FTC leaks: CEO Phil Spencer muses on taking over Nintendo, Valve and Warner Brothers, or else it is game over for Xbox
Seems like it is just a matter of time until we see Microsoft getting the green light to acquire Activision / Blizzard across all continents, even though the US FTC is still thoroughly investigating all the implications. These investigations have been ongoing since 2H 2022, and some of the classified information obtained through this process has already been leaked a few times this year, with the latest leak occurring this week. We already covered the plans for an Xbox handheld and next gen console scheduled for 2028. However, the leaked FTC documents also present projection data for the Xbox Game Pass business and things are not looking great for Microsoft in this regard, to the extent that CEO of MS Gaming Phil Spencer is considering revamping the entire Xbox console business model, and one option includes acquiring other competitors like Nintendo and Valve.
Moore’s Law Is Dead dissects the entire Xbox business plans included in the FTC leaks and is offering a more realistic projection that clearly points out that the Game Pass subscriber goals estimated by Microsoft for 2030 are not enough to keep the whole Xbox business going and fundamental changes are most likely to happen in order to maintain profitability. Microsoft’s estimations revolve around hitting 110 million subscriptions by 2030, but Phil Spencer himself does not believe that that is attainable, and MLID is showing that the projections may actually hit only 80 million subs by the end of this decade.
The existing Xbox model clearly needs to change by 2027-2028 in order to keep it profitable as Spencer is suggesting, so how is Microsoft going to achieve this? It could rethink its console lineup to include handheld consoles like the Steam Deck and a more powerful next gen console powered by AMD Zen 6 + Navi 5 + ARM hardware, yet, apparently, the physical console side of things is not netting Microsoft that much money and is regarded as secondary. What rakes in the most money is the Game Pass model, which itself is not enough to keep the business going for 5 more years. To avoid this, Spencer admitted that Microsoft could be looking to buy Nintendo, Valve, and even Warner Brothers at some point. In one leaked email from 2020, Spencer refers to Nintendo as “THE prime asset for us.”
It stands to reason that the FTC sees Microsoft forcing a gaming studio monopoly with the Activision / Blizzard acquisition, but the evidence is still inconclusive somehow. Of course, Spencer did not outright say that Microsoft has to buy out all the competitors in order for the Xbox business to survive, but more acquisitions could be coming.