Internal Email Reveals Microsoft Seriously Considered Buying Bungie and SEGA

Internal emails and documents from the Federal Trade Commission (FTC) vs Microsoft hearing have revealed that Microsoft seriously considered acquiring Bungie and SEGA. The documents indicate that Xbox chief Phil Spencer reached out to Microsoft CEO Satya Nadella and Microsoft CFO Amy Hood, seeking approval to approach SEGA Sammy regarding a potential acquisition of its Sega gaming studios.

In an email obtained by The Verge, Spencer expressed his belief that SEGA’s diverse portfolio of games would greatly benefit Xbox Game Pass, both on and off-console. He emphasized the global appeal of SEGA’s beloved intellectual property (IP), noting its potential to expand the reach of Xbox Game Pass, particularly in Asia where localized content is crucial. Spencer also highlighted the monetization opportunities SEGA would bring to Microsoft, especially through in-game transactions.

The outcome of Microsoft’s pursuit of SEGA remains uncertain, as it is unclear whether Nadella ultimately approved the talks. However, an internal Microsoft document (via The Verge) from April 2021 reveals that SEGA was still regarded as a significant target for acquisition.

The document outlined Microsoft’s strategic focus on acquiring companies operating in the PC, mobile, and console markets. In addition to Sega, other companies of interest included Bungie, Zynga, and IO Interactive.

Bungie attracted Microsoft’s attention due to its valuable IP, Destiny, and its dedicated community. The document highlighted the integration of Bungie’s development and live operations infrastructure into Xbox Game Studios as a key objective.

Microsoft also identified a potential risk associated with Bungie’s high burn rate, along with NetEase‘s $100 million minority stake investment in 2018. Destiny, recognized as one of the most popular titles generating extensive gameplay hours on console Game Pass, further bolstered Bungie’s appeal.

The document also mentioned several mobile-focused companies, including Thunderful, Supergiant Games, Niantic, Playrix, and Zynga, with whom Microsoft engaged in talks. Although the outcome of discussions with these mobile-focused companies is unclear, Microsoft later shifted its focus to Activision Blizzard for its mobile ambitions.

Now, upon reviewing all of these internal emails and documents, it is safe to conclude that the only successful acquisition by Microsoft during that time period (2020-2021) was Bethesda‘s parent company, ZeniMax, which they acquired for $7.5 billion in order to secure Starfield from Sony.

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