{"id":52070,"date":"2023-08-23T14:23:51","date_gmt":"2023-08-23T18:23:51","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/microsofts-pact-with-ubisoft-signals-long-term-plan-on-videogame-business\/"},"modified":"2023-08-23T14:23:56","modified_gmt":"2023-08-23T18:23:56","slug":"microsofts-pact-with-ubisoft-signals-long-term-plan-on-videogame-business","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=52070","title":{"rendered":"Microsoft’s Pact With Ubisoft Signals Long-Term Plan on Videogame Business"},"content":{"rendered":"
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\n Microsoft
\n \u2018s new pact with French game publisher
\n Ubisoft
\n is sending a clear signal to investors about long-term plans for its videogame business.<\/p>\n

Microsoft (ticker: MSFT) and Activision Blizzard (ATVI) submitted a restructured transaction that includes the
\n Ubisoft
\n (UBSFY) deal to the U.K. Competition and Markets Authority on Tuesday in an attempt to gain approval for their $68.7 billion merger.<\/p>\n

\n

The U.K. regulator had blocked the Microsoft-Activision merger, citing concerns about how Microsoft could use Activision\u2019s blockbuster Call of Duty <\/em>franchise to stamp out competition in the nascent cloud gaming business. <\/p>\n

The regulator will now give the deal a fresh look. It includes noteworthy concessions, making approval more likely, wrote Raymond James analyst Andrew Marok in a Tuesday note.<\/p>\n

The key difference is Ubisoft will acquire the exclusive cloud streaming rights outside the European Union to existing and future Activision Blizzard games for 15 years. Those rights are in perpetuity, meaning Microsoft will only get exclusive rights to games published after that timeline has expired.<\/p>\n

Microsoft\u2019s Activision acquisition had cleared nearly every hurdle except in the U.K. But the decision to move forward without Call of Duty<\/em> exclusivity outside of the Europe Economic Area, where it has existing streaming pacts lined up, shows the company is willing to make short-term concessions to protect the deal\u2019s long-term value, Marok adds.<\/p>\n

Wedbush analyst Nick McKay told Barron\u2019s<\/em> that even though Microsoft\u2019s Xbox Game Pass likely won\u2019t be the only streaming service to offer new Call of Duty<\/em> games, it still shifts the landscape from a period where Call of Duty<\/em> was only sold for $70 a pop.<\/p>\n

On its own, Activision Blizzard viewed selling individual copies as a better business than licensing out Call of Duty<\/em> to cloud services. But Microsoft sees a far larger market of users who may not want to pay for a high-end computer or console but would pay for a subscription access to games on any device.<\/p>\n

\u201cOver the long term, it\u2019s going to gradually tilt the console market more in Microsoft\u2019s favor, because Game Pass becomes that much better from Activision content being available within it from day one,\u201d McKay said. \u201cThe future of console gaming, because of this deal, is going to become dictated more by the popularity of Xbox Game Pass, and subscriptions in general, than it had been previously.\u201d<\/p>\n

He thinks the deal will still position Microsoft to become a
\n Netflix
\n -like powerhouse in the game streaming business.<\/p>\n

\u201cConsole and PC gaming is unique in that you\u2019re still expected to pony up $60 or $70 up front to try truly triple-A experiences, when music and filmed entertainment have moved to these subscription models,\u201d McKay says. \u201cGames will as well over time because consumers have shown an interest in paying for monthly access to wide portfolios of content, over paying intermittently at higher prices for access to individual pieces of content.\u201d<\/p>\n

Activision Blizzard also owns mobile-games giant King, which published Candy Crush<\/em>. It will give Microsoft a major presence in the mobile games business.<\/p>\n

\u201cAt a minimum, it gives them several high profile mobile IPs,\u201d McKay says. \u201cI think the long term goal would be, within the company, for them to start to catch up with the Apples and Googles of the world, as it relates to their prominence in the mobile ecosystem.\u201d<\/p>\n

Of course, the U.K.\u2019s regulator will still need to approve the agreement. It set an Oct. 18 deadline for an investigation into the restructured deal. <\/p>\n

\u201cWe see this move as alleviating the CMA\u2019s concerns; it is hard to argue that providing rights to a rival firm restricts competition in the market, especially when that rival firm is then given permission to act in their economic interest with the rights they have received,\u201d Marok wrote.<\/p>\n

Write to Connor Smith at connor.smith@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Microsoft \u2018s new pact with French game publisher Ubisoft is sending a clear signal to investors about long-term plans for its videogame business. Microsoft (ticker: MSFT) and Activision Blizzard (ATVI) submitted a restructured transaction that includes the Ubisoft (UBSFY) deal to the U.K. Competition and Markets Authority on Tuesday in an attempt to gain approval […]<\/p>\n","protected":false},"author":1,"featured_media":52071,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-52070","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nMicrosoft's Pact With Ubisoft Signals Long-Term Plan on Videogame Business | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Microsoft \u2018s new pact with French game publisher Ubisoft is sending a clear signal to investors about long-term plans for its videogame business.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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