Microsoft may buy out another game company but probably not EA
Microsoft could soon be in the market for a major acquisition that would boost its floundering first-party output tremendously if reports are to be believed.
Phil Spencer, the recently promoted executive vice president of gaming, has spoken in the last several months about the need to boost his company's exclusive output, which has, thus far, been relegated to a rotating release schedule of "Halo," "Gears of War" and "Forza" titles.
Game development takes years and setting up a new studio takes even longer. So why not buy one, instead? Or, better yet, buy out a publisher? That's what Spencer and Microsoft might be contemplating, according to a report this week from video game site Polygon.
The site published an article that postulated Microsoft is in the market for a big acquisition in the coming months and could have its eyes on the biggest publisher in the industry, Electronic Arts. Quoting a "reliable source close to Microsoft," Polygon insinuated that a buyout of the publisher would bring home franchises like "Titanfall," "Battlefield" and the upcoming Bioware-developed "Anthem" and make them exclusive to Microsoft and its Xbox ecosystem.
How the sports titles, including the wildly popular "FIFA" and "Madden NFL" series, would fare would be anyone's guess. There's also the question of how that acquisition would affect EA's exclusive rights to develop games with the "Star Wars" license granted to it by Disney, which is currently in its own buyout of 21st Century Fox and its movie assets. Would the Xbox be the only place where gamers could play "FIFA" and "Madden" or "Titanfall" and "Battlefield?" That would certainly be a major coup for Microsoft and would instantly expand its first-party offerings while stripping Sony and the PlayStation 4 of some of its best selling titles.
Before this gets out of hand and console warriors on both sides of the battlefield draw their swords in defiance, a total buyout of EA is probably not going to happen. Speaking purely from a monetary point of view, EA's market value exceeds $30 billion, which is the absolute bare minimum Microsoft will need to offer to acquire the publisher. That value has already increased this week as the report spread and EA's stock value spiked. That's a lot of money to purchase a publisher that only releases a handful of games no matter how successful a year. For perspective, Disney purchased Marvel for $4 billion and Lucasfilm and the "Star Wars" franchise for $4.06 billion. Nothing EA has not the "FIFA" or "Madden" franchises or any of its other properties offers the monetization value of either of those properties.
Microsoft has shown it's willing to spend money when it sees an opportunity even in the gaming division. It purchased publisher "Mojang" and its coveted "Minecraft" in 2014 for $2.5 billion. "Minecraft" is the the second best selling game of all time, behind only "Tetris." It continues to sell millions of copies each year and its ever-growing community continues to fork over millions more for downloadable content.
You also have to look at why EA is so valuable on its own. The company makes money by selling video games across both the Xbox One and PS4. Its influence is felt across the industry so much that consoles have lived and died solely by how much support EA offers. That influence and power translates into cash. Strip EA of more than half of its audience and it will shrivel. Even if more people were to abandon Nintendo and Sony consoles and flock to the Xbox One, that increase would not offset the losses from cutting off more than half of the industry.