Microsoft signs a deal with Nvidia to make regulators happy about the Activision merger.
Authorities and rivals such as Sony have vehemently opposed the planned Microsoft-Activision merger. Regulators throughout the globe have expressed skepticism about the purchase, even though the move may assuage concerns by expanding users' access to Microsoft-owned games.
The UK said earlier this month that the agreement might be detrimental to gamers by diminishing the competitiveness between Xbox and PlayStation, leading to higher costs, fewer options, and less innovation for millions of users, as well as restricting competition in cloud gaming.
Microsoft President Brad Smith said at a press conference on Tuesday that he is now more hopeful about completing the Activision purchase after the Nvidia pact and a similar agreement with Nintendo Co Ltd. (7974.T).
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Phil Eisler, vice president and general manager of Nvidia's GeForce Now segment, stated that "Call of Duty" will not be accessible on Nvidia's service unless Microsoft acquires Activision.
In contrast, Microsoft-owned titles such as "Minecraft" are immediately covered under the 10-year license agreement.
Eisler said regarding the collaboration between Microsoft and Activision, "At first, we were a little bit skeptical."
"After that, we approached Microsoft, who was excited to support cloud gaming and willing to work with us on a licensing deal that would last ten years. As a result, they gradually made us more used to it over the course of time."
Eisler said that Nvidia does not pay Microsoft for access to the titles, which is consistent with the company's relationship with other gaming businesses, such as "Fortnite" developer Epic Games. Instead, Nvidia's 25 million consumers will need to pay Nvidia for access to its cloud gaming platform and pay Microsoft for its games.
Microsoft shares declined 2%, Nvidia shares fell 3.4%, and Activision shares lost 0.7% in a generally negative market on Tuesday afternoon.
Nvidia said it now supports the Xbox manufacturer's quest to acquire Activision, although the transaction may still be challenging to sell to authorities.
Earlier this month, European regulators warned Microsoft about the merger, while the US Federal Trade Commission sought a court to prohibit it.
The British competition watchdog has suggested that Microsoft may be required to sell "Call of Duty."
Smith hoped Sony Group Corp (6758.T) might contemplate a similar partnership with Nvidia.
Sony has resisted the Microsoft-Activision agreement, declaring last year that it was "terrible for competition, bad for the gaming industry, and awful for gamers themselves."
According to media reports, several corporations, including Alphabet Inc's (GOOGL.O) Google, had voiced concerns to the FTC about the transaction.
Microsoft has committed to maintaining "Call of Duty" on the PlayStation. The popularity of the first-person shooter series has not waned almost two decades after its inception, with the most recent iteration selling $1 billion in its first ten days of release in October.
The American computer titan said the partnership goes beyond "Call of Duty." It has said that acquiring the developer of "Overwatch" and "Candy Crush" will accelerate its expansion in mobile, Desktop, and cloud gaming, as well as consoles, allowing it to compete with Tencent (0700. HK) and Sony.
