Microsoft (NASDAQ: MSFT) announced today that it will acquire ZeniMax and its game-publishing wing Bethesda in a $7.5 billion all-cash deal. ZeniMax's Bethesda gaming subsidiary is responsible for major franchises including Fallout, The Elder Scrolls, and Doom.
Microsoft has been making acquisitions and bolstering internal production capabilities to strengthen its position in the gaming industry. The ZeniMax acquisition is its biggest acquisition in the space yet. The deal is expected to close in fiscal 2021 and have a minimal impact on the company's non-GAAP (adjusted) operating income in its 2021 and 2022 fiscal years.
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What does it mean for Microsoft?
Microsoft will launch its next-generation of Xbox hardware, the Xbox Series X and the Xbox Series S, on Nov. 10, and acquiring ZeniMax could be a significant boon for the console family's exclusive software lineup. Improving its game catalog and development capabilities should also benefit its upcoming xCloud game-streaming service.
The acquisition press release states that Microsoft plans to bring new releases from Bethesda to its Xbox Game Pass subscription service (which is available on Xbox and PC platforms) on the first day of their release. The move signals that the company is moving ahead with plans to make the low-cost subscription service a central part of its gaming strategy.
However, it is possible that some games from Bethesda will still release on competing hardware platforms. Even after acquiring Mojang and its hit game Minecraft in 2014, Microsoft continued to allow updates and new releases of the game on platforms from Sony and Nintendo.
Gaming has become an important part of many tech companies ecosystems. The medium generates tons of engagement and potentially valuable data, and Microsoft has shown an interest in building a cross-platform strategy instead of solely focusing on its Xbox hardware family.
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