Microsoft dropped a bombshell on the morning of September 21, 2020. Out of nowhere, it announced the acquisition of Bethesda and Zenimax for $7.5 billion. We were all left speechless, as it was a bold move to show that Xbox wanted to compete.
Reactions were swift: Xbox fans exploded with excitement, PlayStation players expressed concern, and surely more than one Sony executive felt uneasy. The deal seemed like the move Xbox needed to get back on track after the absolute disaster that was Xbox One and its content crisis throughout the entire generation.
The forecasts were highly favorable, as everything pointed to the brand having the winning strategy to pave the way and compete against Sony's gaming division. Four years have passed since Microsoft announced its intentions to acquire Bethesda, and since then, many things have happened in the industry. For this reason, we look back on the acquisition and ask ourselves if, in the end, it was worth it, especially considering the recent changes in Xbox's strategy.
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A Major Power Move
That historic morning, there was only one topic: Microsoft's billion-dollar acquisition of ZeniMax. And it’s no wonder—thanks to this, Xbox strengthened itself with Bethesda's successful franchises, such as The Elder Scrolls, DOOM, Fallout, Quake, Wolfenstein, among others. Plus, Starfield, a new IP that had yet to debut, was on the way.
Overnight, Xbox Game Studios gained the development power and talent of Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane Lyon, MachineGames, Tango Gameworks, and the still-existing Arkane Austin, Alpha Dog, and Roundhouse Studios.
The news shook social networks, forums, and the media at large, as it implied more than just video games. A giant like Microsoft had shelled out billions of dollars to send a clear message: it was ready to conquer the entertainment industry and surpass its competitors. Suddenly, the balance shifted in favor of Xbox, and it was even said that PlayStation was doomed by this supposed checkmate.
The strategy seemed obvious at first. With all the new franchises, Xbox would end its content crisis. It would also make future Bethesda releases exclusive to its consoles, thereby boosting hardware sales, promoting services like Xbox Game Pass, and competing head-to-head against PlayStation and its acclaimed sagas. A perfect deal.
Xbox didn’t know it yet, but it still had to navigate a legal minefield to complete its acquisition and boast its first benefits. On the other hand, Microsoft had a very different plan than we all imagined for utilizing its shiny new purchase, and this has become quite clear in recent months.
Key Bethesda executives, such as Todd Howard and Pete Hines, celebrated the important deal in a big way. They claimed it was beneficial for both parties, as it guaranteed financial and job security. Furthermore, Microsoft promised creative freedom in terms of development, distribution, communication, management, and the overall business model. What could go wrong?
Amid all the excitement, some concerns arose. People began discussing a potential monopoly, the massive presence Microsoft would gain in the industry, whether it would ruin Bethesda’s studios, and, of course, the topic of exclusivity and what would happen with PlayStation.
While Satya Nadella and Phil Spencer rubbed their hands together, analysts and regulators began to question whether the deal benefited anyone other than Microsoft and Xbox. Several investigations followed, but fortunately, they weren’t as troublesome as the later acquisition of Activision Blizzard.
Both the U.S. Securities and Exchange Commission and the European Commission approved the acquisition of Bethesda without issues. On March 9, 2021, the iconic developer and its studios officially became part of Xbox Game Studios. Shortly afterward, players saw the first benefits.
Acclaimed Bethesda games came to Xbox Game Pass, and it was confirmed that future releases would be day-one launches. Additionally, over the months, the news many Xbox fans were waiting for arrived: games like Starfield, Redfall, and the new Indiana Jones would be exclusive.
As we now know, some things turned out well, while others went terribly wrong. Likewise, things have changed drastically, and Microsoft has partially delivered on its promises. The acquisition also meant making several sacrifices and strategic adjustments that, unfortunately, have already taken a toll on Bethesda and Xbox.
A Deal Full of Ups and Downs
When the purchase was finalized, we all dreamed of more and better Bethesda games, crazy crossovers between franchises, great titles in Game Pass, and an Xbox stronger than ever thanks to eye-catching exclusives. However, it all began with a bittersweet taste, especially for Microsoft console users.
One of the tech giant’s first decisions was to honor the exclusivity that Deathloop and Ghostwire: Tokyo had on PlayStation. This puzzled many players, especially because Xbox had made the purchase precisely to prevent its rival from making these kinds of deals. It’s even said that Sony was negotiating for the exclusivity of Starfield before the agreement was closed.
Later, Phil Spencer and other Xbox executives were very unclear about the exclusivity issue. First, they stated that they didn’t need to bring Bethesda games to other platforms for the acquisition to work and to recoup the investment. Subsequently, Spencer claimed that Bethesda's future was exclusive to Xbox Game Pass, which made a lot of sense since the service is a key part of their ecosystem.
Later, Sarah Bond confirmed what many wanted to hear: Starfield would only arrive on Xbox consoles. This left the door open for Bethesda's most important and ambitious productions to be exclusive and to stay off PlayStation.
Before the castle of exclusivity completely collapsed, the newly acquired studios had their first stumbles. Bethesda delayed Starfield at a key moment for Xbox, and Redfall was a complete disaster that PlayStation players luckily avoided. Then, the industry’s crisis and Microsoft’s decisions took their toll on the studio with significant consequences.
"As unreal as it may seem, the acquisition that was supposed to solve the content crisis doomed the studio behind Hi-Fi RUSH, a title that debuted as an exclusive, was acclaimed, and momentarily gave Xbox the prestige it sought."
Despite Zenimax and Bethesda employees forming a union that Microsoft approved, they didn’t escape the various waves of layoffs that hit Xbox. Later came the real cold shower: the closure of Tango Gameworks, Arkane Austin, Alpha Dog, and Roundhouse Studios.
As unreal as it may seem, the acquisition that was supposed to resolve the content crisis doomed the studio behind Hi-Fi RUSH, a title that debuted as an exclusive, was acclaimed, and for a moment gave Xbox the prestige it sought. It literally took years for Xbox to define its strategy regarding exclusivity. After announcing that titles like Indiana Jones and the Great Circle would only come to its consoles —and that even Disney justified it— Microsoft made a turn and bet on a multiplatform approach.
Executives like Pete Hines questioned the company for its double standards regarding exclusive games, as its strategy was never clear and changed significantly, especially after the purchase of Activision Blizzard. With all that said, what role does Bethesda play in Xbox and Microsoft’s current strategy? Was its $7.5 billion acquisition worth it, considering everything that has happened since?
Was It Worth It?
For months now, it’s clear that Microsoft no longer seeks to compete in the same arena as Sony, where exclusivity is key to success. The tech giant now bets on a multiplatform approach because what really matters to it is having the content in its hands and controlling its distribution.
In this sense, having Bethesda on their side is very important, as they possess iconic games and franchises that have filled their release calendar and entire segments of their events. The simple arrival of their games to Xbox Game Pass made the purchase worthwhile for many. Of course, the idea of enjoying future releases like DOOM: The Dark Ages with a subscription is extremely attractive.
The problem for Microsoft is that, even so, Xbox Game Pass has not grown as expected. Due to the company’s change in strategy, it’s clear that the Bethesda acquisition won’t be the masterstroke to take market share from PlayStation. Nor will it boost the exclusive offerings or Xbox console sales, at least not in this generation.
On the other hand, the acquisition has had negative points that have significantly impacted Xbox's reputation, such as studio closures, waves of layoffs, and how they’ve turned their back on true industry legends like Shinji Mikami, former head of Tango Gameworks.
We know Microsoft has supported Bethesda in terms of technology and resources to make better games, but it’s hard to know the full extent of this integration. Perhaps, when they reveal Fallout 5 or The Elder Scrolls VI, that support will become evident, and as players, we’ll see more benefits from the acquisition.
Although it’s been several years since Bethesda joined Xbox, we haven’t really seen all the potential or all the risks of the purchase. In the long term, its success will depend not only on the games these companies can offer, but also on how Microsoft manages the talent within its studios—something that so far has not been one of its strengths.
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