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Internal Documents Show Microsoft Considered Acquiring Bungie and Sega

Microsoft contemplated acquiring gaming companies Bungie and Sega to boost its Xbox Game Pass, according to internal documents.

According to internal documents presented at the FTC v. Microsoft hearing, Microsoft deliberated over acquiring gaming companies Bungie and Sega. This strategic move was seen as a way to bolster its Xbox Game Pass offering.

In an email from November 2020, Xbox chief Phil Spencer wrote to Microsoft CEO Satya Nadella and CFO Amy Hood, seeking approval to approach Sega Sammy for a potential acquisition of Sega's gaming studios. Spencer highlighted Sega's globally appealing portfolio and its potential to accelerate the Xbox Game Pass both on and off-console.

Microsoft saw a Sega acquisition as a way to increase Xbox Game Pass subscriptions across PC, console, and cloud platforms. The global appeal of Sega's renowned IPs was considered pivotal in expanding Xbox Game Pass to new audiences, particularly in Asia where localized content is key for success. The acquisition would also open up monetization opportunities via game transactions.

While it remains unclear how the Sega acquisition plan progressed, an internal Microsoft document from April 2021 still listed Sega as a significant target. The company had identified key areas for acquisitions, including PC, mobile, and console markets, and had Sega, Bungie, Zynga, and IO Interactive on their shortlist of potential acquisitions.

The documents also revealed that Bungie, now owned by Sony, was on the list, citing the acquisition would secure valuable IP and integrate its development and live ops infrastructure into Xbox Game Studios. Microsoft also considered acquiring Zynga for its mobile ambitions before focusing on Activision Blizzard.

IO Interactive, developer of Hitman, was on the "final watchlist" alongside mobile companies such as Thunderful, Supergiant Games, Niantic, Playrix, and Zynga. It remains unclear if Microsoft initiated talks with these mobile-centric companies.

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