During the proceedings between Microsoft and the US Federal Trade Commission (FTC) regarding the acquisition of Activision Blizzard, some intriguing backstage information concerning the Xbox gaming and sega industry surfaced. One revelation that stood out was Microsoft’s consideration of purchasing Sega and several other studios to fortify their Xbox Game Pass offerings.
Captured in an email penned by Phil Spencer, the Xbox division leader, to Satya Nadella and Amy Hood (Microsoft’s CEO and CFO, respectively), the blueprint for this proposed strategy unfurled. The missive, dating back to November 2020, saw Spencer seeking approval for the strategy of engaging with Sega Sammy and laying a bid for the Sega gaming studio. His argument was compelling; “Sega, with its balanced portfolio of games across various segments and global appeal, could turbocharge Xbox Game Pass, both on consoles and beyond.”
The Attraction of Sega and Xbox Intellectual Properties
Advocating for the Sega acquisition, Spencer emphasized that the studio’s “cherished intellectual properties” could significantly broaden the Xbox Game Pass’s reach, capturing new demographics, especially in Microsoft Asia. These well-established franchises would offer familiar gateways to the Game Pass for many potential users. Furthermore, he noted the potential for future monetization through in-game transactions, highlighting the long-term financial opportunities this acquisition could bring to Microsoft.
Microsoft Expanding Xbox Acquisition
Intriguingly, documents from April 2021 reveal Microsoft had its sights set on several other gaming companies. These include Bungie (known for Destiny), Zynga (Farmville), IO Interactive (Hitman), and Niantic (creator of Pokémon GO). Notably, Sega is no longer featured on this list, although the reasons for Microsoft’s shift in interest remain undisclosed. The Bungie case presents an interesting narrative. Bungie is recognized as a valuable intellectual property owner beyond just Destiny. It was on Microsoft’s radar due to Destiny’s standing as one of the most-played titles on Game Pass. A Microsoft subsidiary from 2000 to 2007, Bungie played a pivotal role in Halo’s success as an Xbox exclusive. Moreover, after 15 years of independence, Sony, Microsoft’s arch-rival, acquired Bungie in 2022.
A Near Miss with Zynga Acquisition
Among all the entities mentioned, Zynga was the closest to becoming a Microsoft asset. Negotiations took place between the two companies. Furthermore, Microsoft opted to invest in Activision Blizzard instead, leading Take-Two, the GTA series developer, to purchase Zynga. As it stands, Microsoft’s negotiations with other mobile-focused companies are yet to be confirmed. Regardless, Phil Spencer’s testimonies during recent proceedings emphasize Microsoft’s shift in strategy. This shift was from striving for console market dominance to a more focused approach to thriving in smartphone gaming.
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Microsoft’s consideration of acquiring Sega, among other studios, underscores its strategy to breathe new life into the Xbox Game Pass. It was also to strengthen its foothold in the ever-evolving gaming industry, particularly targeting mobile gaming. As these plans evolve, we await to see their impact on the gaming industry. Keep in mind that this could be a game-changing strategy. Furthermore, it can pave the way for a new era of game distribution and consumption.