Microsoft to buy video game publisher ZeniMax for $7.5 bn

Microsoft announced it would acquire video game publisher ZeniMax Media for $7.5 billion in cash — taking on Sony.
Microsoft CEO Satya Nadella
ZeniMax Media is the parent company of Bethesda Softworks, one of the leading game developers and publishers in the world.

Microsoft aims to tap the global gaming industry that is expected to be worth more than $200 billion in annual revenue in 2021.

ZeniMax Media is the creators of gaming franchises including The Elder Scrolls and Fallout among many others. Bethesda brings an impressive portfolio of games, technology, talent, as well as a track record of blockbuster commercial success, to Xbox.

Bethesda has created games including the Elder Scrolls, Doom and Fallout. The deal could pave the way to a long-awaited Netflix of gaming, as Microsoft builds out its subscription-based service Xbox Game Pass, Bloomberg reported.

Microsoft’s $7.5 billion Zenimax acquisition demonstrates how the company wants to dominate the games console market, which will be worth $60 billion by 2025, according to GlobalData forecasts.

Microsoft is determined to outpace Sony in the console race. Having priced its new Xbox consoles to match Sony’s PS5, the company will add several high-profile new games to the platform, Rupantar Guha, associate project manager for Thematic Research at GlobalData, said.

Zenimax titles such as Wolfenstein, Doom, Quake, Prey and Dishonored will compete with PS5 exclusives such as Spider-Man: Miles Morales, Gran Turismo 7 and Ratchet & Clank: Rift Apart.

Microsoft will offer Bethesda’s Starfield as a replacement for Halo Infinite, which was developed in-house but postponed to 2021 due to COVID-19. The game should boost the appeal for the Xbox Series X and Series S consoles during the holiday season.

Microsoft could not acquire stake in TikTok’s US business. Microsoft rival Oracle and retail major Walmart will be acquiring 20 percent stake in TikTok Global for $12 billion. Oracle will also be the cloud partner of TikTok.

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, CEO of Microsoft.

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.

Microsoft expects the acquisition to close in the second half of fiscal year 2021 and to have minimal impact to non-GAAP operating income in fiscal years 2021 and 2022.