Less than a month before Microsoft (MSFT) -) is set to complete its landmark acquisition of videogame publisher Activision Blizzard (ATVI) -), Xbox boss Phil Spencer is already thinking about ways to swallow even more of the competition.
In a leaked email sent in 2020 but just recently made public as part of a trial document released online and first reported by IGN, Spencer says that getting (read that: buying) Nintendo would be a "career moment" and that Microsoft is "playing the long game" with the famous Japanese videogame company.
Related: Activision Blizzard Microsoft Deal: What You Need to Know About the Merger
Spencer goes on to say in the email that “Nintendo is THE prime asset for us in gaming and today gaming is our most likely path to consumer relevance."
It's true that Microsoft's stance on this idea could have shifted since the email was originally penned. The company announced its intent to buy Activision Blizzard in January 2022, a deal that once completed would pull the company close to the top of the list of videogame companies in terms of revenue.
Chinese company Tencent currently holds the No. 1 spot with 554.55 billion yuan (US$81 billion) posted for 2022.
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While Nintendo is by far the legacy player in the videogame space alongside Sony and Microsoft, it makes much less, earning 1,601,677 yen ( $12.031 billion USD) in 2022.
The Microsoft vs. FTC documents that contained the aforementioned email also show that Microsoft in 2024 was planning to release a new Xbox model that does not have a disk drive. That would mark the first all-digital videogame console offering from a major player in the industry.
New, all-digital Xbox Series X design coming next year https://t.co/UIzYhyB0GZ pic.twitter.com/gBKcuCEFvT
— Polygon (@Polygon) September 19, 2023
Nintendo deal would be all about the IP
While buying Nintendo (NTDOY) -) would extend Microsoft's reach in the consumer gaming world and give it access to more casual players, that's only a small piece of why the deal would make sense. Microsoft would be adding Nintendo's huge array of characters/intellectual property.
Currently, Walt Disney (DIS) -) has a clear lead in the IP space and that's a massive advantage for its streaming network and theme parks. The company can launch new shows, movies and theme-park attractions based on well-known, and in many cases beloved, characters.
If Microsoft added Nintendo -- which currently has a market capitalization upward of $50 billion -- it would immediately be in the discussion for No. 2 in the IP space. You could argue that Comcast (CMCSA) -) currently holds the second spot with franchises like "Fast & Furious," "Minions," "Jurassic Park" and others.
Nintendo had a huge hit with the "Super Mario Bros." movie and also owns "Donkey Kong," "Legend of Zelda," and numerous other franchises that Microsoft could leverage across multiple platforms.
In addition, the purchase would put Microsoft into the theme-park business as a key partner with Comcast's Universal Studios. A Microsoft/Comcast partnership would be a bigger challenge to Disney than Comcast simply licensing Nintendo characters.
Should Microsoft ever manage to buy Nintendo, the deal would give it incentive to work more closely with Universal Studios. That could mean using Hololens for virtual or augmented reality experiences or developing entirely new theme-park tech.
Comcast would be a stronger Disney competitor if Microsoft owned Nintendo. Microsoft would open up new areas of business while also becoming the clear dominant player in the videogame-console space, offering machines for every level of player from casual to hard core.
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