok.
Industry expert Nick McKay from Wedbush explains that while Microsoft's Xbox Game Pass may not be the sole streaming service offering new Call of Duty games, it undeniably alters the gaming landscape from a time when Call of Duty was only available for individual purchase at $70 each.
While Activision Blizzard initially favored selling individual copies of their games, Microsoft recognizes the potential in a much larger market of users who prefer subscription-based access to games across various devices, without the need for high-end computers or consoles.
Overall, Microsoft's new partnership with Ubisoft showcases their strategic vision for the videogame industry and their commitment to innovation and market expansion.
Console Gaming Landscape Set to Shift with Microsoft's Acquisition of Activision Blizzard
By Connor Smith
Microsoft's recent acquisition of Activision Blizzard is predicted to have significant long-term effects on the console gaming market. Industry experts believe that this deal will tilt the balance in Microsoft's favor, with the inclusion of Activision content in the popular Game Pass subscription service from day one.
According to gaming analyst McKay, the future of console gaming will be increasingly influenced by the popularity of Xbox Game Pass and other subscription models. He draws a comparison to the shift seen in music and filmed entertainment, where consumers now prefer paying for monthly access to a vast library of content rather than purchasing individual pieces. McKay sees a similar trend emerging in gaming, with consumers embracing subscription models as a cost-effective and convenient way to access triple-A experiences.
In addition to bolstering their console gaming presence, Microsoft's acquisition of Activision Blizzard also grants them a major foothold in the mobile games market. With ownership of King, the developer behind popular mobile game Candy Crush, Microsoft gains access to high-profile mobile IPs. McKay believes that this move positions Microsoft to compete with industry giants like Apple and Google in the mobile gaming ecosystem.
Before the deal is finalized, regulatory approval is required. The U.K.'s regulator has set an October 18 deadline to investigate the agreement. However, analysts such as Marok argue that providing rights to a rival firm actually promotes competition in the market. They believe that granting permission to Actvision Blizzard to act in their own economic interest supports this notion.
The acquisition of Activision Blizzard by Microsoft signifies a significant shift in the console gaming landscape. With the integration of popular content into Xbox Game Pass and a strong entry into the mobile games market, Microsoft is poised to dominate the industry in the coming years.
