U.K.’s CMA says Ubisoft cloud deal addresses previous Microsoft-Activision deal concerns
“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.
NEW RELEASES:
This week’s major release is Electronic Arts’ (EA) soccer sim “EA Sports FC 24,” which launches September 29 on PC, Xbox One (MSFT), Xbox Series X/S, PlayStation 4 (SONY), PS5, and Nintendo Switch (NTDOY). Also out this week is CD Projekt Red’s (OTGLY) “Cyberpunk 2077: Phantom Liberty,” an expansion to 2020 role-playing game “Cyberpunk 2077,” which releases September 26 on PC, PS5, and Xbox Series X/S.
MICROSOFT/ACTIVISION:
Last week, the U.K.’s Competition and Markets Authority said that the sale of Activision’s (ATVI) cloud gaming rights to Ubisoft (UBSFY) substantially addresses previous concerns and opens the door to the deal being cleared. “While the CMA has identified limited residual concerns with the new deal, Microsoft has put forward remedies which the CMA has provisionally concluded should address these issues,” the regulator said. “The CMA is now consulting on the remedies before making a final decision.”
UNITY BACKTRACKS:
After Unity (U) received significant backlash for announcing a runtime fee for publishers per each software install, Unity Create head Marc Whitten said in a blog post: “I want to start with simply this: I am sorry. We should have spoken with more of you and we should have incorporated more of your feedback before announcing our new Runtime Fee policy…Our Unity Personal plan will remain free and there will be no Runtime Fee for games built on Unity Personal. We will be increasing the cap from $100,000 to $200,000 and we will remove the requirement to use the Made with Unity splash screen. No game with less than $1 million in trailing 12-month revenue will be subject to the fee. For those creators on Unity Pro and Unity Enterprise, we are also making changes based on your feedback. The Runtime Fee policy will only apply beginning with the next LTS version of Unity shipping in 2024 and beyond. Your games that are currently shipped and the projects you are currently working on will not be included – unless you choose to upgrade them to this new version of Unity. We will make sure that you can stay on the terms applicable for the version of Unity editor you are using – as long as you keep using that version. For games that are subject to the runtime fee, we are giving you a choice of either a 2.5% revenue share or the calculated amount based on the number of new people engaging with your game each month. Both of these numbers are self-reported from data you already have available. You will always be billed the lesser amount.”
Following the announcement, BofA said that Unity’s stock is more attractive now than it was the day before the initial fee announcement. Unity and investors are “better off today and we view the recent selloff as a particularly attractive buying opportunity” after Unity recently announced several refinements to address concerns following developer feedback regarding its recently introduced Runtime install-based fee pricing structure.
Additionally, Barclays said that the new pricing change is a “step in the right direction” for Unity as it protects developers on a number of fronts, including a cap for the runtime fee at 2.5% of revenue. Applying the cap to a prior bottom up analysis, this reduces the firm’s estimated annual runtime fee by 27% to $192M. The firm believes the changes rolled out on Friday were necessary as the first step to re-gain the trust of its developers while still maintaining most of the economic benefit from the runtime fee, which the firm believes still positions Unity well to reach its $1B EBITDA run-rate target by Q4 of 2024.
OTHER STORIES TO WATCH:
- Video game voice actors and motion capture performers in the SAG-AFTRA union have voted to strike if talks on a new labor contract fail, Reuters reports [read more]
- Ubisoft (UBSFY) CEO Yves Guillemot said that streaming will transform the video game industry, FT reports [read more]
- Meanwhile, Ubisoft confirmed that it is working on “Tom Clancy’s The Division 3” [read more]
- Video game software sales jumped nearly 29% year-over-year in Europe in August, Gamesindustry.biz reports [read more]
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Originally Posted September 26, 2023 – What You Missed This Week in Video Games
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