UCL School of Management

25 August 2023

Joost Rietveld shares his analysis of Microsoft's restructured deal with Ubisoft

Following an intriguing twist to the Microsoft-Activision acquisition saga, UCL School of Management Associate Professor Dr. Joost Rietveld dissects the newly restructured deal between Microsoft and Ubisoft. This development comes on the heels of the UK Competition and Markets Authority’s (CMA) concerns about the original acquisition’s implications for cloud game streaming.

The acquisition, which holds the promise of reshaping the gaming industry, has encountered a roadblock with the Competition and Markets Authority (CMA) formally blocking the merger in its original form. However, Microsoft has proposed a restructured transaction that could potentially address the regulatory concerns.

Joost’s insights into the situation provide a comprehensive understanding of the recent developments. He points out that the CMA’s concerns primarily revolve around cloud gaming, a small but potentially transformative aspect of modern gaming. Microsoft’s initial acquisition proposal raised these concerns, prompting the regulatory body to intervene.

In response, Microsoft has proposed a restructured deal that involves the transfer of cloud streaming distribution rights for Activision games to Ubisoft, another major player in the gaming industry. This restructured deal aims to alleviate the CMA’s concerns by narrowing the scope of the acquisition. Ubisoft is poised to become a significant distributor of Activision games through its Ubisoft+ subscription service, expanding its offerings and potentially licensing streaming access to other cloud gaming providers and console makers.

Joost also emphasises that this move underscores Microsoft’s stated intentions for the acquisition. That is to expand the reach of its Game Pass offering, which aims to make a diverse range of games accessible to a wider audience including to consumers on PC and mobile platforms. Activision’s portfolio of games includes Call of Duty, Candy Crush, and World of Warcraft. Cloud gaming, although a factor in the acquisition, is not its primary motivation. 

Moreover, the agreement between Microsoft and Ubisoft does not conflict with Microsoft’s existing commitments to the European Commission (EC). Earlier agreements with cloud gaming services, such as NVIDIA GeForceNow, Ubitus, and Boosteroid Cloud Gaming, remain unaffected.

The CMA’s decision to open a new investigation into the restructured transaction signifies its cautious approach. Joost shares the CMA CEO Sarah Cardell’s statement that the investigation doesn’t indicate a green light but rather a thorough assessment of the details and their potential impact on competition.

In a recent update, shedding more light on the situation, Joost is quoted in Bloomberg where he offers insights into why cloud streaming of video games might not follow the same trajectory as music and video. Additionally, he is also featured in CTFN and discusses why Ubisoft could be a logical choice for Microsoft in terms of potential partners for the restructuring of the transaction. It also delves into how this choice might affect the gaming industry moving forward.

Rietveld’s expertise sheds light on the intricacies of this complex deal, showcasing the multi-dimensional nature of the gaming industry’s transformation. His insights offer a valuable perspective for industry professionals, stakeholders, and gamers alike, helping them navigate the evolving landscape with a clearer understanding of the developments at hand.

As the CMA investigation deadline approaches on 18 October, the industry’s attention remains fixed on the unfolding developments. The outcome of this investigation carries significant implications for the gaming industry, making it a critical point of interest for stakeholders, industry professionals, and gamers alike.

For the full analysis, visit Dr. Joost Rietveld’s LinkedIn post.

Last updated Wednesday, 30 August 2023