Microsoft rumored to buy Electronic Arts for US$35 billion to boost Xbox-exclusive portfolio
The Xbox One series of consoles have been focused on hardware improvements and the idea of the console being the center of home entertainment. While the consoles themselves have been great, especially the powerful Xbox One X, they still lag in numbers behind Sony's Playstation 4. The primary reason — lack of a large exclusive game library. Microsoft has recently promoted Xbox Chief Phil Spencer to the post of EVP of Gaming and game industry analysts are predicting that Microsoft could be looking at gobbling up a large game publishing studio to expand its Xbox-exclusive game portfolio — and currently, all eyes are on Electronic Arts (EA).
Polygon reports that industry analysts feel that Microsoft needs to act fast and expand its exclusive offerings otherwise, Sony will always have the upper hand even if Microsoft dishes out arguably better hardware. Many acquisition rumors are doing the rounds and the speculative candidate right now is Electronic Arts, which currently has a market cap of US$35 billion. There are also rumors about Valve and PUBG Corp. as other contenders. Microsoft's acquisition of Minecraft creator Mojang in 2014 has turned out to be beneficial for the company and analysts are speculating that another acquisition might be in the offing 'very, very shortly'.
In a subsequent report, Polygon quotes market analyst DFC Intelligence, who states that while EA could be a ripe candidate, it is also somewhat unlikely given market sentiments and potential antitrust issues. Microsoft's limited successes with game studio acquisitions in the past are also a concerning factor. Also, EA games are available on most platforms making the whole exclusivity thing kind of moot, especially, for extant franchises.
All said and done, basically any game company could fit the bill for Microsoft but it would definitely take a lot more than simply splurging the cash. Microsoft knows this and it could well take a different path altogether. Like Windows-as-a-Service (WaaS), the Redmond giant could be looking at Games-as-a-Service (GaaS) and help developers involved in such creations. CEO, Satya Nadella, was also hinting about negating console domination as a goal in a recent investors call and focused more on thinking about how to effectively measure progress in gaming.
Even if Microsoft were to acquire EA like tomorrow, it would take a lot of time before the results bear any fruit. From an arm-chair CEO's point of view, acquiring smaller aspirational studios would pay off in the long run than simply buying out a large publisher. Ultimately, no matter the strategy, having an exclusive game library is paramount to drawing crowds. Hardware can only help to an extent. The Nintendo Switch is a very good example of that.
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