Microsoft has acquired private gaming company zenimax for $7.5bn, in a deal that underscores how the tech giant sees gaming moving beyond console wars and into a battle for original content and subscription plans.
Zenimax is the parent of bethesda softworks, a 2,300-employee team across eight gaming studios behind major franchises including the elder scrolls, fallout, wolfenstein, doom, quake and starfield.
A person familiar with the deal compared it to disney purchasing pixar in 2006 for $7.4bn. this has always been one of the highest quality, if not the highest quality, independent studios that is left, the person said.
The all-cash deal is microsofts third-largest acquisition behind linkedin and skype, and matching the $7.5bn it paid for github in 2018, according to dealogic. it was announced on monday, a week after microsofts bid to purchase tiktok fell through, and one day before pre-orders start for two new xbox consoles.
Microsoft chief executive satya nadella has long said that he wants to focus on high-growth sectors where the company can be one of the top two or three players. in a press release he called gaming, already bigger by revenues than hollywood and the music industry combined, the most expansive category in the entertainment industry.
Microsoft projected gaming industry revenues will surpass $200bn next year.
Phil spencer, head of xbox, said he will be adding bethesdas iconic franchises to xbox game pass its cloud-based streaming service that has 15m subscribers for both console and pc.
Microsoft expects gaming quickly heading in the direction of film and tv hit-driven businesses where original content is king.
Quality differentiated content is the engine behind the growth and value of xbox game pass from minecraft to flight simulator, mr nadella said. as a proven game developer and publisher, bethesda has seen success across every category of games.
What is unclear is whether microsoft will at some stage make bethesdas franchises exclusive to xbox and pc, shutting out rival playstation.
Sony, playstations parent, had just last week highlighted some bethesda titles such as fallout 4, which alone has more than 1bn downloads as it launched the ps5 ahead of the holiday season.
A statement from mr spencer implied that such a move was not in the works, as he emphasised reaching more players in more ways, but exclusive content has been a feature of the streaming wars between netflix, disney, hbo, apple and nbcuniversal.
The acquisition expands microsofts creative studio portfolio from 15 to 23, pitting it on a warpath with playstation, whose secret sauce is the diversity of worldwide studios, its 14-studio development hub behind games such as the last of us and gran turismo, chief executive jim ryan told the financial times last week.