Home/ Companies / News/  Microsoft and Bethesda should up each other’s game

Microsoft may be on the verge of launching its next Xbox, but acquiring Bethesda Softworks is only partly about feeding that machine.

The deal, announced Monday, has the software titan laying out $7.5 billion in cash for ZeniMax Media, Bethesda’s parent company. That’s three times what Microsoft paid to acquire the owner of “Minecraft" back in 2014, though that deal only brought it one—albeit hugely popular—game. Bethesda, which has been in the business since the mid-1980s, brings the Xbox maker a large batch of game properties to add to its library, including popular action franchises such as “Elder Scrolls," “Fallout," “Doom" and “Quake."

This is the largest acquisition in the videogame sector in more than a decade, since Activision merged with Vivendi’s Blizzard Entertainment in 2017 in an $8 billion deal. But unlike that deal—which created a game publishing powerhouse controlling mega-popular properties like “Call of Duty" and “World of Warcraft"—Microsoft’s latest move represents the largest acquisition by far of game content by a company that also happens to run one of the major console platforms. Arch-gaming-rival Sony’s largest buy to date was last year’s pickup of Insomniac Games for $229 million.

But Microsoft’s prime motivation is less about gaining exclusive disks to slide into its consoles than it is about feeding its subscription-based game service known as Xbox Game Pass. The company said it would be adding all future Bethesda games to the service on the same day they launch for consoles and PCs. Doug Creutz of Cowen notes that game publishers “concerned about maintaining the value of their new releases" have largely been reluctant to commit major titles to the service. Adding Bethesda’s titles on their launch days would make Xbox Game Pass “a significantly more potent offering," Mr. Creutz wrote to clients Monday.

Growing Xbox Game Pass will help Microsoft shift even more of its gaming business to a recurring model and away from the hit-driven volatility common to the industry. And Microsoft’s resources could help Bethesda accelerate its pace of output in a market where development budgets are soaring. Spending money keeping this game franchise humming seems a better use of Microsoft’s capital than trying to keep TikTok out of hot water.

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