Technology

Microsoft tightens grip on gaming with $7.5bn deal for ZeniMax

Deal for Doom maker comes a week after Microsoft’s failed bid for TikTok’s US assets

Photograph: Lucy Nicholson/Reuters

Mon Sep 21 2020 - 20:54

Microsoft said on Monday it would acquire ZeniMax Media for $7.5 billion (€6.4 billion) in cash, strengthening its Xbox video game offering with the studio behind titles such as Fallout and the Doom, as competition heats up with Sony Corp.

ZeniMax is the parent company of Bethesda Softworks, which has also developed hits including The Elder Scrolls, Wolfenstein and Dishonored.

The deal comes more than a week after Microsoft's failed bid for short-video app TikTok's US assets. TikTok has currently structured the deal as a partnership with Oracle and Walmart rather than an outright sale.

Microsoft said it planned to bring Bethesda’s future games into its monthly Xbox Game Pass subscription service when they launched on Xbox or PC. The game pass now had more than 15 million subscribers, Microsoft added.

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Bethesda’s structure and leadership would remain in place, Microsoft said.

Gaming is in high demand from stuck-at-home users during the Covid-19 pandemic, and Microsoft has put its faith in offering users many ways to play via its cloud service and consoles at different price points.

The latest deal would mean Microsoft would have more hit titles in its gaming library, a key attraction point for gamers when choosing a console.

“Microsoft recognises its need for consumer-based revenue growth, which we believe this deal will directly help drive along,” brokerage Wedbush Securities said in a note.

Both Microsoft and Sony are launching their next-generation gaming devices in November, with pre-orders for Xbox going live on Tuesday.

Microsoft said the ZeniMax deal would close in the second half of fiscal year 2021, and have minimal impact on adjusted operating income in fiscal years 2021 and 2022.

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