CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
MSFT completed its $75B Activision Blizzard (ATVI 94 NR) deal after the U.K.’s Competition and Markets Authority (CMA) said the deal no longer poses a competitive risk within the high-growth cloud streaming gaming market. MSFT agreed to give up cloud streaming rights (ex. EU) to Ubisoft (UBI EUR29 ***) to get approval from the CMA. UBI will compensate MSFT for the cloud rights to ATVI’s games through a one-off payment and recurring payment agreement that supports pricing based on usage. Although we believe MSFT gave up a lot to get this deal done (e.g., cloud gaming rights to UBI, long-term deals for gaming rights to competitors, and free licenses to stream in the EU), we note that it does bolster its own streaming offering (Xbox GamePass). MSFT will have more content/titles to offer, creating more revenue opportunities on the gaming side, while GenAi initiatives have the potential for MSFT to be a more dominant force in gaming. We see the deal adding 3%-pts. of inorganic growth to revenue over the next year.