Microsoft on Monday (September 21) announced plans to acquire ZeniMax Media, the parent company of Bethesda Softworks, one of the largest, privately held game developers and publishers in the world.
Bethesda Softworks is the creator behind critically acclaimed and best-selling gaming franchises like The Elder Scrolls and Fallout.
Microsoft’s latest acquisition of Bethesda brings an impressive portfolio of games, technology, talent, as well as a track record of blockbuster commercial success, to Microsoft’s Xbox.
Under the terms of the agreement, Microsoft will acquire ZeniMax Media for $7.5 billion.
The gaming industry is among the most resilient of businesses during the pandemic where its profits seem to be unaffected as it continues to grow year after year.
More than three billion people on the planet play games for fun, escape, and human connection. Unlike any other medium, games empower people to engage in creativity, strategic thinking and teamwork, immersing them into interactive stories and worlds created by some of the world’s most amazing creators.
The cultural phenomenon of gaming has made it the largest and fastest-growing form of entertainment in the world—an industry that is expected to be more than $200 billion in annual revenue in 2021.
As the gaming industry transforms from a device-centric era to a player-centric era powered by new technology that provides the freedom to play with friends anywhere on any device, many traditional tech companies have diversified portfolios by expanding more into the gaming industry.
How will this deal expand Microsoft’s gaming portfolio?
With unique investments in content, community, and the cloud, Microsoft’s gaming strategy differs from others by empowering people to play the games they want, with the people they want, anywhere they want.
Games are the primary growth engine in gaming, and games are fueling new cloud-gaming services like Xbox Game Pass, which has reached a new milestone of over 15 million subscribers. With the addition of Bethesda, Microsoft will grow from 15 to 23 creative studio teams and will be adding Bethesda’s iconic franchises to Xbox Game Pass.
This includes Microsoft’s intent to bring Bethesda’s future games into Xbox Game Pass the same day they launch on Xbox or PC, like Starfield, the highly anticipated, new space epic currently in development by Bethesda Game Studios.
“Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialize and play with their friends,” said Satya Nadella, Microsoft’s chief executive officer.
“Quality differentiated content is the engine behind the growth and value of Xbox Game Pass—from Minecraft to Flight Simulator. As a proven game developer and publisher, Bethesda has seen success across every category of games, and together, we will further our ambition to empower the more than three billion gamers worldwide.”
Micorsoft Executive vice-president for Gaming Phil Spencer said this is an awesome time to be an Xbox fan. He said in the last 10 days alone, they have released details on two new consoles which go on pre-order since Tuesday.
The Redmond-based company executive said they also launched cloud gaming in Xbox Game Pass Ultimate, and now made another investment in the most critical part of their strategy: the games
“Generations of gamers have been captivated by the renowned franchises in the Bethesda portfolio and will continue to be so for years to come as part of Xbox,” Spencer said.
What does ZeniMax Media acquisition include?
The planned acquisition includes publishing offices and development studios spanning the globe with over 2,300 employees, including Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios.
Bethesda’s critically acclaimed and best-selling franchises include The Elder Scrolls, Fallout, DOOM, Quake, Wolfenstein, and Dishonored, among others.
Bethesda parent company ZeniMax Media was founded in 1999 by Chairman and CEO Robert Altman. Microsoft, however, stressed Bethesda’s structure and leadership will remain in place.
“This is a thrilling day for this company, our employees, and our fans. We have enjoyed a close partnership with Microsoft for decades, and this deal is a natural progression of those years working together,” said Bethesda CEO Altman.
“The big winners today are our fans. We are continuing to develop our slate of AAA games, but now with Microsoft’s scale and entire Game Stack, our games can only get better,” he said.
The transaction is subject to customary closing conditions and completion of regulatory review. Microsoft expects the acquisition to close in the second half of the fiscal year 2021 and to have minimal impact on non-GAAP operating income in fiscal years 2021 and 2022. Non-GAAP excludes the expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses.
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