Why Xbox Acquired Bethesda and Will Make The Titles Exclusive

Everyone has been buzzing for days since Microsoft announced their intent and agreement to purchase the publisher Zenimax which included the famed Bethesda studio. This bold move aligns with the vision that Phil Spencer has developed with Sataya Nadala. They have the ambitious goal of reaching the more than 3 billion gamers worldwide.

Those 3 billion gamers worldwide are very clearly not all console or PC gamers based on the PC and consoles sales, but there are some key reasons acquisitions right now don’t necessarily have to focus on the whole market segmentation. The biggest of these is that Microsoft still needs to establish a solid user base and the best way to do that is to extend their technology into what they currently do best while rounding out the areas that they need more time and experience in. It is very likely that Microsoft looked at their current user base and the user base that may have left the ecosystem for PS4 and examined that player demographic. What they found is likely a need to go back to their strengths from the Xbox 360 days as the best console for Shooters and RPGs.

An analysis of the market would clearly show the best economic move for them would be to acquire a major publisher that could instantly and definitively make them the leaders again in both. Looking around at the market there would be two major publishers that would fulfill the two at once in Bethesda and EA. From the recent work and partnership with both studios it is likely they explored each of these options. Bethesda would be the clear preference for acquisition to EA because it came with more owned IP instead of licenses and is almost solely focused on the two areas they likely identified to cement an initial subscriber base for gamepass.

By making that move to cement that initial subscriber base, they will be doing everything they can to make sure those that play the games are doing so in their ecosystem (preferably gamepass subscription). The only way to really ensure that is to make sure the only place to play those games is in their ecosystem (Xbox/PC/Streaming). There is almost no chance that they will bring those any outside options, especially not a competitor (most likely outside option if any would be Steam with an agreement by Steam to add gamepass).

I know a lot of people point to number of potential sales they could lose out on by not bringing these games to Playstation for example. That argument may make some sense on the outside if you say that a uber popular franchise like Elder Scrolls bringing a game to Playstation could sell say 17 million copies which would equate to just over a billion dollars in sales. That’s a massive number, for sure, but those are one times sales with the possibility for maybe some DLC sales down the road. Now let’s look at it from Microsofts perspective. Elder Scrolls can be that title that brings millions of people into gamepass, just like Game of Thrones brought millions into HBO. Let’s say they bring an additional 10 million subscribers into the system and maybe 2/3rds of them stay (that’s Netflix retention rate). That’s 6.6 million subscribers brought in by that IP being exclusive, over the course of a year that is roughly 1.2 billion (already ahead of the playstation potential sales) and over the course of say a three year period becomes 3.6 billion in addition to a number of other benefits to Microsoft. Subscribers are likely to buy games in their ecosystem, some are bound to become brand evangelists that spread the word and bring others to the ecosystem, they may buy hardware, and they add to the player base of other games in their system keeping games alive for longer (and increasing the future value of that IP).

The business decision could not be any more clear, it is better to the bottom line and to future business to keep these newly acquired IP and any other new IP exclusive to the Xbox ecosystem.

Published by xboxworlds

New blogger, passionate about gaming on xbox

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