Game Wars: Microsoft Acquires ZeniMax Media For 7.5 Billion
While I was all set to write an article on something else this morning about the video game world, huge news hit the wire. Microsoft had bought the company that owns some of the most recognized gaming IP’s in the business. The worlds of Fallout, Elder Scrolls, Doom, Wolfenstein, Dishonored, Prey, and Quake, among others are now owned by the Redmond, WA company.
ZeniMax Media, the parent company of Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios, agreed to be bought out by Microsoft for a whopping 7.5 billion dollars.
Also to note, at the time of this writing, the Xbox Series X and the Series S are slated to go up for preorders tomorrow at 8 AM PT (September 22). Brilliant move by the Microsoft marketing team.
What This Means
Microsoft swung for the fences on this one and hit it out of the park. The company is looking at the video game landscape and getting ahead of things. Content is now king. Gone are the days of launching a gaming console with physical games. Streaming has taken over music and movies, just ask Apple, Amazon, Disney, Netflix, and Hulu. Consumers want their entertainment instantly, and Microsoft knows this. That’s why their Game Pass and xCloud game streaming service, has been such a huge hit for them. For a monthly fee, gamers can play a huge library of games, including the hottest new titles, whenever they want. No longer will they have to drop $60-$70 bucks to buy the latest hit. Microsoft knows that to have a ton of content to offer on Game Pass they need to own the creators of that content. They realized that the best thing to do was to begin buying up game developers across the world that make the games we love to play. They already own a bunch of great game studios:
- 343 Industries (Halo)
- The Coalition (Gears of War 5)
- Compulsion Games (We Happy Few)
- The Initiative (led by 2013 Tomb Raider boss David Gallagher)
- inXile Entertainment (Wasteland 2)
- Mojang (Minecraft)
- Ninja Theory (DmC: Devil May Cry, Hellblade: Senua’s Sacrifice)
- Obsidian Entertainment (Fallout: New Vegas)
- Playground Games (Forza Horizon)
- Rare (Sea of Thieves)
- Turn 10 Studios (Forza Motorsport)
- Undead Labs (State of Decay)
Now with the purchase of ZeniMax Media, Microsoft has positioned itself to become an even bigger player in the game content world. Game Pass and xCloud are now setting themselves up to become the dominant game streaming service for video game consoles, if it wasn’t already. Adding all of the major game IP’s that come with the ZeniMax purchase will do nothing but strengthen the Xbox Series X and S going forward because of Game Pass and xCloud. What many thought would be another sales victory for Sony and their soon to be released PS5 console are now rethinking that prediction. Microsoft is playing the long game, with a surging Game Pass and the titles to back it up. It would be interesting to see what the heads at Sony and Nintendo are thinking about right now.
All of this doesn’t even touch on the issue of title exclusivity. Microsoft has now put itself in a win-win position with all of the gaming IP’s they control. Where big titles such as Fallout and Elder Scrolls games would once be released on multiple platforms, now Microsoft can turn them into exclusives only available on Xbox or PC, leaving Sony and Nintendo empty handed. On the other hand, if Sony and Nintendo want those games on their systems they will now be PAYING Microsoft, their competitor, for them. One can see why Microsoft’s strategy makes so much business sense.
The Console Wars Are Over
While Microsoft would love to sell more game consoles than Sony and Nintendo, their long-term strategy doesn’t depend on it for market dominance. Game Pass and xCloud have people playing on their phones and PCs as well. While the PS5 may sell more units out of the gate, Microsoft is banking on the strategy that with what they can offer via Game Pass and xCloud, will result in more people subscribing to their service. A nice fringe benefit being more sales of Xbox Series consoles. Unless Sony and Nintendo really up their services to the tune of what Microsoft is already doing, they might find themselves on the losing end of gaming revenue share. Microsoft will gladly hand the two companies a “victory” in the console war, but in the minds of people in Redmond that “war” was over the minute they developed Game Pass and xCloud. This is the next generation of warfare. Microsoft is no longer looking at it based on how many console units sold. Now they are looking at the number of subscribers they have for their services, and how to continually increase that number. You do that by having an ever growing library of great game content.
That is why Microsoft continues to make moves like the ZeniMax purchase. The more quality content they can bring in-house, the stronger they become. Gamers across the world can see this. Fans of gaming franchises like Doom and Fallout will quickly become loyal customers of Microsoft as long as the company continues to produce good games. This will be key. Microsoft will need to keep a “hands off” approach when it comes to game development, especially when it involves game IP’s beloved by millions the world over. The console wars might be over in the eyes of Microsoft, but it’s in their best interest to not shoot themselves in the foot by trying to micromanage all of the game studios they now own.
Final Verdict
I was not planning to buy a new Xbox Series console for the foreseeable future, most of my gaming being done on the PC. However, what Microsoft has done with the ZeniMax purchase has now made me rethink a bit on how I game. Game Pass has now become a must for me. If I can play a new Fallout, Elder Scrolls, or Doom game for a fee of just over $100 per year on both PC and Xbox then it’s a no brainer. I will probably preorder the digital only Xbox Series S and have it connected to the big TV to play games with my family. I really like the strategy that Microsoft is going with here. They have thought ahead and are making the market react to them instead of the opposite.
The only question I have now is what’s my chances of getting my order through in the morning…
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