22 August 2023
If you are covering the latest news on Microsoft’s acquisition of Activision Blizzard, please find below a comment from Ben Barringer, equity research analyst at Quilter Cheviot:
“The new deal between Microsoft, Activision Blizzard, and now Ubisoft, should satisfy the CMA, but as with all corporate activity, nothing is certain until the dotted line has been signed. This new iteration of the deal effectively sees Ubisoft become the middleman in it all, in order to give some neutrality in the market, acting like the Switzerland of cloud gaming if you will.
“However, while this deal may now pass muster, there are a few things to bear in mind. Firstly, we do not yet know what the window will be between games being released by Microsoft on console to them then being available via the cloud. There will likely be agreements in place to make this window as small as possible, but it is one to watch as Microsoft will want as much exclusivity as possible.
“The second point to note is that cloud gaming only commands around 4% of the market. Now, Microsoft is a dominant player in this small market, with Xbox owning more than 60% of the market share. This is clearly what the CMA was worried about when it originally rejected the deal, but it may have been focusing on the wrong fight. It is far from a foregone conclusion that the cloud will be the future of gaming. Alphabet recently shut down its Stadia service following a lack of uptake, and the numbers so far for the wider market haven’t exactly been screaming disruption. This isn’t to say it won’t eventually happen, but there is a long way to go before consumer behaviour will ultimately change in this market.”
