ZeniMax Media Sold To Microsoft
In a surprising move by Microsoft they have announced that they are buying ZeniMax Media for $7.5 Billion. As you may know, Microsoft was bidding for TikTok and after TikTok rejected Microsoft’s bid it is surprising to see this announcement by Microsoft so soon. If anything, this shows how the gaming industry is exploding in terms of popularity and also in terms of corporate positioning. ZeniMax Media Sold To Microsoft for what reason? Let’s look a little deeper into why.
First of all, what IP does ZeniMax Media own? The company’s growing library of intellectual properties includes such major franchises as The Elder Scrolls®, Fallout®, DOOM®, RAGE®, Wolfenstein®, Prey®, Dishonored®, The Evil Within®, and QUAKE® as you can see here: https://www.zenimax.com/about
Why ZeniMax Media Sold To Microsoft?
Back in 2016 Bloomberg.com published this article about the possible IPO (Initial Public Offering) or Private Equity Stake and stating that ZeniMax Media had a value of approximately $2.5 Billion. See article here: https://www.bloomberg.com/news/articles/2016-05-11/providence-said-to-weigh-options-for-video-game-maker-zenimax
The IPO did not take place but that didn’t affect the value of ZeniMax Media. In less than 5 years ZeniMax Media now has a valuation of $7.5 Billion. Not a bad return on their investment for staying a private company.
Why would Microsoft purchase ZeniMax Media Now?
If Microsoft had already been working with ZeniMax Media then why would Microsoft pay up $7.5 Billion now? Here is an excerpt from Satya Nadella via Stratechery article link below:
We are in, quite frankly, the early days in all of this, but good momentum and we do have ambitions outside of this which I don’t think we covered particularly today with you all. Some things that I’m really invested in is gaming, and the simple idea there is we have as much of a shot to build a subscription business as anybody else. So we describe it as shorthand, “Netflix for games”, we have a structural position in that we have both a console business as well as a PC business which happens to be in fact bigger than the console business when it comes to gaming and the idea is to aggregate those sockets with a subscription service, we won’t be the only ones, there will be competition just like with other content, there may be a few subscriptions that will be successful, so we are going to go after it. The good news is, we have a huge back catalog, which is we have our own games, we bring not only users, we bring already a social network in Xbox Live, we bring content, and we’re going to go after it. We’re going to go after it with current sockets, and of course streaming is another element to it, because then can you plug in an Xbox controller into even an Android phone and play a Triple A game? We know that’s feasible, now the question is when does the cost curve on it going to be viable. So those are at a high level what we are trying to get done.
Click here for article: https://zerocounts.net/2019/01/21/activision-microsoft-and-platforms/
So the “Netflix for Games” is coming to a device near you?
It’s been an interesting few weeks for Microsoft between their failed bid for Tik Tok and now this purchase of $7.5 Billion for ZeniMax Media. You can’t really blame Microsoft for going after Tik Tok considering the massive buzz around the app. However, in the end, the Tik Tok bid seems more of a distraction and now we see the real strategy.