The Xbox gaming console is the subject of a Bloomberg piece titled “Xbox: The oral history and an American video game empire” that explores Microsoft Corporation’s (NASDAQ: MSFT) decision to get into gaming — and some failed acquisitions.
What Happened: Before releasing the Xbox console, Microsoft approached several gaming companies about acquisitions so it could have exclusives to compete against Sony Corporation (NYSE: SNE).
Microsoft approached Electronic Arts (NASDAQ: EA), which was considered one of the top gaming companies at the time. Microsoft met with Electronic Arts more than five times, but left empty-handed on a deal, the report said.
After failing to acquire Electronic Arts, Microsoft turned to Nintendo Co (Pink: NTDOY).
“They just launched their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went,” said Kevin Bachus, who was director of third-party relationships for Microsoft at the time.
Microsoft reportedly met again with Nintendo in January 2020 to pitch the company on a joint venture. The pitch was that Nintendo wasn’t good at hardware but was strong in the games business with Mario and other brands. Microsoft said they would take care of the hardware. Nintendo declined the joint venture as well.
Microsoft also tried to acquire Square, now known as Square Enix, the makers of the “Final Fantasy” franchise games, and Midway, known for the “Mortal Kombat” games.
The acquisition that was completed by Microsoft prior to the Xbox release was of Bungie, the makers of the popular “Halo” franchise. Microsoft acquired Bungie and was able to enjoy the success of the exclusive “Halo” games for many years.
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Why It’s Important: Exclusive games can be a key differentiator for video game consoles. The success of the Playstation 5 could be in part due to exclusives like “Spider-Man: Miles Morales” and “MLB The Show.”
Microsoft acquired ZeniMax Media in 2020, which gives it control of franchises like “Dishonored,” “Fallout,” “Doom” and “The Elder Scrolls.” The company could look to launch exclusive titles to complement its “Halo” games and better compete with Sony.
Microsoft may have failed 20 years ago at acquiring any of the mentioned companies, but the Xbox has been a hit for the company, and Microsoft now has a gaming division worth billions of dollars annually.
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