UK Competition Regulators to Re-Examine Games Market

This industry analysis examines the evolving regulatory landscape of Microsoft’s proposed acquisition of Activision Blizzard, specifically focusing on the UK Competition and Markets Authority’s (CMA) decision to review a restructured version of the deal. The primary thesis suggests that by divesting cloud gaming rights to Ubisoft for the next 15 years, Microsoft has provided the CMA with a politically viable path to approve the merger while addressing previous concerns regarding market dominance in the cloud sector. This restructuring allows the CMA to align with international regulators, such as the European Commission, while maintaining its stance that the original proposal was insufficient.

The scope of the analysis covers major global industry developments as of late August 2023, with a particular emphasis on the UK market and international competition law. Key data points include the CMA’s new Phase 1 investigation deadline of October 18th and Microsoft’s internal player safety statistics, which reveal that only 1% of Xbox players receive behavioral suspensions, with only one-third of those becoming repeat offenders. The report also highlights the expansion of the UK games scene through Rocket Science’s new office in Cardiff, supported by Welsh government initiatives.

Beyond regulatory matters, the analysis tracks significant shifts in industry talent and hardware. It notes the retirement of Charles Martinet as the voice of Mario and the launch of the PlayStation Portal remote-play handheld. Market challenges are also addressed, including a US class-action lawsuit against Roblox regarding illegal minor gambling and the banning of indie titles like Luck be a Landlord in 13 countries due to stricter simulated gambling regulations. The findings conclude that despite previous friction, the Microsoft-Activision deal is now highly likely to proceed following the Ubisoft divestment strategy.