Companies Microsoft Could Invest in Instead of EA

In the past few weeks, rumors regarding companies that Microsoft was thinking of investing in surfaced around the media. It would work as a way to enhance their first party portfolio, that has been criticized in the past for its lack of quality, original titles, and also as part of the strategy to make Game Pass an even more appealing service.

Valve, PUBG Corp, and EA were named as possible targets, even Sega was rumored due to a visit of the company’s executives to Microsoft’s HQ. And all those news made me think of possible targets for them to go after.

I wouldn’t consider Valve a good option, given that it still is a private company and Gabe Newell would need to approve the sale. And let’s be honest, they haven’t produced many games in the last few years, it wouldn’t help boost their catalog. PUBG Corp. has only produced 1 successful title, and yes it is a massive success, but it doesn’t appear that PUBG will have the longevity Minecraft has, and it might end up being another fad, albeit a huge one.

The only one left was EA, however the company has dealt with PR problems, something that could stifle Xbox’s good momentum, and except for their annual sports franchises and Battlefield, most of their latest releases have been critical or commercial failures, like Mirror’s Edge Catalyst, Need for Speed Payback and Star Wars Battlefront 2.

They also seem to be overly dependent on their established IP’s, and currently, they appear to go through problems with their own development studios. Bioware Montreal merged with Motive after Mass Effect Andromeda’s troubled release, Visceral Games was closed as they developed a single-player Star Wars game, Bioware is allegedly under a lot of pressure as expectations grow around Anthem, as reported by Kotaku. News that Disney was willing to negotiate the Star Wars’ license with other studios also shows another warning sign, even though it could point to an EA sale. There’s no doubt that they would be a great addition to Xbox’s array of studios, but those problems might come in the way of a purchase.

Thinking about those possibilities, I looked into what they could do with the money they’d spend on buying EA, the most realistic possibility for me. To calculate the value of the companies I used the market cap, or the market value of the shares of a publicly traded company at a point in time, market evaluations of private companies, and for some studios, I based it on the value of other studios with similar sizes or franchises of similar success.

Bethesda

 

Market Value: $2.500.000.000,00 (2016)

Buying Bethesda would require a negotiation with ZeniMax Media, their parent company, but it would bring franchises like Elder Scrolls, Skyrim, Prey, Dishonored, Wolfenstein to their portfolio. There wouldn’t be many new games added to Game Pass, but they would be titles with a great critical reception that would bring an amazing value to the service.

Studios such as MachineGames, Arkane and Tango Softworks would be added to their team, and as a plus, they would bring a renowned developer in Todd Howard as part of their staff. Some cultural differences could present a challenge, but it has everything to be a productive partnership.

Capcom

 

Market Value: $2.720.000.000,00

Capcom has seen its better days, nonetheless, they appear to go through a process of recovery after years of struggles. The success of Resident Evil 7, that made fans of the series happy again, and the incredible sales of Monster Hunter World have proved that they still can produce quality titles. Speaking of Monster Hunter, if they made an exclusive title of the series for the Xbox, it would be huge to the Japanese market, that they have failed to succeed at.

Their extensive back catalog would be very attractive, with Okami, the DMC series, Dead Rising series, Mega Man, still resonating with gamers, and many others able to be resurrected such as Dino Crisis (that would look incredible nowadays), Onimusha, Lost Planet, Strider, Viewtiful Joe.

CD Projekt Red

 

Market Value: $2.000.000.000,00

The opportunity to buy one of the most exciting studios certainly sounds appealing. Even the small number of games shouldn’t come in the way or stop them from looking into this talented studio that produced one of the best titles of this generation, possibly ever.

Acquiring them would bring Xbox’s slate of studios to another level, as Naughty Dog did to Sony. Cyberpunk 2077 may come out next year, and we haven’t seen it running to attest its quality, but if The Witcher 3 proved anything is that they have potential to create something incredible. It could also work as a boost to their PC strategy as CD Projekt Red owns GOG, a virtual store that sells PC games without DRM, that if given more investment could work either as a rival to Steam or help them boost their Windows store library.

Insomniac

Market Value: $150.000.000,00 – 300.000.000,00

One of the best independent studios for the past 20 years, Insomniac has produced great titles and is responsible for iconic franchises, like Ratchet & Clank, Spyro, and Resistance (to a lesser degree). They are able to create huge AAA titles and smaller indie games, somehow managing to always deliver high-quality products.

The fact that they already have a relationship with Microsoft, having worked on Sunset Overdrive, could facilitate a negotiation. It would also be a strategic partnership as it would end the relationship they have with Sony whilst adding a very talented studio to their team.

IO Interactive

Market Value: $70.000.000,00 – 125.000.000,00

Coming from the latest Hitman title, IO became an independent studio leaving Square Enix and keeping their IP’s. Even though they only really have one famous franchise, Hitman, they would bring a genre that we rarely see as exclusives anymore, stealth titles.

Yes, a reboot of Kane & Lynch could work, Dog Days had some very interesting ideas, however, the execution was flawed. The last Hitman could work in Xbox’s strategy, as it has the potential to be a live service. The elusive target system worked very well, and the maps were vast and felt alive. Instead of releasing a single title, they could turn it into a service seamlessly.

Remedy

Market Value: $90.000.000,00

A long-time partner of Microsoft, Remedy has also been seen as a possible target of Redmond’s company. Working on 2 exclusives for the company, the revered Alan Wake, and the innovative Quantum Break, they are also responsible for the beloved Max Payne series, that has been dormant, and could make a comeback on the Xbox platform.

Their established relationship could make the transition much easier, their engine could be used by other first-party studios, and their storytelling focus should bring new and interesting titles, even though they might take some time to finish.

Sega

Market Value: $3.970.000.000,00

Sega has been part of gaming history for decades now, with franchises like the Valkyria series, Shenmue, Sonic, Yakuza, Persona, under their umbrella. But it would be a complicated purchase as they have deep relationships with both Sony and Nintendo, creating exclusives for them,  with Yakuza being the best and most successful example.

This would be an appealing purchase not only because of their franchises but because of their studios, especially for the PC market. The possibility of bringing Relic and Creative Assembly to their side, recognized for the RTS titles, with both having worked on Xbox exclusives (Age of Empires IV and Halo Wars 2). Atlus would also come as part of the negotiation, famous for creating quality JRPG’s and games with a unique vision, that are very different than what we can find on the Xbox platform.

Square Enix

Market Value: $5.300.000.000,00

Tomb Raider, Final Fantasy, Just Cause, Deus Ex, Dragon Quest, Kingdom Hearts, Life is Strange, Parasite Eve, Legacy of Kain, Thief, just to name the most famous. The sheer variety of Square Enix IP’s would be enough to back up the decision to purchase them. The ability to continue franchises and reboot several shows the potential of this negotiation, as many of their games please western and eastern audiences.

Their partnership with Marvel could come in the way, but Microsoft could publish those titles as multiplatform. It would allow Microsoft to have exclusives on genres they don’t have, like JRPG’s, Horror and Open World action games. Their partnership in Rise of the Tomb Raider wasn’t as successful as expected, however, the release date was the main responsible.

It may sound small, but their Action Figure division would be another source of income and could work in conjunction with Xbox’s marketing team to enhance character’s recognition and on release strategies.

Take-Two

Market Value: $12.800.000.000,00

This would be massive mainly because of three letters: GTA. If the series became an exclusive it would have an enormous backlash, but let’s be honest, in the end, it would generate huge sales, becoming an actual system-seller unlike we’ve ever seen.

Bioshock, that was originally an Xbox exclusive and is deemed as one of the best franchises of the 360 generation, Red Dead Redemption, that got the internet crazy over a color change in their logo, the NBA, and WWE 2K series, that amass millions of copies sold yearly, would all become part of their catalog, working as a recurrent source of income.

As for the studios, Firaxis, the studio responsible for XCOM and Civilization, Hangar 13, the one behind Mafia, Visual Concepts, would all be part of Xbox’s development team. Their new publishing label, Private Division, could produce small to mid-size titles creating a stable stream of Game Pass additions, keeping the service appealing without having to rely so heavily on third-party support.

But the biggest inclusion would be Rockstar, in a move that would instantly elevate their first-party team to a whole new level. As they are the only studio that can release a title without any gameplay, and with minimal marketing solely on their brand recognition, a topic that I wrote about previously.

Ubisoft

Market Value: $9.290.000.000,00

This prolific publisher became a juggernaut in the last decade, since the release of the original Assassin’s Creed. Some may argue that all of their games are similar, but their formula works as they are always part of the top 10 highest sold titles worldwide every year.

They went through PR problems, yet they appear to have recovered from it. Their catalog is big enough to attract all types of gamers, from platformers to e-sports centric titles. Microsoft could bring UbiArt games back, that were critical darlings, successful commercially, and definitely deserve more attention. And in this live services age, their ability to continue to provide support to their games and practically reboot them after launch is a very valuable skill.

The fact that The Division, Rainbox Six, Assassin’s Creed, Beyond Good & Evil, The Crew, Ghost Recon, Just Dance, Trackmania, and Trials would become Xbox’s franchises is a huge plus as well.

Just to Compare

Currently, EA is valued at approximately $38.6 billion, and for Microsoft to buy them they would need to pay a higher value in order to accrue interest from their stakeholders. I didn’t consider Sony or Nintendo, but I thought of 10 companies that could be bought for roughly $39 billion. It would be impossible to buy all of them because of regulations, and the headache that it would be to organize so many operations, but some could be valuable purchases.

Companies Market Value
Bethesda  $    2.500.000.000,00
Capcom  $    2.720.000.000,00
CD Projekt Red  $    2.000.000.000,00
Imsoniac  $        300.000.000,00
IO Interactive  $        125.000.000,00
Remedy  $          90.000.000,00
Sega  $    3.970.000.000,00
Square Enix  $    5.300.000.000,00
Take-Two  $  12.800.000.000,00
Ubisoft  $    9.290.000.000,00
Total  $  39.095.000.000,00
EA  $  38.590.000.000,00

Other possibilities:

  • Sumo Digital
  • Ninja Theory
  • Obsidian Entertainment
  • Studio MDHR

 

 

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