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Microsoft considered acquiring Bungie and Sega to bolster Xbox Game Pass, internal emails show

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According to internal documents from the FTC v. Microsoft case, Microsoft was considering buying both Bungie and Sega. Xbox head Phil Spencer asked Microsoft CEO Satya Nadella and CFO Amy Hood for permission in an email obtained by The Verge to approach Sega Sammy regarding a potential acquisition of the Sega games division.

“We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console,” wrote Spencer in the email from November 2020.

Microsoft anticipated that acquiring Sega will increase demand for Xbox Game Pass on PC, console, and cloud platforms. “The global appeal of Sega’s beloved IP will help expand Xbox Game Pass’s reach to new audiences around the world, most notably in Asia, where localised content is critical to success,” Spencer stated at the time in his presentation to Nadella and Hood. Sega would also provide game transactions value for any future monetization options.

It’s unclear what transpired in the Sega acquisition process or whether Nadella ultimately gave his approval to negotiations. Sega was still named as a key target in a Microsoft internal merger study document from April 2021, though. Sega, Bungie, Zynga, and IO Interactive were among the businesses Microsoft was seriously considering buying. Microsoft has identified major areas for acquisitions in the PC, mobile, and console marketplaces across several markets.

Microsoft’s internal paper stated that the acquisition of Bungie would secure valuable IP, Destiny (and its community), and integrate its development and live operations infrastructure into Xbox Game Studios. Bungie, a former Sony-owned firm, was on the list. Along with NetEase’s $100 million investment in a minority share in Bungie in 2018, Microsoft had noted a “high burn-rate” risk for the company. Also mentioned was the fact that Destiny was among the “highest hours generating titles on console Game Pass.”

The “final watchlist” for 2021 included mobile businesses including Thunderful, Supergiant Games, Niantic, Playrix, and Zynga as well as Hitman creator IO Interactive. Prior to focusing on Activision Blizzard for its mobile goals, Microsoft was in talks to acquire Zynga (Zynga was subsequently acquired by Take-Two). It’s unclear whether Microsoft has spoken to the other mobile-focused businesses.

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Vishal kanojiya is a journalist with more than two years of experience in digital journalism. he specializes in business and technology beats. Currently, he is an Author & Cheif Editor of Techbatti

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