Revised Microsoft-Activision Deal Sparks 9% Surge in Ubisoft Stock

Shares of the esteemed French game maker, Ubisoft, experienced a remarkable 9% surge in European trading on Tuesday following a groundbreaking announcement. Microsoft, a global tech leader, unveiled a revised takeover proposal for Activision Blizzard, a leading game company, in a bid to assuage concerns raised by cautious U.K. regulators.

Earlier this year, the original $69 billion deal put forth by Microsoft was blocked by the U.K.’s Competition and Markets Authority (CMA) due to potential competition concerns in the burgeoning cloud gaming market. While Microsoft faced regulatory obstacles in the U.S. and Europe as well, the CMA emerged as the most stringent critic of the merger. However, the latest development reveals a renewed agreement between Microsoft and Activision Blizzard, subject to investigation by the CMA, with a decision deadline set for October 18. Crucially, Microsoft will not acquire cloud rights for existing Activision Blizzard PC and console games or future releases during the next decade and a half. These rights will be divested to Ubisoft ahead of Microsoft’s acquisition.

Brad Smith, Microsoft’s esteemed President, lauded the revised deal, highlighting the unique opportunity it presents to Ubisoft for cloud gaming distribution. In a recent blog post, Smith expressed optimism, stating, “The agreement will enable Ubisoft to innovate and encourage different business models in the licensing and pricing of these games on cloud streaming services worldwide.” Ubisoft, renowned for its popular titles from the Assassin’s Creed, Tom Clancy’s Rainbow Six, and Far Cry franchises, stands to benefit significantly as an independent third party, facilitating the provision of Activision Blizzard’s gaming content to various cloud gaming service providers, including Microsoft itself. It is worth noting that Ubisoft already offers cloud games on platforms like Amazon Luna and Nvidia’s GeForce Now, which directly compete with Microsoft’s Xbox streaming service.

The agreement also stipulates that Ubisoft will compensate Microsoft through a one-off payment and a market-based wholesale pricing mechanism, incorporating pricing options based on usage. This arrangement underscores the mutually beneficial nature of the partnership and the commitment to fostering innovation and growth in the ever-evolving gaming industry.

– Additional reporting by CNBC’s Arjun Kharpal.

– Corrigendum: Ubisoft is the publisher behind the iconic Assassin’s Creed game franchise. Apologies for the earlier misspelling of the franchise name.