How Microsoft CEO and Xbox boss say Bethesda will beef up the Xbox Games Pass lineup

Microsoft may be known as an enterprise software giant, powering most of the world’s PCs and creating backroom technology and tools. But it has also spent more than $ 10 billion buying development studios behind some of the most popular video games in the world. For Microsoft CEO Satya Nadella, it’s about the future of software.

Though not known as a gamer, Nadella has made big bets in the video game industry, buying Minecraft maker Mojang for $ 2.5 billion shortly after being named CEO in 2014. He then bought five more studios in 2018, including role-playing game maker Obsidian, known for the space adventure The Outer Worlds and the well-received South Park: The Stick of Truth. In 2019, it bought Double Fine, maker of the adventure game Psychonauts.

What drives it is the belief that interactive entertainment will be a key technology in the next 10 years and that gamers using Microsoft products expect the company to create titles like those created by the studios it bought.

“You can’t just wake up one day and say, ‘Let me build a game studio,'” Nadella said in an interview after the company announced its $ 7.5 billion cash purchase from ZeniMax Media, which owns several industry-leading game developers, including Bethesda Softworks and Id Software. “The idea of ​​having content is so that we can reach larger communities.”

That’s why Microsoft will consider buying even more video game companies in the future, he said, and why it continues to invest in its Xbox Game Pass subscription service.

“Content is the incredible ingredient on our platform that we continue to invest in,” said the Xbox CEO. Phil Spencer he said in that same interview. “This doubles the size of our creative organization.”

Microsoft’s purchases mark the most dramatic ways the company is looking to build its Xbox brand. They also give the company more games to play in what is increasingly becoming a hit-driven business.

Competitor Sony is known for a range of homegrown series, from the post-apocalyptic thriller The last of us to the treasure hunt game Uncharted to the action series God of War. His upcoming game Marvel’s Spider-Man: Miles Morales will headline the November launch of PlayStation 5, priced up to $ 500.

Meanwhile, the Xbox team is best known for its space war series Halo and Gears of War, and its Forza racing games, neither of which will headline the launch of its $ 500 Xbox Series X.

“Microsoft now does not need another major content / intellectual property acquisition,” Cowen analysts wrote in a note to investors Monday.

Playing now:
See this:

PS5 vs. Xbox Series X: Complete Comparison

9:15

Growing supply

While Microsoft may host some blockbuster titles, many gamers have said that the company needed to improve its game, particularly compared to Sony. “A look at the 2018 exclusives list from the two companies makes for a gloomy reading, at least for Xbox fans,” wrote gaming site Polygon in 2018.

Gamers will see a noticeable difference with Bethesda, Spencer said in the interview Monday, noting that the company’s games will be offered on Microsoft’s Xbox Game Pass subscription service at the same time they hit stores. They will also be available through Microsoft’s xCloud video game streaming service, which allows people to play games over the Internet similar to the way they stream movies from Netflix.

“This is a great investment in games that they are going to be able to play,” he said.

Spencer also said that Bethesda will be run semi-independently, in an effort to keep the company building the games that made it successful in the first place. “It’s about the culture of those teams,” she said. “It is not about becoming us.”

It’s also the reason gaming companies will continue to be on Microsoft’s radar. “We will always look for places where there is that overlap of purpose, mission and culture,” Nadella said, noting that the Xbox team has worked with ZeniMax companies, including Bethesda, since the first Xbox was launched in 2001. “We will always seek to grow. inorganically where it makes sense. ”

Rethink TikTok

Bethesda isn’t the only consumer product acquisition Microsoft has been involved in in recent months. The company also made an offer to buy TikTok, the fast-growing China-based social network based on memes and short videos. The app, which has been downloaded more than 2 billion times worldwide and has more than 100 million users in the United States, is at the center of a political battle between the Chinese government and President Donald Trump.

Nadella said TikTok’s parent company ByteDance approached Microsoft to try to create a company that was wholly owned by Microsoft. Over the course of the past few weeks, the company was part of an ever-changing public takeover process, dictated at times by Trump, who threatened to ban TikTok from US app stores. about undefined national security concerns.

Trump said he would not ban the app if it was bought by a US company, and for a while Microsoft seemed to be the one. On Sunday, however, Trump announced that he approved a deal that featured enterprise software maker Oracle and retailer Walmart would take bets into a new company, called TikTok Global, although some uncertainty persists.

“It’s not something I acknowledge, and it’s definitely not the deal I made an offer for,” Nadella said. “The deal has obviously changed a lot since then.”

But if Microsoft had won the acquisition, Nadella said, it would have been part of what he sees as the company’s efforts to expand its software. “I don’t start each day thinking that I want to become someone else,” he said. “I start each day by saying, ‘How can I do a better job of doing the things that come naturally to us?'”

And that’s why you tried to buy TikTok and why you bought Bethesda.