Microsoft has announced a significant 10-year agreement to bring Activision games, including the popular Call of Duty franchise, to Nvidia’s gaming platform. However, this agreement is contingent upon Microsoft’s completion of their highly contested $69 billion acquisition of Activision. Regulators and competitors, such as Sony, have strongly opposed the proposed Microsoft-Activision merger. While this move may address concerns by providing more avenues for consumers to access Microsoft-controlled games, global regulators have remained skeptical about the acquisition.
Just recently, Britain expressed apprehension regarding the deal, suggesting it could harm gamers by diminishing the rivalry between Xbox and PlayStation. The consequences may include higher prices, limited choices, reduced innovation for millions of players, and a stifling of competition in the cloud gaming industry.
Microsoft President Brad Smith, during a news conference, expressed cautious optimism about finalizing the Activision acquisition following the Nvidia partnership and a similar arrangement with Nintendo.
Phil Eisler, the vice president and general manager of Nvidia’s GeForce Now segment, clarified that titles like Call of Duty will only be available on Nvidia’s service if Microsoft successfully acquires Activision. However, other Microsoft-owned titles, such as Minecraft, are immediately covered under the 10-year license agreement.
Initially, there were concerns regarding the Microsoft-Activision deal from Nvidia’s perspective. However, after consulting with Microsoft, Eisler stated that they were reassured of Microsoft’s commitment to enabling cloud gaming and their willingness to collaborate on a long-term license agreement. This gradually increased Nvidia’s comfort level with the situation.
Importantly, Nvidia is not paying Microsoft for access to these titles. This arrangement aligns with their agreements with other gaming companies, like Epic Games, and instead requires Nvidia’s 25 million customers to pay for access to the cloud gaming platform and the games from Microsoft.
The announcement had an impact on the stock market, with Microsoft’s shares falling 2 percent, Nvidia’s dropping 3.4 percent, and Activision’s declining by 0.7 percent in a generally bearish market.
Nvidia has now announced its support for Microsoft’s bid to acquire Activision. However, regulatory approval for the deal remains uncertain. European officials have already issued a warning to Microsoft, and the US Federal Trade Commission has requested a block on the acquisition. The British competition watchdog has even suggested that Microsoft may need to divest the Call of Duty franchise.
Despite the opposition, Microsoft’s Brad Smith expressed hope that Sony would consider pursuing a similar deal with Nvidia. Sony has been one of the leading voices against the Microsoft-Activision merger, claiming it would be detrimental to competition and the gaming industry as a whole.
In addition to Sony and Nvidia, other companies, including Google’s Alphabet, have expressed concerns about the deal to the Federal Trade Commission, according to media reports.
Microsoft has affirmed its commitment to keep Call of Duty available on Sony’s PlayStation. The popularity of this first-person shooter franchise remains strong, as evidenced by its achievement of $1 billion in sales within its first 10 days of release in October.
Microsoft insists that the acquisition extends beyond Call of Duty. They believe that purchasing a company that produces games like Overwatch and Candy Crush will boost their growth in mobile, PC, and cloud gaming, as well as strengthen their position in the console market, allowing them to compete with industry giants like Tencent and Sony.
Overall, Microsoft’s agreement to bring Activision games to Nvidia’s platform marks a significant development in the gaming industry. However, the potential acquisition of Activision still faces obstacles and uncertain regulatory approval.
© Thomson Reuters 2023
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