Chalk this one up to “I didn’t see this coming…” in the Microsoft/Activision Blizzard acquisition saga. In a bid to appease the UK Competition and Markets Authority, Microsoft and Ubisoft have announced that the former will be selling off its Activision Blizzard cloud gaming rights to Ubisoft — and then licensing them back for Xbox Game Pass cloud gaming.

While there were rumours that Microsoft was going to divest its cloud gaming rights for Activision Blizzard games, many analysts expected it to apply to the UK only and not worldwide.

“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights. This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.

“Under the restructured transaction, Microsoft will not be in a position either to release Activision Blizzard games exclusively on its own cloud streaming service – Xbox Cloud Gaming – or to exclusively control the licensing terms of Activision Blizzard games for rival services.”

Brad Smith – Vice Chair & President

Under the terms of the agreement, Ubisoft will pay Microsoft a “one-time payment and through a market-based wholesale pricing mechanism, including an option that supports pricing based on usage.” The agreement with Ubisoft will keep Microsoft’s EU obligations to provide cloud streaming rights in the EU in place, including obligations to Nvidia, Boosteroid, Ubitus, and Nware. Ubisoft will then have the rights to add Activision Blizzard to Ubisoft+, as well as other streaming platforms.

Ubisoft had this to add in their press release:

“We’re dedicated to delivering amazing experiences to our players wherever they choose to play. Over the past 15 years we’ve built and honed our online services and distribution ecosystem into one of the most complete in the industry. Today’s deal gives players even more opportunities to access and enjoy some of the biggest brands in gaming.”

Chris Early, Senior Vice President, Strategic Partnerships and Business Development, Ubisoft

If you’re concerned that you’ll have to subscribe to Ubisoft+ as well as Xbox Game Pass in order to access Activision Blizzard games, this portion of the deal covers cloud gaming only. In other words (as best as I can tell), Microsoft will still be able to bring Activision Blizzard games to Xbox Game Pass. However, the ability to stream those games via Xbox Cloud Gaming will have to come through licensing from Ubisoft, which other reports indicate likely won’t be an issue.

What I find most interesting about the deal is that Microsoft chose to partner with Ubisoft and not EA. Given that EA Play is already part of Xbox Game Pass, complete with trials of games as they release and access to older titles in the EA Play Vault, it seems like that would have been a better fit. Then again, perhaps that would have been too close to Microsoft for the UK Competition and Markets Authority’s liking, or perhaps Ubisoft just offered Microsoft a better deal.

At the end of the day, we’ll just have to see if this new re-structuring of the Microsoft/Activision Blizzard deal appeases the UK regulators and how it will unfold down the road for access to Activision Blizzard games like Call of Duty and Diablo down the road on Xbox Game Pass and other non-Ubisoft cloud game streaming services.