Ubisoft CEO Explains Why They Acquired Activision’s Cloud Streaming Rights from Microsoft
Ubisoft came out of nowhere to 'rescue' Microsoft from its litigation with UK regulator CMA (Competition and Markets Authority). As you'll undoubtedly recall, the CMA was the only regulator to successfully block Microsoft's groundbreaking acquisition of Activision Blizzard. Microsoft appealed to the CAT (Competition Appeal Tribunal), but it would have been a long and arduous road to pursue, as CAT could only recommend another outcome to the CMA without being able to enforce it.
Ultimately, it might have been a lengthy, costly, and perhaps even futile legal battle, not to mention that there was no guarantee Activision would have agreed to extend the terms of the deal for as long as that whole process might have taken. However, Microsoft decided to sell its cloud streaming rights to a third party to persuade the CMA, and it found a very interested buyer in Ubisoft. The partial divestiture worked, as the CMA issued a preliminary approval for the restructured deal last week.
Today, Chief Executive Officer and Founder Yves Guillemot talked about the company's motivation behind the deal (which will consist of a one-time fee of an undisclosed amount) in an interview with the Financial Times.
When Netflix first said it was going to go into streaming, their shares fell a lot and they were widely criticised. Today, we see what they have become. It’s going to be the same with video games, but it will take time. But when it takes off, it will happen very quickly.
We strongly believe in the next five to 10 years, many games will be streamed and will also be produced in the cloud. That’s what pushed us to go forward with the Microsoft deal.
The Ubisoft CEO also noted that developing countries might jump more quickly than others on cloud streaming, providing access to regions that traditionally do not engage with the console market.
Countries that need to progress very quickly often jump to new technologies and skip old methods of the old systems. So, we think that these regions will move more quickly to streaming and the cloud than others.
News of the deal helped push Ubisoft shares forward, though they are still far from the company's historical heights after a series of game delays and cancellations. Last year, Ubisoft got a big investment (€300 million) from Tencent as it tried to stave off hostile acquisitions.
In the new Financial Times interview, Ubisoft CEO Yves Guillemot said the board would listen to proposals:
We wanted to work with Tencent to ensure that the board had good control of the company’s capital. But that doesn’t stop the board from listening to proposals.
However, the terms of the agreement with the CMA prevent Microsoft from acquiring Ubisoft for the next fifteen years.
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