Bloomberg has published a comprehensive story about how Microsoft’s original Xbox came to light and the challenges that the company faced to turn it into the gaming juggernaut that it is today. One of the more amusing passages relates to comments made by former executives Steve Ballmer (CEO), Bob McBreen (head of business development), and Kevin Bachus (head of first-party games), who admitted that Microsoft tried to buy its way into the annals of gaming history by securing major developers/publishers such as EA.
Apparently, Microsoft was willing to throw so much cash around that it even tried to acquire one of its biggest competitors in the console space, Nintendo. Things didn’t turn out as well as Bachus and his Xbox team had hoped, however, as they were literally laughed away by the Japanese gaming icon instead of working on what would have presumably been a very expensive deal.
BOB MCBREEN (head of business development) The first company we reached out to buy was EA. They said, “No, thanks,” and then Nintendo.
BACHUS Steve made us go meet with Nintendo to see if they would consider being acquired. They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went.
MCBREEN We actually had Nintendo in our building in January 2000 to work through the details of a joint venture where we gave them all the technical specs of the Xbox. The pitch was their hardware stunk, and compared to Sony PlayStation, it did. So the idea was, “Listen, you’re much better at the game portions of it with Mario and all that stuff. Why don’t you let us take care of the hardware?” But it didn’t work out.
BALLMER I remember loving their content.
HOWARD LINCOLN (chairman of Nintendo of America) Nintendo does not talk about confidential discussions with other companies. In any event, nothing came of these discussions.
The article goes on to confirm that Microsoft even tried to buy Squaresoft (which merged with Enix in 2003 to become Square Enix), as well as Mortal Kombat maker Midway Games. While the latter was actually open to an acquisition, the Final Fantasy publisher wanted more money than what Microsoft was willing to pay.
MCBREEN We had a letter of intent to buy Square. In early November 1999, we went to Japan. We had one of those big dinners with their CEO and Steve Ballmer. The next day, we’re sitting in their boardroom, and they said, “Our banker would like to make a statement.” And basically, the banker said, “Square cannot go through with this deal because the price is too low.” We packed up, we went home, and that was the end of Square.
BACHUS We were talking to Midway about acquiring them. They were very serious about wanting to be acquired, but we couldn’t figure out how to make it work because we’d immediately get them out of the PlayStation business, and we didn’t need their sales and marketing group, and so that left us with not a lot of value.
It’s hard to imagine what the gaming world would have looked like if Microsoft’s wallet prevailed, but the modern ubiquity of the Xbox brand does prove that the software giant did manage to play some of its cards right. That would include the acquisition of then-obscure developer Bungie, whose critically acclaimed Xbox launch title, Halo, effectively saved the system and thrust it into worldwide prominence.