Microsoft snaps up Bethesda Softworks for $7.5B

Microsoft announced plans to buy ZeniMax Media, the parent company of game developer and publisher Bethesda Softworks whose games franchises include The Elder Scrolls , Fallout, DOOM, Quake, Wolfenstein and Dishonored.

The Redmond, Washington-based software giant said it has agreed to buy ZeniMax Media for $7.5 billion in cash and will use Bethesda's portfolio of games and technology to augment its Xbox Game Pass offering.

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

The planned acquisition includes publishing offices and development studios with over 2,300 employees around the world, including Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog and Roundhouse Studios.

Microsoft will increase the number of its creative studio teams from 15 to 23.

Game on
Microsoft further revealed that Xbox Game Pass, its video game subscription service that is used with Xbox One consoles and Windows 10, now has 15 million subscribers.

On September 15, the company also launched its long-anticipated cloud gaming service as part of the Xbox Game Pass Ultimate subscription.

The cloud-gaming service, which was given the working title of xCloud, represents the next step in Microsoft's gaming strategy and was launched in beta mode for Xbox Game Pass Ultimate members in 22 markets.

Subscribers initially have access to over 150 games from the cloud on their Android phone or tablet.

Phil Spencer, executive vice president of gaming at Microsoft, could barely contain his excitement about the latest developments.

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"In the last ten days alone, we've released details on our two new consoles which go on pre-order tomorrow, launched cloud gaming in Xbox Game Pass Ultimate, and now we're making another investment in the most critical part of our 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," he said.

An opinion column by Bloomberg also suggested that Microsoft's Bethesda buy more than compensates for losing the TikTok battle to Oracle as Bethesda's video-game franchises will help narrow the gap between Microsoft's Xbox console and Sony's market-leading PlayStation.

Cloudy vision
In terms of its new cloud gaming offer, Microsoft enters an increasingly crowded market as operators and hyperscalers eye its potential with increasing interest.

Deutsche Telekom (DT) is one of the latest companies to throw its hat into the ring, launching the MagentaGaming cloud-based video game streaming service.

Google has already launched Stadia and Nvidia offers GeForce Now.

A recent report carried out on behalf of communications software and network systems provider Ribbon Communications also highlighted the revenue opportunities of cloud gaming for carriers with 5G networks.

Spencer is clearly gearing up for the fight to bring more gamers into the Xbox world. "Today is a landmark step in our journey together and I’m incredibly energized by what this step means for Xbox," he said.

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— Anne Morris, contributing editor, special to Light Reading