What game company is Microsoft going to acquire next? If Phil Spencer stumbled upon a genie bottle, it’d most definitely be Nintendo, according to a leaked internal email from 2020 that involves the head of Xbox calling Nintendo the “prime asset” for a potential acquisition. Spencer said that Microsoft is one of the few U.S. companies that stands a chance of owning Nintendo, although there are some challenges in the way, such as the Switch maker already having “a big pile of cash.”
Takeshi, I totally agree that Nintendo is THE prime asset for us in gaming, and today gaming is our most likely path to consumer relevance. I’ve had numerous conversations with the LT of Nintendo about tighter collaboration and feel like if any US company would have a chance with Nintendo, we are probably in the best position. The unfortunate (or fortunate for Nintendo) situation is that Nintendo is sitting on a big pile of cash; they have a BOD that until recently has not pushed for further increases in market growth or stock appreciation. I say “until recently,” as our former MS BOD member ValueAct has been heavily acquiring shares of Nintendo (https://vwm.reuters.com /article/us-nintendo-valueact-exclusive-idUSKCN2232VT) and I’ve kept in touch with Mason Morfit as he’s been acquiring. It’s likely he’ll be pushing for more from Nintendo stock, which could create opportunities for us. Without that catalyst, I don’t see an angle to a near-term, mutually agreeable merger of Nintendo and MS, and I don’t think a hostile action would be a good move, so we are playing the long game. But our BOD has seen the full writeup on Nintendo (and Valve) and they are fully supportive on either if opportunity arises, as am l.
Confidentially, we have two fairly active M&A discussions in Gaming right now, Warner Brothers Interactive and ZeniMax. I took ZeniMax to the BoD last week, and prior to the BoD discussion, I asked Amy and Satya if they wanted me to slow either or both of these given the TikTok discussions, and they both emphatically told me “no.” They are fine doing all 3 of these if the deals make sense. I won’t say WB or Zeni is Nintendo, but both are for sale and gettable by us if things align. Biggest obstacle in WB is IP ownership; we wouldn’t own any of the IP, which hurts long-term flexibility, and the only obstacle on Zeni is valuation expectations of founders. But I think it’s likely one or both of these happen, which will help us continue to double down on our relevance. To give a sense of scale, ZeniMax is about the size of our current first-party studios org, so that would be doubling our content asset. Downside is it’s more core, less broad, not mobile, more north American/European, etc.
I love this discussion and value you looking at the opportunities here. At some point, getting Ninterdo would be a career moment, and I believe a good move for both companies. It’s just taking a long time for Nintendo to see that their future exists off of their own hardware.
Discussion (9 replies)
Join Discussion →In 2020 but an appetite for another gaming acquisition has to be low after Activision blizzard. Going after Nintendo would be even more fraught with trade peril.
I doubt they could buy them.
Market cap might be whatever, but valuation with ip and all that would me massive.
If they did MS will just suck all life out and make Nintendo worthless within a decade.
But imagine Nintendo IPs on PC. (legit)
Yeah, all I can see is souless Mario, Zelda, Flavorless Pokémon, on and on. All IP filled with corporate beige (Pokémon is partial ownership so I don't know).
Please no.
Yup. I can certainly believe it was their top choice and then they “settled” for ActiBliz
What every new partner wants to hear. "I settled for you".
I can't see how ActiBliz would have been anyone's first choice.
It has Call of Duty and King, so ok there are bright spots there worth chasing. Blizzard keeps trying to open up eSports - it hasn't quite done it yet, but it keeps trying - so if that actually becomes a thing, you'd be there, but I'd say it's not there yet.
That said, all the controversy around Kotik was a big albatross around that deal, and he was hardly alone as there have been a lot of "bad culture" stories come out of there -- some of it was probably fueled by "Me Too" - but in the realm of publicly traded stock, perception is more important than reality. Blizzard just got kicked out of China with their most profitable title there (World of Warcraft).
And it was a really high dollar acquisition without a lot of recent success - you are paying a premium for basically just the IP - a lot of the big IPs over there haven't had a blockbuster game in a really long time ("Show me the money")
Microsoft swallowed the entire package - hook, line and sinker - rather than trying to parcel out what they considered worthwhile (they always held up CoD as their example, and mentioned mobile aspirations, but they didn't just snipe those items out of the deal).
So yeah, I think this was probably the third or fourth girl they asked to the prom, and they were prepared to keep going down the list until someone finally said yes, no matter how ridiculous the offer was.
HAHAHAHAHAHAHAHAHAHAHAHA, interesting way to put it!