Microsoft and Bethesda Should Up Each Other's Game -- Heard on the Street
September 21 2020 - 2:04PM
Dow Jones News
By Dan Gallagher
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.
(END) Dow Jones Newswires
September 21, 2020 13:49 ET (17:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Microsoft (NASDAQ:MSFT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Microsoft (NASDAQ:MSFT)
Historical Stock Chart
From Apr 2023 to Apr 2024