Microsoft is celebrating the 20th anniversary of the original Xbox this year. The console had a rocky start and a storied history in console gaming. After all, back in the day, Microsoft was only known as a player in the PC market. Jumping into the console arena was big news, but on one that elicited mixed reactions from both the industry and the gaming community.
One particularly interesting nugget of that history is how Microsoft offered to buy one of the biggest names in the console market: Nintendo. Although there were rumors of this event that surfaced through the years, no clear confirmation was ever made. Until now!
Microsoft Wanted a Piece of the Console Pie
Today, mobile gaming is a massive and still growing trend, and what many gaming companies are trying to break into. But back in the late 1990s to early 2000s, console gaming was the big thing. At the time, there were only three players in that ring: Nintendo, Sega, and Sony. Console gaming in the late 1990s was generating $5 to $6 billion of the $30 billion total annual revenues of the video game industry. It was not surprising that Microsoft wanted in on that.
But Microsoft had little to no history with developing consoles. Microsoft Games and its subsidiaries were best known for PC gaming. During that era, PC games were viewed as complicated and overly serious compared to their console brethren. For example, Age of Empires was one of Microsoft’s biggest games . But it generally did not fit the game designs and aesthetics prevalent with the popular consoles like the Nintendo 64 or the Playstation.
Furthermore, Bill Gates, founder and CEO of Microsoft, was particularly concerned with the development of the Playstation 2, which boasted more than just video game features. Gates and his company had made some attempts at negotiating a partnership with Sony, which was the leading console developer at the time thanks to the success of the PSX (aka Playstation 1). Negotiations did not push through, however, as Sony opted to creating its own proprietary software and programming.
Microsoft Made an Offer to Nintendo… and Nintendo Laughed
While the development of Project Midway (which would later be known as the original Xbox) was still in its infancy, apparently Microsoft made attempts to buy Sony’s biggest competitor, Nintendo. According to an oral history and interviews of key players as reported by Bloomberg, Microsoft made a serious bid to buyout Nintendo. But this was met by raucous laughter from the top Nintendo executives!
According to Kevin Bachus, who was in charge of 3rd party relations:
"Sony coming out and saying, 'PlayStation 2 is going to redefine the computer world,' that got attention inside of Microsoft."
He later continued:
"Steve [Ballmer, Microsoft President and later CEO] made us go meet with Nintendo to see if they would consider being acquired. They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went."
Bob McBreen (the head of Microsoft business development) added:
"We actually had Nintendo in our building in January 2000 to work through the details of a joint venture where we gave them all the technical specs of the Xbox. The pitch was their hardware stunk, and compared to Sony PlayStation, it did. So the idea was, 'Listen, you’re much better at the game portions of it with Mario and all that stuff. Why don’t you let us take care of the hardware?' But it didn’t work out."
One can imagine how Nintendo found the Microsoft offer utterly amusing. While losing ground to Sony at that period of time, Nintendo was still very successful and leading in the Asian market. It probably did not help matters that the attempt made by Microsoft was a bit on the nose, bordering on insulting.
But it appears that Microsoft, despite failing with the offer to Nintendo, made other attempts with more companies. EA Games, Konami, Midway, and Square Enix were all approached by Microsoft. And, while they were not laughed at as with Nintendo, all these companies also declined the offer.
The events that occurred during Microsoft’s early forays into console gaming is certainly an amusing anecdote in history. The bemused refusal of Nintendo to sell the company and its properties to Microsoft may have led to the efforts in getting the original Xbox out as early as 2001. While the Xbox eventually became a force to be reckoned with, especially after Sega closed its doors, it was not smooth sailing.
Moreover, one cannot help but imagine how things would have been different if Nintendo actually accepted the offer. Would Mario have become the mascot of not just the Nintendo brand, but of Microsoft itself? Would we have had HALO if Microsoft developed a Metroid game with Samus? One wonders how the console and PC gaming industry might have turned out 20 years later!