Microsoft has acquired Zenimax Media Inc, the parent company of Bethesda Softworks in its most expensive video game deal in history. The $7.5 billion cash acquisition will boost Microsoft’s gaming portfolio, giving gamers something to look up to following announced delays in the release of Halo Infinite, the biggest Xbox exclusive.
The deal will close before June 30, 2021.
Bethesda is one of the largest, most critically acclaimed game developers in the world with a talent of 2,300 worldwide, and renown games like the Elder Scrolls, Fallout, Wolfenstein, Starfield and Doom.
Microsoft CEO Satya Nadella says the acquisition will boost its gaming content capacity, as the company also plans to release games on other platforms in future, making their games broadly available.
“With the acquisition of Bethesda, we metaphorically and literally double our gaming content capacity,” said the Chief Executive in an interview with Bloomberg.
Following the acquisition, Microsoft will own Bethesda game titles, as well as its id Tech game engine by id Software. The game titles will be available on the company’s Game Pass Subscription Package, which gives players access to over 200 games.
Adding Bethesda’s titles on Game Pass is likely to attract more users and revenue on the platform that already surpassed 15 million subscribers as of April 2020. The broader portfolio and other Game Pass Ultimate perks like one-day launches, cloud gaming could better position it’s Xbox Series X and Series S against Sony’s PlayStation 5. Both consoles debut in November this year.
What the Microsoft Acquisition Means for Bethesda
For Bethesda, the acquisition deal is an avenue to become a better developer and publisher, using resources from Microsoft to make better games. Nevertheless, the company will continue working on the same games, and still publish them.
Pete Hines, Senior Vice President at Bethesda Softworks, says,
“We’re still working on the same games we were yesterday, made by the same studios we’ve worked with for years, and those games will be published by us. So why the change? Because it allows us to make even better games going forward. Microsoft is an incredible partner and offers access to resources that will make us a better publisher and developer.”
Bethesda’s previous agreements to debut games on the PlayStation 5 will remain. Head of Xbox Phil Spencer says Microsoft will address the availability of games on different consoles on a case by case basis.
Bethesda is the third-largest acquisition in Microsoft history, surpassed by the Skype valued at $8.5 billion in 2011 and LinkedIn at $26.2 billion in 2016. Microsoft acquired Github for $7.5 billion in 2018.
The acquisition shows Nadella’s growing investments towards gaming pegged on his optimism in the growth of interactive media. Microsoft’s gaming strategy has come a long way since including Spider Solitaire as part of Windows 98’s Microsoft Plus effectively making it the most played game on Windows PCs by 2005. In 2018 and 2019, Microsoft acquired seven gaming studios, eyeing more revenues the gaming industry. The industry is expected to generate over $200 billion annual revenues in 2021. It is therefore impossible to skip the games when talking about industries that are very fast growing.
“Gaming has been there at the foundation of this company, next to (programming) languages perhaps and maybe operating systems, but the point is, going forward this interactive media has got much more reach,” Nadella said.
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