What you need to know about Microsoft’s $7.5bn ZeniMax acquisiton

22 Sep 2020

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Microsoft is planning its largest gaming acquisition to date with the $7.5bn purchase of Bethesda’s parent company, ZeniMax Media. But what does that mean for competition in the video game industry?

On Monday (21 September), Microsoft announced its plans to acquire ZeniMax Media, the parent company of game publisher Bethesda Softworks.

The acquisition could potentially give Microsoft’s Xbox an advantage in terms of exclusive releases of some of Bethesda’s most popular games, which include Fallout, Doom and Wolfenstein, creating problems for rival console-makers in the increasingly competitive video game industry.

The deal, worth $7.5bn in cash, is set to be the biggest gaming acquisition in Microsoft’s history.

Microsoft previously acquired Minecraft for $2.5bn in 2014. Minecraft has since become the best-selling video game of all time, with more than 200m copies sold to date.

Acquiring ZeniMax Media

In a statement about the deal, Microsoft said that more than 3bn people on the planet are now playing video games to have fun and socialise. It added that the industry is expected to generate more than $200bn in revenue in 2021 alone.

Microsoft said the acquisition of ZeniMax Media and Bethesda Softworks will bring “an impressive portfolio of games, technology talent, as well as a track record of blockbuster commercial success, to Xbox”.

It plans to add Bethesda’s franchises to its cloud-based gaming service Xbox Game Pass, which has recently reached the milestone of 15m subscribers. The game subscription service offers players access to a catalogue of games for a single monthly subscription price.

‘Now we’re making another investment in the most critical part of our strategy: the games’

New titles are added to Xbox Game Pass every month and some games have been made available through the service on the day of their release. Microsoft said that it plans to bring Bethesda’s future games into Xbox Game Pass the same day that they launch on Xbox or PC.

Satya Nadella, CEO of Microsoft, said: “Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialise and play with their friends. Quality differentiated content is the engine behind the growth and value of Xbox Game Pass – from Minecraft to Flight Simulator.

“As a proven game developer and publisher, Bethesda has seen success across every category of games, and together we will further our ambition to empower the more than 3bn gamers worldwide.”

Phil Spencer, executive vice-president of gaming at Microsoft, added that it is “an awesome time to be an Xbox fan”.

“In the last 10 days alone, we’ve released details on our two new consoles … launched cloud gaming in Xbox Game Pass Ultimate, and now we’re making another investment in the most critical part of our strategy: the games.”

The transaction is expected to close in the second half of the 2021 fiscal year.

How will this affect PlayStation?

It is not yet clear if the deal will mean future Bethesda games could become Xbox exclusives. Spencer, who is currently the head of the Xbox brand and leader of Microsoft’s global creative and engineering teams for gaming, has previously voiced opposition to exclusive game releases.

In an interview with GamesIndustry.biz earlier this summer, Spencer said: “Gaming is about entertainment and community and diversion and learning new stories and perspectives, and I find it completely counter to what gaming is about to say that part of that is to lock people away from being able to experience those games.”

Ahead of the acquisition, Bethesda had been working closely with Sony to develop two games for the upcoming PlayStation 5 – Deathloop and Ghostwire: Tokyo.

Both of these games were announced as “timed console exclusives” for the new Sony console, which means that they will only be available on the PlayStation 5 for a fixed period of time before later launching on the Xbox.

In an interview with Bloomberg, Spencer confirmed that Microsoft will honour Bethesda’s commitment to Sony. While that may sound promising for PlayStation fans who love the studio’s games, Engadget said that Microsoft’s ownership of Bethesda could get “worrying” when it comes to releasing exclusives to counter Sony’s offering.

Xbox’s Game Pass may still be enough of a competitive edge to sway those who are undecided about which console to get this year, meaning that Xbox may not have to resort to console exclusives.

Sony’s PlayStation Now and PlayStation Plus services have yet to offer a real alternative to Game Pass. A new service is set to launch with the PlayStation 5, called PlayStation Collection, however this solely features PlayStation 4 titles and none of the new games the company plans to release at the console’s launch.

The next generation of consoles

Microsoft’s acquisition announcement comes just weeks after the company revealed the budget-friendly Xbox Series S, which will launch later this year alongside the next-generation Xbox Series X.

The digital-only entry-level Xbox will cost $299, while the Series X console, which has a disk drive, will cost $499. The Series X will be capable of 4K native performance, while the Series S is limited to 1440p gaming.

Meanwhile, Sony’s PlayStation 5 will also come in at two different price points this year. The entry-level digital-only console will cost €399.99 at launch, while the model with an additional Blu-ray disc drive will cost €499.99.

Sony said that both models will be equally matched in terms of performance and capable of playing in 4K resolution.

Ahead of the launch, Sony revealed a number of new games that will be exclusive to the PlayStation 5, including Marvel’s Spider-Man: Miles Morales; God of War: Ragnarok; Gran Turismo 7; and Final Fantasy XVI.

The Xbox Series X, on the other hand, has chosen not to be reliant on major exclusives. Microsoft’s key launch title for the new Xbox was supposed to be Halo Infinite, before it was announced that the game would be delayed until 2021. Instead, the company is counting on Game Pass and third-party titles to impress players when the new Xbox consoles launch later this year.

Kelly Earley was a journalist with Silicon Republic