Microsoft's ZeniMax Acquisition Pushes Xbox Game Pass Into Overdrive

Microsoft's ZeniMax Acquisition Pushes Xbox Game Pass Into Overdrive

THIS WEEK IN BUSINESS | Microsoft's plan to change the way we play games received a considerable boost this week, but what happens if it works?

This Week in Business is a collection of stats and quotes from our sister site GamesIndustry.biz that sheds light on console sales, new trends, and more. Check back every Friday for a new entry!

It was a big week for Microsoft, with the company announcing that it was buying ZeniMax Media the day before preorders for Xbox Series consoles opened up. It took a huge outlay of money to add Bethesda, id Software, Arkane, MachineGames, Tango Gameworks, and more to Microsoft's stable of first-party studios, but it also gave the Xbox a line-up of presumably PC/Xbox-exclusive franchises like Elder Scrolls, Fallout, Doom, Wolfenstein, Quake, Dishonored, and more.

Just having The Elder Scrolls 6 as an Xbox exclusive could be hugely significant, giving Microsoft something it could plausibly hold up against Sony's first-party lineup of blockbusters. There's nothing wrong with Halo and Gears of War, exactly, but the Xbox One showed just how far they can carry a console on their own.

This acquisition also vastly improves Microsoft's Game Pass Ultimate subscription, ensuring a steadier stream of big first-party titles to add to it, likely solidifying the catalog offering by adding all of ZeniMax's previous-gen titles, and making the value proposition of the monthly fee that much more compelling from a consumer's point of view.

That said, I have serious reservations about seeing the games industry follow music and movies down the subscription service route. Some of those concerns are financial, related to the ways this paradigm shift could hurt developers and publishers as they lose what little leverage they have against the massive platform holders and multinational corporations that shape our culture, determining what sort of creativity gets funded, distributed, and seen.

But I also don't think it's great for the way people view games as disposable consumer content. When I buy a book, a movie, a game, whatever, I'm invested in it. The more I spent on it, the more I'm probably going to feel obligated to engage with it, the more rough edges and potentially alienating choices I'm going to endure before putting it down and walking away. I think there's some value in that, because it means the games, music, and movies I play, listen to, and watch have more latitude to challenge me, to eschew my expectations and show me something great I never would have thought to ask for.

In a subscription streaming world, where these is no friction to starting these games and no cost associated with dropping them, there's nothing to keep me sticking around. In some ways that's good. That frictionless barrier to entry means I've seen plenty of things on Netflix I never would have purchased or rented.

But at the same time, it makes the things I watch on Netflix more disposable. It turns a creative artform full of meaning and thought into background noise, something I can half pay attention to while I'm doing errands or scrolling through social media, something I can start up, run into the slightest annoyance, and walk away from entirely.

Netflix has changed the way I watch movies and TV shows, and not for the better. I'm not thrilled about that happening with games.

STAT | $7.5 billion - The amount Microsoft paid to acquire ZeniMax Media and its stable of studios and franchises. That's billions more than Disney paid for Marvel or Star Wars ($4 billion and $4.05 billion, respectively), Microsoft paid for Minecraft ($2.5 billion), Google paid for YouTube ($1.65 billion), or Facebook paid for Oculus ($2 billion). It's still less than the Activision-Vivendi merger that created Activision Blizzard though; that deal put Vivendi's value at $8.1 billion.

QUOTE | "We'll always look for places where there is that commonality of purpose, mission and culture. We will always look to grow inorganically where it makes sense." - Microsoft CEO Satya Nadella says the company always leaves the door open for more acquisitions.

QUOTE | "Japan is our fastest growing region worldwide... Since we launched Xbox Game Pass for both console and PC in Japan this past April, we've seen more players on Xbox devices, games, and services than at any time in our history in the market." - Xbox head Phil Spencer celebrates the recent success of the brand in Japan during Microsoft's Tokyo Game Show Xbox Showcase.

QUOTE | "The ratings just jumped 50%! From squat to squat and a half!" - TV network owner Duke Phillips celebrates the recent success of his film critic Jay Sherman in the 1995 season two premiere of The Critic.

STAT | 15 million - Microsoft's total worldwide Game Pass subscriber base, up 50% since April of this year. (That's not squat, but that's the worldwide growth and I'm still very skeptical that this is the generation Microsoft breaks through in Japan.)

QUOTE | "Introducing Luna, Amazon's cloud gaming service where it's easy to play great games on devices you already own. No waiting for lengthy downloads or updates—just play." - Amazon announces its new game streaming service with minimal hype, but a similarly minimal $5.99 monthly introductory subscription price.

QUOTE | "That is 100% a dig at Activision Blizzard, right?" - Me, upon hearing the name of former Blizzard chief Mike Morhaime's new publishing company Dreamhaven, which he hopes will give its staff of key former Blizzard developers "an environment for creators that enabled them to focus on the right things and a creative space that allows them to innovate."

QUOTE | "Let's be honest: PS5 preorders could have been a lot smoother. We truly apologize for that." - Last weekend, Sony tweeted out a mea culpa for the hectic, uncoordinated way PS5 preorders were handled last week. Microsoft's Xbox Series preorder strategy was not much better when it comes to consumer frustration.

STAT | 1.5 million each - Baird analyst Colin Sebastian's estimates for PS5 and Xbox Series consoles sold in North America by the end of the year.

QUOTE | "For some of these premium games, if the $10 increase was implemented, people would happily pay it. They might grumble about it, but they would certainly pay it. The price sensitivity, particularly on day-one, suggests that." - NPD analyst Mat Piscatella is confident that $70 next-gen game prices won't significantly hurt sales.

QUOTE | "We wanted to start fresh with a company structure that was worker-owned and gave everyone a say in the future of our organization." - Future Club CEO Francesca Esquenazi announces the new studio, which is comprised of former employees of Skullgirls studio Lab Zero Games, which imploded in recent months after owner and lead designer Mike Zaimont was accused of abusive and inappropriate behavior.

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Brendan Sinclair

North American Editor

Brendan joined GamesIndustry International in 2012. Based in Toronto, Ontario, he was previously senior news editor at CBS-owned GameSpot in the US.

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