Microsoft signs Nvidia Game deal to ensure controllers in Activision Connect

BRUSSELS, Feb 21 (Reuters) – Microsoft Corp ( MSFTO ) has struck a 10-year deal to bring “Call of Duty” and other Activision ( ATVI.O ) games to Nvidia Corp’s ( NVDAO ) gaming platform. Activision’s hotly contested $69 billion acquisition of the Xbox maker is allowed to close.

Regulators and competitors like Sony have come out strongly against the proposed Microsoft-Activivision tie-up, and the Nvidia deal could address concerns by ensuring more ways for consumers to get games through Microsoft.

Britain said earlier this month that the deal would harm gamers by weakening competition between Xbox and PlayStation, resulting in higher prices, fewer choices and less innovation for millions of players, as well as stifling competition in cloud gaming.

Microsoft Chairman Brad Smith said at a news conference on Tuesday that he was now more optimistic about the Activision acquisition after the Nvidia deal and a similar arrangement with Nintendo Co Ltd ( 7974.T ).

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Bill Eisler, vice president and general manager of Nvidia’s GeForce Now division, said titles like “Call of Duty” won’t be available on Nvidia’s service until Microsoft buys Activision, but Microsoft-owned titles like “Minecraft” will be covered immediately. Under a 10-year license agreement.

“We were a little worried about it at first,” Eisler said of the Microsoft-Activivision deal. “But we approached Microsoft and they were very open about wanting to run cloud gaming and work with us on a 10-year licensing deal. So over time, they made us more and more comfortable.”

Eisler said Nvidia does not pay Microsoft for access to the titles, which is the same arrangement the company has with other gaming companies, such as “Fortnite” maker Epic Games. Instead, Nvidia’s 25 million customers must pay Nvidia to access its cloud gaming platform and Microsoft must pay for its games.

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Microsoft shares fell 2.2%, Nvidia fell 2.8% and Activision fell 0.6%.

Nvidia said it now supports the Xbox maker’s bid to buy Activision, but the deal could still be a tough sell with regulators. Earlier this month, European authorities issued warnings about the Microsoft deal, while the US Federal Trade Commission asked a judge to block it. The UK competition watchdog said Microsoft should divest from “Call of Duty”.

Smith said he hoped rival Sony Group Corp ( 6758.T ) would strike a similar deal with Nvidia.

Sony opposed the Microsoft-Activivision deal, saying last year that it was “bad for competition, bad for the gaming industry and bad for gamers.”

In addition to Sony and Nvidia, other companies including Alphabet Inc ( GOOGL.O ) Google have raised concerns with the FTC about the deal, according to media reports.

Microsoft has promised to keep “Call of Duty” on Sony’s PlayStation. The first-person shooter franchise’s popularity hasn’t waned nearly two decades after its launch, with the latest installment hitting $1 billion in sales in its first 10 days in October.

The US tech giant said the deal was more than “Call of Duty”. It has said buying the maker of “Overwatch” and “Candy Crush” will supercharge its growth in mobile, PC and cloud gaming and consoles, helping it compete with the likes of Tencent ( 0700.HK ). Sony.

(This story has been corrected to clarify that Nvidia does not charge game publishers to make titles available on its cloud service in Episode 7)

Reporting by Fu Yun Che in Brussels and Stephen Nellis in San Francisco Editing by Peter Henderson and Matthew Lewis

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