Microsoft's Big Gaming Ambitions: The Nintendo & Valve Proposition
The realm of mergers and acquisitions in the tech and gaming world is always dynamic and filled with unexpected twists. The recent disclosure from the US Federal Trade Commission's inquiry regarding Microsoft's intent to purchase Activision Blizzard unveiled an intriguing proposal: Phil Spencer, Microsoft's gaming CEO, had toyed with the idea of acquiring Nintendo.
This revelation, dating back to 6th August 2020, is sourced from an email dispatched by Spencer to two prominent Microsoft executives: Chris Capossela, the chief marketing officer, and Takeshi Numoto, the commercial chief marketing officer. The memo highlights Spencer's perspective that with San Francisco's investment group, ValueAct, accumulating Nintendo stocks, there might be an avenue for Microsoft to suggest an acquisition.
The correspondence kicks off with an enticing statement:
"I totally agree that Nintendo is THE prime asset for us in Gaming and today Gaming is our most likely path to consumer relevance."
While reminiscing about his interactions with Nintendo's leadership team, Spencer expressed optimism about Microsoft's unique positioning. He noted that Nintendo's affluent financial status and its board's historical reluctance to pursue aggressive market growth might make negotiations challenging. However, ValueAct's involvement in purchasing Nintendo shares and its potential push for more might tilt the scales in Microsoft's favor.
In an intriguing twist, Spencer didn't just stop at Nintendo; he also alluded to Valve and the colossal Steam platform. This speculation wasn't entirely new, as rumors about Microsoft's interest in Valve have swirled for years. Gabe Newell, Valve's co-founder, had previously dismissed such speculations in a 2007 conversation with Rock, Paper, Shotgun.
Within the memo's depths, Spencer dropped hints about other potential acquisitions on Microsoft's radar, notably Warner Bros Interactive and ZeniMax. He candidly shared that while Warner Bros's IP ownership posed a challenge, the valuation expectations for ZeniMax were the key hurdles.
Some of you may remember when Microsoft had explored an acquisition of TikTok in 2020 under the Trump administration's influence. This venture, however, didn't materialize. Spencer also compared the size of ZeniMax to Microsoft's current in-house studios, suggesting that such an acquisition would essentially double their content assets.
A notable part of the correspondence saw Spencer reflect on the prospective synergy between Microsoft and Nintendo. He mused that such a merger could be a landmark moment in the gaming industry, hinting at Nintendo's hesitance to diversify from its hardware-centric focus.
The entire disclosure provides a fascinating peek behind the curtain at the strategic maneuvers of tech behemoths. While Microsoft's acquisition appetite has been evident with past purchases, including Mojang and Ninja Theory, their audacious pitch to Nintendo in 2000 was met with resistance, to put it nicely - or as they said, laughed at for an hour straight.
As these corporate revelations come to light, they offer a snapshot of the intricate dynamics of the gaming industry. Although the notion of seeing Zelda titles under the Microsoft umbrella is intriguing, I'd caution against excessive consolidation, highlighting the importance of diversity and competition. Nintendo is out of reach, even for Microsoft - And Phil should have known that already. This story, as it was with Nintendo, is just comical to me. Microsoft tried to buy Nintendo, and got laughed out of the room.