What You Need to Know About Microsoft’s Deal With Game Developer ZeniMax

One may wonder at times as to what is the end point of our collective civilisational progression as humans?

One answer: The ‘optimisation’ of time away from the daily rut of life towards more creative, and dare we add, leisurely pursuits?

The Gaming World

Thanks to these blessed shower thoughts, one can quickly comprehend why gaming companies are in the prime of their heydays. Since Sony introduced the Playstation in 1994, generations of gamers around the world have been hunched to their consoles. Microsoft followed suit through the Xbox. Not that these two are the only enterprises in the gaming business (Apple, Google, Nintendo, and a gazillion publishers ranging from Electronic Arts to Activision come to mind).

But the culture of gaming has taken a major lift thanks to the two tech behemoths trying to outdo each other over the decades which followed.

Playstation traditionally emerged as the single most sought-after gaming console with Microsoft (through the XBox) following up at best.

But the laggard indulged in everything from near-predatory pricing to undercutting competition, offering all-the-games-you-can-play subscription packages and out-innovating itself by introducing exclusive design upgrades in its bid to pry gamers away from Sony’s consoles. Nevertheless, Playstation has continued to maintain the lead thanks to its range and quality of ‘exclusive game titles’ and ‘critically acclaimed franchises’, which has, over time, become the most significant factor of differentiation, considering technology and product specifications of both have gradually converged.

Microsoft Acquisition of ZeniMax

With the $7.5bn acquisition of ZeniMax Media (the company that produces games like The Elder Scrolls, Fallout, Wolfenstein, Doom, Quake and Starfield), Microsoft has triggered nerdgasms throughout the gaming community. This acquisition clearly underlines an intent to further deepen the franchise density that would sit under the Microsoft umbrella. Microsoft has, in fact, gone on a mini-buying spree picking up several independent game publishers over the last few years in an attempt to close in on Sony.

While the acquisition centres around original content (read ‘exclusive game titles’) and the exclusivity of these titles is yet to be determined, it is still broadly in line with Microsoft’s march towards becoming a one-stop gaming powerhouse that is driven by a strong content portfolio, cloud-based distribution and crafty pricing models. With help from Bethesda, the manufacturer of the ZeniMax games, Xbox users will now have access to a litany of game titles distributed over the cloud, which perhaps were in question earlier. Furthermore, Microsoft’s subscription service — Game Pass — should see a meaningful uptick in value proposition which already gives subscribers access to more than 200 games.

Microsoft’s access to a greater number of gaming studios would certainly come in handy for futureline game development carrying its own licensing and IPR rules.

How is it different from Playstation?

Sony users have always appreciated its exclusivity and better quality. By virtue of that, the company has assumed quite a zen-like position and limited itself to developing newer and more affordable models to suit the gamers (such as Virtual Reality).

Microsoft, on the other hand, continued to emphasise the importance of cloud-gaming (i.e., online games streaming from remote servers) as the future, investing plenty of resources into ‘offering options for upgradation’ to gamers and issuing ‘Xbox Game Pass’ to acclimatise its customers to a subscription-like model.

In fact, the launch of Xbox Game Pass in 2017 faced heavy judgment from the gamers and analysts alike as it supposedly sought to build a monthly subscription culture mirrored on streaming services like Netflix and Amazon.

The recent acquisition however puts things into perspective, because a subscription model is only as good as the titles that hide behind the subscription gateway. Deeper the games portfolio the more lucrative is the subscription service. With robust distribution networks in place and a constantly evolving business and pricing models, it underlines once again the cliched phrase in our times — content is king.

Is it ‘Game Over’ for Sony Playstation?

It would be presumptuous and foolhardy to brand those words over any product issued by one of the largest electronics companies of our times. But the acquisition does put Sony at somewhat of a disadvantage. Sony’s entrusted faith in its loyal customers may have worked immensely in the past, but it is yet to be tested in an environment when there is some sort of parity in the quality of games with Microsoft.

(Originally published September 29th 2020 in transfin.in)