At one point, Microsoft considered acquiring Sonic the Hedgehog developer Sega, Destiny 2 developer Bungie, and Hitman studio IO Interactive to expand and support its audience and Xbox Game Pass.
That’s according to new internal emails revealed as part of Microsoft’s ongoing court trial against the Federal Trade Commission to acquire Activision Blizzard, as reported by The Verge. In a 2020 email, Xbox head Phil Spencer writes to Microsoft chief financial officer Amy Hood and CEO Satya Nadella to request a “Strategy Approval to approach Sega Sammy regarding a potential acquisition of their Sega gaming studios.”
Elsewhere in court documents, an internal 2021 Microsoft merger review document features a “watchlist” for studios Microsoft was considering acquiring and it includes both Bungie and IO Interactive for the purposes of “engagement and social interaction” and “audience expansion.” Other studios on the watchlist include Thunderful (Planet of Lana, Steamworld Build), Supergiant Games (Hades, Bastion), Niantic (Pokémon Go), and Zynga (the mobile games juggernaut later acquired by Grand Theft Auto publisher Take-Two in 2022).
Despite Bungie being on Microsoft’s watchlist, it was actually PlayStation parent company Sony Interactive Entertainment that went on to acquire the Destiny maker for $3.6 billion last year. Since 2021, when Microsoft made this list, the company has not acquired any listed companies.
As for Sega, Spencer said, “We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console.” In that same email, Spencer lists three “top priority segment and geographic combinations for Xbox” in the following order:
- PC in North America and Europe
- Mobile in North America and Europe
- Console and PC in APAC
“Keeping in mind these leading priorities, we evaluated a set of targets, both individually and in combination of our own studios, to determine the best strategic fit,” Spencer writes later in the email. “Sega is the most attractive next acquisition target due to its global PC catalog, presence on mobile in Asia, and global brand affinity on console through its classic IP.”
For more about this ongoing court trial, read how Xbox claimed Activision demanded a larger revenue share to put Call of Duty on Xbox. After that, read our impressions of Sonic Origins Plus, the latest release from Sega.
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