Why Ubisoft acquired Activision's cloud streaming rights: Insights from the CEO

Ubisoft unexpectedly stepped in to assist Microsoft in its legal battle with the UK regulator CMA (Competition and Markets Authority), which had thwarted Microsoft's ambitious acquisition of Activision Blizzard. Microsoft had lodged an appeal with the CAT (Competition Appeal Tribunal), but this route would have been lengthy and uncertain, as CAT could only recommend a different outcome to the CMA without enforcement powers.

Why Ubisoft acquired Activision's cloud streaming rights: Insights from the CEO

Ultimately, pursuing this legal battle might have proved costly and futile, with no assurance that Activision would have agreed to extend the deal's terms during the protracted process. However, Microsoft opted to sell its cloud streaming rights to a third party to sway the CMA, and Ubisoft emerged as a keen buyer. This partial divestiture proved successful, leading to a preliminary approval from the CMA for the revised deal last week.

Today, Yves Guillemot, Chief Executive Officer and Founder of Ubisoft, elaborated on the company's rationale for this deal in an interview with the Financial Times.

"When Netflix initially ventured into streaming, their stock plummeted, and they faced widespread criticism. Today, we witness their tremendous success. The same trajectory is likely for video games, albeit it will take time. However, when it gains momentum, it will do so rapidly. We firmly believe that in the next five to ten years, numerous games will be streamed and produced in the cloud. This belief drove us to partner with Microsoft."

Guillemot also highlighted the likelihood that developing countries would adopt cloud streaming more rapidly than others, expanding access to regions traditionally less involved in the console market.

"Nations needing swift progress often leap to new technologies, bypassing older systems. We anticipate these regions will embrace streaming and cloud services more swiftly than others."

The announcement of this deal boosted Ubisoft's stock, although it still remains below the company's historical highs due to game delays and cancellations. Notably, Tencent made a substantial €300 million investment in Ubisoft last year in a bid to fend off hostile takeovers.

During the Financial Times interview, Yves Guillemot mentioned that the board would be open to considering proposals:

"While we partnered with Tencent to ensure strong board control over the company's capital, it doesn't preclude the board from considering other proposals."

However, the terms of the agreement with the CMA stipulate that Microsoft cannot acquire Ubisoft for the next fifteen years.

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