Team green’s latest acquisition is by far its biggest and most impressive – at $7.5 billion no less – but does this spell doom for PSN players keen to play games from the famous publisher and its partners?
Where were you when Microsoft bought ZeniMax Media? That’s what the nerds will say…
It could well be up there, for people of a hardcore gaming persuasion at least, as a pivotal moment in history that changes things forever. That’s certainly the vibe you get when reading news coverage of let’s face it, a pretty big and totally unexpected announcement.
Just three years ago Microsoft only owned a handful of games studios, the fallout from the poor concept and subsequent launch of Xbox One in 2013, which lead the company to cut back on investment and according to rumour, seriously consider allowing their once-mighty games division to wither away, sold off bit by bit to the highest bidder.
Microsoft CEO Satya Nadella was convinced by Phil Spencer, himself promoted up the order at Xbox at the same time Nadella took over the company in 2014, to go all-in on gaming – no doubt emboldened by his new post as Executive Vice President of Gaming as of 2017, a handsome reward for smartly guiding the Xbox division through the crisis of the early Xbox One generation.
Fast-forward to 2020 and the fruits of that commitment from the top of the company, combined with Spencer’s canny abilities, have changed the rules of the game just as we are about to enter a new hardware generation.
From media centre to games service – saving the Xbox brand
The success of the Xbox 360 back in the noughties had undoubtedly got corporate Microsoft execs eager to jump on board, despite a clear lack of gaming experience or an understanding of the industry.
The result was the Xbox One, a media centre first, gaming machine second.
Betting the farm on an all-in-one media device that cost £429, at a time when smart TVs and internet streaming were becoming all the rage, smacked of arrogance and worst of all, a general disrespect for the Xbox consumer base who only wanted to play the latest and greatest games.
Disappointing sales figures, undoubtedly due in part to a lack of must-have first-party AAA games compared to their rivals – brought on by under-investment and poor decision making – meant the future for Xbox looked pretty bleak unless a major change in approach took place. Cue an unceremonious exit for the talentless execs, cue Spencer’s recovery and rebuild.
a battlefield that can only have one winner – this is no longer a good analogy
So, aside from correcting the obvious flaws with the hardware in the form of a ‘pro’ consumer console – Xbox One X – that would no longer support Kinect (the failed experiment that had taken so much time and resource and come to nothing) was another idea that could really add value to the software side of the business. Xbox Game Pass, a Netflix-style subscription service for Xbox games that unlike PlayStation Now, Sony’s streaming games service, would offer local downloads to your console hard drive and would make all of the company’s flagship titles available to subscribers on day one.
The sheer number of games available for as little as £9.99 per month still trumps anything Sony or Nintendo have to offer their customers, and could in time prove to be a masterstroke, as the goodwill from gamers appreciative of Game Pass’ value has bought time for Microsoft to build-up a healthy stable of games studios to finally close the gap with Sony heading into the 2020s.
ZeniMax Media is the icing on the Game Pass cake
With a Game Pass install base now topping 15 million subscribers, the Xbox strategy is clearly building beyond physical hardware, with team green looking to make their service the first place gamers turn to, no matter what device they wish to play on.
Game Pass Ultimate, a slightly more expensive subscription tier that not only includes a healthy variety of PC games to download and play, now also includes xCloud, Microsoft’s cloud streaming games service that recently went live on Android devices.
Gaining a foothold across a wide variety of machines that support gaming is becoming the central Xbox strategy, making big acquisitions of companies like ZeniMax and all of its subsidiaries make more sense than ever, as the opportunities to profit from the games they create can reach far beyond the shelf under your TV at home.
With this latest acquisition and several made over the last few years, Microsoft has gone from owning just 7 games studios to 23. Perhaps crucially, that’s significantly more than Sony who have 14.
So what does this all mean for PlayStation players?
An acquisition as large as ZeniMax Media could matter a lot to gamers, as their studios are responsible for so many popular and by extension, highly anticipated titles. Doom, Fallout, Dishonoured and the Elder Scrolls series are just some of the major franchises Microsoft now owns.
Will these popular games become Xbox only titles? Perhaps, but probably not.
It’s easy to get caught up in the ‘console war’ rhetoric that dominates the way we talk about this part of the industry, as if we’re on a battlefield that can only have one winner. But this is no longer a good analogy.
New hardware requires an upfront investment, just as new software does, but on a much bigger scale. Making a decent profit is the aim and in that sense, both Sony and Microsoft have been very successful this generation, despite the PS4 outselling Xbox One roughly 2 to 1.
New hardware will usually be sold at close to, if not at, a net loss in order to offer a reasonable price of entry, with software sales and eventually (as manufacturing costs come down and often in the form of a ‘slim’ console release) hardware too getting those spreadsheets well and truly back in the black. It’s a multi-year plan and one that hasn’t changed much over the last couple of decades – that is until now as technology is allowing a new service model to appear in the form of games subscriptions, following the lead movies and TV shows took several years back. In Game Pass, Xbox happens to have the best value offering as of this time.
Timed exclusives? Special Xbox only content? Performance priority given to Xbox hardware? you bet
With all that in mind, it may not make sense for Microsoft to exclude PlayStation players as, given how highly anticipated, for example, new games from Bethesda are likely to be, the opportunity to make a lot of cash from the cut the company will receive from sales of games on their rivals platforms could be too great to pass up. It’s effectively a free bonus for Microsoft to be able to make money from games marketed and sold on devices they don’t own or control. Which brings us back to what I think is the core Xbox strategy moving forward.
Sony may be sticking for the most part to a traditional sales model, albeit with PlayStation Now, which in its current form, struggles to enthuse the player base due to the services quality limitations and lower value offering, the result of which is a paltry 2.2 million subscribers compared to Game Pass’ 15 million active users previously mentioned. What this shows is the companies have different approaches this time around, making the console space feel less of a war ground and more of a co-habitant virtual playground.
If Microsoft continues to add value to Game Pass through a diversity of titles brought on by their studio acquisitions, along with an aggressive strategy of releasing more exclusive high-quality AAA game experiences to their own hardware, bridging that gap with what is undoubtedly Sony’s main advantage as of this writing, subscribers numbers should continue to rise, further offsetting initial costs and hopefully reaching a tipping point that would allow Game Pass to become the primary cash-cow for the division in the coming decade. With such a business model, it simply wouldn’t make sense to exclude all their games created by their many studios from rival platforms, as it will only help to recoup investment costs as well as improve goodwill relations with gamers, an area the company struggled with last time they launched into a new console generation and one that undoubtedly left a lot of money on the table.
Timed exclusives? Special Xbox only content? Performance priority given to Xbox hardware? you bet. But as we’ve seen with Microsoft’s other big out of-the-blue acquisition some years back – Mojang Studios, makers of mega-hit Minecraft – team green seem happy to live and let live with their rivals, all the while making a ton of money in the process.
Having said all of that, psychological wounds run deep, so perhaps absolute victory in this phoney war really is what Microsoft is after. Keeping all the games to themselves? Now that really is having your cake and eating it.
