Microsoft to Buy Game Developer Bethesda for $7.5 Billion

Microsoft is going to purchase large game developer Bethesda for $7.5 billion. The deal has some questioning where the intellectual property will go.

Bethesda is certainly one of the larger game developers out there. Among the properties under their belt include the Fallout Franchise, parts of the Doom franchise, The Elder Scrolls franchise, Dishonored, and a number of others out there. So, it is no surprise that so many are talking about how Microsoft, developer of the XBox console, is saying that they will buy the company for an estimated $7.5 Billion. From CBC:

Microsoft Corp. said on Monday it would acquire ZeniMax Media for $7.5 billion in cash, strengthening its Xbox video game offering with the studio behind titles such as Fallout and the Doom reboot.

Microsoft said it plans to bring Bethesda’s future games into its monthly Xbox Game Pass subscription service when they launch on Xbox or PC. The game pass now has more than 15 million subscribers, Microsoft added.

Microsoft bought hugely popular game franchise Minecraft for $2.5 billion six years ago.

Bethesda’s structure and leadership will remain in place, Microsoft said.

While the report does mention how this could very easily boost Microsoft’s XBox platform, the deal certainly raises a number of questions. One of the key aspects about many of the Bethesda games is that those games are available on many different plantforms. Take, for instance, The Elder Scrolls: Oblivion. That was a game that was released on PC, Playstation 3, and XBox 360. In fact, you can buy this game on Steam right now. While it makes business sense for a software developer to make a game available on as many platforms as possible, if you are suddenly owned by Microsoft, the strategy changes. Now, there is a financial incentive to put everything exclusively on the XBox platform and Microsoft owned properties.

While it’s likely that whatever existing contracts will probably be honoured, some are questioning where future games will be released. From GameSpot:

One aspect of the $7.5 billion deal that has been confirmed is that future games from Bethesda will launch on Xbox Game Pass on the day of their release, whether that’s on Xbox or PC. Starfield is one such game explicitly confirmed to be hitting Game Pass on day one, and it seems safe to assume the same will be true for other, unannounced projects, like the inevitable Fallout 5 (and the Fallout: New Vegas 2 dream project that some are now clamoring for).

But those games are still far away. More pressing is what happens to Deathloop and Ghostwire: Tokyo, two games set for 2021 releases (following Deathloop’s recent delay) on PS5, but not Xbox Series X and Series S. Speaking with Bloomberg, Xbox boss Phil Spencer indicated the exclusivity arrangement for these two games will be honored, although specific details weren’t shared, including the prospect of them eventually making it to Xbox. More importantly, Spencer added that, when it comes to future Bethesda-published games, which would presumably include The Elder Scrolls VI and Starfield, “We’ll take other consoles on a case-by-case basis.”

We’ve reached out to both Microsoft and Bethesda for further details and will report back with anything we learn. But the fact that no news was shared about them as part of the announcement suggests that either nothing has changed or that nothing is going to be shared about the current exclusivity arrangement just yet, because the acquisition hasn’t yet closed.

Another question that this raises is what all this means about competition in the gaming world. This is, after all, a huge deal. Some commentators don’t seem all that worried. From Forbes:

Two things are true about this situation. First, Sony, while a huge player in the video game console and development space, is in no financial position to make a deal anywhere close to as big as this Microsoft purchase of Bethesda. Second, Sony is in a strong enough position with its first party studios and games where it…really doesn’t need to “respond” with some sort of purchase of its own.

For the first part of this, I think some people have lost track of the scale of these companies. PlayStation beat Xbox in the last console generation in terms of sales, and yet Sony and Microsoft are not remotely equivalent companies in terms of size. To put this in perspective:

But Sony also…doesn’t need to do anything like this?

If Sony is lacking in any areas for this upcoming console generation, it’s probably not related to exclusives. Part of the reason Microsoft made this move in the first place was to destroy the narrative that their first party studios and games were lacking, while Sony has been in a position of strength for years. Sony has Naughty Dog (Uncharted, The Last of Us), Santa Monica (God of War), Insomniac (Spider-Man), Guerrilla Games (Horizon Zero Dawn) and Sucker Punch (Ghost of Tsushima) all creating generational classics every year or so. They are in a perfectly strong position with those studios going forward, and Microsoft, despite all these acquisitions, has yet to put out the actual games that are a result of all this investment, and the quality of upcoming blockbusters like Avowed or Fable remain unknown. Most will have more confidence that say, Elder Scrolls 6 will be worthwhile, if that ends up being exclusive, but that is years and years away.

Of course, a perspective like this doesn’t take into consideration how something like this encourages consolidation from a business perspective. It’s basically a question of whether Sony specifically needs to do anything, not, “what does this mean for competition in the big gaming picture?” Maybe some other developers will emerge from the woodwork and render this concern moot, maybe not. In the console market, competition has been a problem in the past. For instance, remember when Nintendo had such a huge amount of power back when the original Nintendo Entertainment System was dominating the market? Plenty of people pointed out how developers had problems getting their games to market unless it was through Nintendo.

At any rate, a deal like this is creating waves and we’ll probably find out at some point what the broader implications are in all of this.

Drew Wilson on Twitter: @icecube85 and Facebook.



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