Microsoft was knocked out on Monday in the hotly contested arena of sports computer games, clearing the way for a three-way fight between traditional games publishers.
Ubisoft said it was buying the technology, tools and source code shipped in Microsoft Game Studios' team sports games, including the NHL Rivals hockey game, gridiron football's NFL Fever, basketball's NBA Inside Drive and the MLB Inside Pitch baseball game.
Microsoft did not reveal the terms of the deal. In December, it announced publisher Take-Two was buying its Salt Lake City studios, which developed other sports games including the Top Spin tennis game.
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Microsoft has been gradually withdrawing from developing sports games. Last March, it announced it would not be bringing out new versions of its titles. The move was seen as a sop to Electronic Arts, the world's biggest games publisher, to persuade it to develop online versions of its sports games for Microsoft's Xbox Live service.
In May, EA ended its boycott of Xbox Live when the two companies announced titles such as Fifa Soccer and Madden NFL would be developed for users to play over the internet on Xbox Live.
In the past few weeks, competition has intensified, with EA announcing a five-year exclusive licensing deal with the National Football League and Take-Two reaching a long-term licensing rights agreement with Major League Baseball. Ubisoft has now signaled its intent to be a third major force.
The company also announced it had signed an exclusive license with Vijay Singh, the number-one ranked golfer, to develop a game. This would directly compete with EA's Tiger Woods golf game.