The ongoing Microsoft vs FTC hearings is giving gamers much insight into the gaming industry. One of the things we just learned during the ongoing legal proceedings is that Microsoft had a list of gaming developers that were prime targets for acquisition.
The preliminary injunction hearing has compelled Microsoft to share information about its acquisition plans. According to a report by The Verge, over the past three years, the tech giant has explored potential acquisitions of gaming companies such as SEGA, Bungie, Niantic, and IO Interactive.
The strategy of acquiring established gaming developers was discussed in an internal email between the long-time Xbox chief, Phil Spencer, Microsoft CEO Satya Nadella, and CFO Amy Hood.
Spencer was asking for “strategy approval” to approach SEGA about a potential acquisition.
I’m writing to request Strategy Approval to approach SEGA Sammy regarding a potential acquisition of their SEGA game studios,” Spencer wrote in the email. We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console.
Spencer notes that SEGA is a publicly-traded company and that gaming “has represented roughly half of SEGA Sammy’s revenue and operating income” for each of the last three years. He adds, “Sega is the most attractive next acquisition target due to its global PC catalog, presence on mobile in Asia, and global brand affinity on console through its classic IP.
It wasn’t discussed during the hearing if Nadella approved of the plan to approach SEGA for a potential acquisition. But, in an internal 2021 merger review document, SEGA is still part of Microsoft’s final watchlist.
The internal watchlist also revealed that Microsoft targeted Bungie, Niantic, Zynga, Supergiant Games, and IO Interactive. Niantic is best known for developing Pokémon GO and is currently working on an augmented reality Monster Hunter title.
Supergiant is notable for developing the popular rogue-like dungeon crawler Hades while IO Interactive owns the Hitman franchise. We previously reported that Microsoft tried and failed to acquire mobile developer Zynga before the company’s proposed merger with Activision Blizzard.
Bungie was previously owned by Microsoft but spun off in 2007. The Destiny developer is currently owned by Sony after being acquired in 2022 for $3.6 billion. Microsoft also mentioned in the watchlist that Destiny was one of the most-played titles on Game Pass and acquiring the studio would secure the valuable IP along with a passionate community. Bungie’s ability to ship and scale games was also noted.
It was discussed during the hearings that Microsoft planned to “spend Sony out of business.” While the tech giant insists that the strategy wasn’t carried out by the company, the presence of a Merger and Acquisition watchlist paints a different picture.
Microsoft has previously said that it isn’t done with purchasing studios after it closes the Activision Blizzard purchase. We wouldn’t be surprised if a new document adds EA and Ubisoft to the list of potential acquisitions.
