Inside Phil Spencer’s Masterplan: Microsoft’s Game Pass Ascendancy through Studio Acquisitions

Microsoft has been demonstrating for some time now its interest in establishing a position in the world of video games through acquisitions, a fact that has been further confirmed by its legal proceedings regarding the purchase of Activision Blizzard. However, now that we have gained access to the documents included in the Federal Trade Commission process, we have been able to verify, among many other things, that Xbox has made only a fraction of the purchases it would have liked to make. Even though none of them were as enormous and disruptive as the acquisition of Activision Blizzard.

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In 2020, Phil Spencer sent an email to Satya Nadella, the CEO of Microsoft, requesting approval to explore the possibility of acquiring several development studios, as well as continuing to study the feasibility of acquiring others to further enhance their Game Pass. Among the list of companies they wanted to purchase were Sega, IO Interactive, Supergiant Games, Niantic, Zynga (which was acquired by Take Two in January 2022), and Bungie (which was acquired by Sony around the same time). Whether these acquisitions were ultimately allowed by Microsoft or not, and if they were allowed, why they were not pursued, is something we do not know. However, what we do know is that, for Microsoft, the most attractive acquisition among these options was Sega, “due to its global PC catalog, mobile presence in Asia, and global affinity with the brand through its classic IPs.”

Although these specific acquisitions did not materialize, it is quite likely that Microsoft reached some form of agreement with some of these companies and found replacements for others. Sega games now systematically appear on Game Pass on day one, and while they did not acquire Zynga, the Activision Blizzard deal included the acquisition of King, the other major Western mobile gaming company. This puts them one step closer to that previously elusive market for Microsoft, which they were attempting to cover with the potential acquisition.

All of this only demonstrates that Microsoft’s strategy has long been focused on aggressively acquiring studios to address their shortcomings using their virtually unlimited funds. It is highly probable that they will continue this strategy in the future, and it should come as no surprise if we hear more news of this nature. Until then, one thing is certain: Microsoft is willing to make bold moves to establish Xbox as synonymous with video games.

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