As a result of the ongoing courtroom drama around the Microsoft and Activision Blizzard merger, new insights have been revealed about the strategic maneuverings behind Microsoft's acquisition of Bethesda Softworks through ZeniMax Media, and its impact on the much-anticipated game Starfield.
Phil Spencer, Xbox's chief, elucidated during the Federal Trade Commission (FTC) hearing that Sony's aggressive strategy of paying competitors to keep games off the Xbox platform motivated Microsoft's $7.5 billion acquisition of ZeniMax, Bethesda's parent company.
The primary catalyst was the potential for Starfield, a highly anticipated RPG, to become exclusive to the PlayStation 5, as pointed out by The Verge.
At the time, Sony had already secured exclusivity for Deathloop and Ghostwire: Tokyo, both of which sold quite well, at the very least, relative to expectations. The former, in particular, was a GOTY nominee in 2021 and is widely considered one of the games of the current generation with high marks from critics on the PS5 and the Xbox Series S/X.
"When we heard that Starfield was potentially also going to end up skipping Xbox, we can’t be in a position as a third-place console where we fall further behind on our content ownership so we’ve had to secure content to remain viable in the business," Spencer explained.
With Xbox lagging as a third-place console, acquiring Bethesda allowed Microsoft to secure popular content and remain as competitive as can be and not lose its footing in the console wars any further. After closing the deal, Microsoft promised it would release exclusives for Xbox and PC, delivering Redfall and scheduling Starfield's release for September 6 with the likes of Avowed and possibly even The Elder Scrolls VI, among many others.
Given Sony's position as the market leader and its aggressive exclusivity deals, Microsoft felt the pressure to act to prevent its content ownership from further falling behind.
In addition to securing content, Microsoft's acquisition also represents a pushback against Sony's exclusivity strategy. During the FTC hearing, Spencer depicted Sony as an aggressive competitor, accusing the company of using its revenue to weaken Xbox's market presence. The Bethesda acquisition was thus a strategic move to safeguard Xbox's competitiveness in the face of Sony's hostilities. However, the console war's dynamic extends beyond these two heavyweights. Microsoft's proposed $68.7 billion Activision Blizzard deal could further tip the scales in this competitive industry.
By acquiring more game developers and securing additional content, Microsoft aims to strengthen its position against the market leaders, Sony and Nintendo.
The revelations surrounding Starfield, the Bethesda acquisition, and the Activision Blizzard merger show how exclusivity and content ownership are integral to the competitive dynamics of the console industry. It highlights the power of third-party developers and the pivotal role they play in the console wars.
We've seen just how big exclusivity can be for Sony, with Final Fantasy 16 drawing in rave reviews and topping sales charts for the PS5. After posting a historical quarter, PS5's position atop the totem pole is clear with the Xbox Series S/X lagging so far behind.
Mind you, it's not just exclusivity that Sony has going for it - it has the majority market share. It even came to the point that Activision once threatened Xbox to make Call of Duty exclusive to the PS5 if it didn't concede and give it a higher revenue share.
With the odds stacked against the Xbox, Microsoft's response is understandable if appropriate. As the FTC hearing goes on, with more testimonies expected from industry leaders, the stakes remain as high as ever.