Every iteration of sonys playstation has outsold the equivalent microsoft xbox release. but microsofts plan for gaming goes beyond consoles. its cloud gaming business already has more subscribers than sonys. the $7.5bn purchase of zenimax should push it further ahead provided it squeezes exclusive content from the purchase.
This is a well-timed, affordable purchase. zenimax owns the studios behind popular games such as the elder scrolls and doom. with millions of people stuck indoors, video game sales have ballooned. industry tracker npd group reports us spending on gaming hardware, software, and accessories hit a record $11.6bn in the second quarter of the year up almost a third on the same period last year.
The all-cash deal is microsoftsbiggest video game purchase and, adjusted for inflation, its sixth-largest acquisition. a swelling cash pile easily covers the price. free cash flow for the 2020 fiscal year, which ended in june, was just over $45bn, up from about $38bn the previous year.
Both sony and microsoft have next-generation consoles ready for the holiday season. both should benefit from new, home-centred lifestyles. yet once again, sony is expected to outsell microsoft. the latter does not publish its console sales figures never a good sign of corporate confidence. statista estimates that last year sony sold almost three times as many playstation 4s as microsoft sold xbox ones.
Microsoft is, however, more than happy to say that it has 15m xbox game pass subscribers accessing titles for a minimum $10 monthly fee a figure that just happens to trump sonys playstation now. mobile cloud gaming is available for $15. if the acquisition of zenimax doubles subscriber numbers it would contribute more than $4bn to the companys annual top line.
To do that it needs to keep adding new titles. microsoft plans to run the gaming studios as a separate division. that should help developers thrive. microsoft is making few commitments on the supply of new games from the zenimax studios to rival platform businesses. its best strategy is to reserve the best releases for itself, luring new subscribers.
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