Microsoft has signed Nintendo deal, Smith says, set to defend Activision merger

Juergen Schwarz/Getty Images News

Microsoft (NASDAQ:MSFT) President Brad Smith said on Tuesday the company had signed a deal to bring Xbox games to Nintendo (OTCPK:NTDOY), as he attended a hearing to defend the company's proposed acquisition of Activision Blizzard (NASDAQ:ATVI).

In a tweet, Smith said Microsoft (MSFT) had signed a "binding 10-year contract" to bring Call of Duty to Nintendo (OTCPK:NTDOY), releasing the titles on the same day with all features and content, in an effort to provide "long term equal access" of the popular video game series to other platforms.

Call of Duty is produced by Activision (ATVI), which is currently in the process of being acquired by Microsoft (MSFT) for $69B.

Microsoft (MSFT) initially announced the deal with Nintendo (OTCPK:NTDOY) in December.

Separately on Tuesday, Smith, along with Microsoft Gaming Chief Executive Officer Phil Spencer and Activision (ATVI) CEO Bobby Kotick, defended the proposed deal before European Union antitrust regulators to convince them that the deal would boost competition, according to Reuters.

In total, 18 senior executives from the two companies were slated to attend the hearing in an effort to defend the deal, the news outlet added. Conversely, Sony (SONY), which opposes the deal, sent its gaming chief, Jim Ryan, while Google (GOOG) (GOOGL) and Nvidia (NVDA) also sent representatives.

Update: Speaking after the hearing, Microsoft's (MSFT) Smith said the company would bring both its PC games and Activision games to Nvidia's (NVDA) GeForce Now streaming service, while adding that consumers largely back the deal to acquire Activision Blizzard (ATVI).

Other participants include the European Games Developer Federation, video game company EA (EA) and competition regulators from various European countries, including Germany, Italy and France.

The Activision-Microsoft deal is already seeing extensive antitrust reviews and challenges in the U.S., U.K. and the EU.

Microsoft (MSFT) shares fell 2% in mid-day trading on Tuesday, while Activision (ATVI) fell less than 1%.

Last week, investment firm Deutsche Bank upgraded Activision Blizzard citing that the company has the "highest concentration" of must-have content, including its popular Call of Duty franchise.

This story has been updated to include comments from Smith about Nvidia's streaming service.

Comments

[LifelongMetsfan1]

The Activision buy is not about gaming. If Microsoft can pull this off and buy Activision in 5-10 yrs Microsoft will have developed a meta-like consumer goods delivery platform. Think virtual Amazon/Wallmart/CVS etc all on one location.

[investerinquiry999]

@LifelongMetsfan1 So... like the Google Play store, the Xbox store, the Playstation store, the Nintendo eShop, or the Apple App store, Steam? If Microsoft buys Activision, all these alternatives die?

[prema_donna]

No one buys Call of Duty (or most Activision games) on Switch anyway. This has just been a stall tactic to try and crush the merger.

[Caywyn]

@prema_donna They don’t buy call of duty on switch because it doesn’t exist.

[prema_donna]

@Caywyn Call of Duty games have never been popular on Nintendo systems. No one bought them on the Wii when they were still released, and no one bought them on any Nintendo console. FPS isn't a popular genre on Nintendo consoles, and with the possible exception of the Super Nintendo and the Nintendo 64, that has always been the case. Activision Blizzard games have been primarily popular on PC, XBOX Series X, and PS5 in roughly that order.

[Bitzap]

@prema_donna

"FPS isn't a popular genre on Nintendo consoles"

Fortnite was very popular on the Switch. For example:

esports.gg/...

[PanicFirst]

Nintendo signed a piece of paper that doesn't mean anything.

[while adding that consumers largely back the deal to acquire Activision Blizzard (ATVI).]

Really?

[Caywyn]

@PanicFirst I do, why wouldn’t I? I don’t believe for a second that Microsoft has any reason to limit call of duty, and the acquisition should make game pass even better. As an added benefit, Microsoft might be able to clean up the dumpster fire that is Activision’s management.

[Bruce Bohannon]

Thanks SA.

[Blowback2]

Long time MSFT holder. Kinda don’t care but leaning towards wanting this deal to fail. Don’t think ANY gaming company is worth 69 Billions.

[investerinquiry999]

@Blowback2 It is a large purchase price. However, Microsoft sees cloud gaming/game subscriptions as important to the future of gaming. Microsoft views Activision content as helpful to achieving its subscriber target numbers. If they have 300 million subscribers at ~$15 per month, and if we estimate a 50% profit margin, Activision will pay for itself within 5 years. Worth the purchase price if the content drives subscriptions.

[Nuclear Nightclub]

@Blowback2 They are buying the best. That makes sense. Why buy something else than best when you've got the money? Over the long-term, that is decades, it might be worth it.

[TundraXD]

@Blowback2 Gaming is a $400B+ industry globally. Why would a single company not ever be worth this amount?

[Jakelamotta]

Mmhh activision is a short position with limited downside I guess. If the deal falls through activision probably drops by 20-30%

[RSI Raistlin]

@Jakelamotta Thats a big hope for 20/30%. So you think itll go to the mid 50s with a 3 billion cash infusion? I doubt it but I hold puts at 50 just in case. I think its 15% upside and about the same to the downside. But the difference is the upside is permanent and I think within 2 weeks itll pop off the downside with alot of cash flexibility.

[bluescorpion0]

'business' is now an arm of government. Markets really have no purpose to exist since the West pivoted to communism, or crony capitalism at best.