Feature Article

If You Believe Microsoft, Buying Bethesda Isn't All About Exclusivity

The strategy for Xbox goes beyond locking off big games on specific platforms--at least, according to Xbox boss Phil Spencer.

The news that Microsoft bought Bethesda Softworks parent company ZeniMax Media for $7.5 billion is shaking the video games industry. It's a potential sea change for the release of the next generation of consoles, wreaking massive changes on the gaming landscape and, very likely, the choices players are making about which machines to buy this holiday season. Suddenly, Microsoft owns not just Bethesda Game Studios, the maker of the hugely popular Elder Scrolls and Fallout franchises, but a whole bunch of others--like Dishonored developer Arkane Studios, Doom developer id Software, and Wolfenstein developer MachineGames. That's a heavy lineup of game-makers that may now make games only for Xbox consoles.

That's the traditional way of thinking, anyway, and the strategy that has defined various iterations of "console wars" for the last three decades. We're rapidly hitting the end of a generation greatly defined by exclusive games, or the lack thereof. It's accepted at this point that Sony came out on top in the eighth generation, at least in competition with Microsoft, in large part because of major PS4 exclusive games such as Horizon Zero Dawn, God of War, Marvel's Spider-Man, and The Last of Us Part 2. Meanwhile, Microsoft had exclusives of its own, mostly first-party games like Gears 5, Halo 5: Guardians, Sea of Thieves, and Forza Horizon 4. But there always seemed to be fewer of them, receiving less acclaim, and with a longer drought between their releases.

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So snagging the maker of The Elder Scrolls V: Skyrim, as well as a bunch of other popular games, makes a lot of sense you were looking to build a stable of next-gen exclusives. But the way Xbox boss Phil Spencer has been talking lately, that might not necessarily be the play here. If we take Spencer's word for it, the ZeniMax acquisition seems more like Microsoft building on a strategy that goes beyond locking players into a specific platform, in order to get them where they live--to sell them on a subscription service and to create bigger cross-platform player bases, instead of just relying on getting customers to commit to a console.

We know that Microsoft's big play of late is Xbox Game Pass, a subscription service that allows players to download and play a bunch of games on their Xboxes, PCs, or both. Mixed into Game Pass is cloud gaming, where you stream a game over the internet, allowing you to play Xbox and PC games on a variety of devices, including smartphones, without owning them. Game Pass is Microsoft's move for the future: It's a Netflix-like subscription service that collects money from players indefinitely and brings them into the Xbox ecosystem.

One of the big selling points of Game Pass is that it gets you all Xbox first-party games on the day of their release as part of the deal, so adding the games Bethesda makes and publishes to that list suddenly makes the subscription even more desirable--and it was already pretty solid.

But it doesn't really sound like Microsoft's current strategy is about getting every game-playing member of the public to buy a new Xbox. Sure, the company would like that, but if there's a big lesson to take away from the eighth generation, it's that every new hardware cycle is also a hard reset, and from one generation to another, nothing is guaranteed. Microsoft was extremely competitive with Sony during the Xbox 360/PlayStation 3 era, and then Microsoft's fortunes shifted considerably with the Xbox One. It seems like Spencer and the rest of Microsoft learned that lesson, and they're less interested in getting people onto a hardware platform for a few years than they are developing a content ecosystem that could last a lot longer.

"As a player you are the centre of our strategy," Spencer told GI.biz last summer. "Our device is not the centre of our strategy, our game is not the centre of the strategy. We want to enable you to play the games you want to play, with the friends you want to play with, on any device. On TV, the Xbox console is going to be the best way to play console games."

He added: "I find it completely counter to what gaming is about to say that part of that is to lock people away from being able to experience those games. Or to force someone to buy my specific device on the day that I want them to go buy it, in order to partake in what gaming is about."

So acquiring Bethesda et al. and sticking all their games solely on Xbox makes sense in the traditional way of thinking, but going by Spencer's comments, it's maybe not the future that he and Microsoft are envisioning. After all, the most cogent example of how exclusivity can be a losing strategy comes from Bethesda's own Skyrim, a game that has been ported to just about every platform available across two hardware generations, because that's how high the demand was. Microsoft could leverage Elder Scrolls' popularity as an exclusive to sell consoles, but that would mean missing out on sales on all the other platforms where Skyrim has seen major success. Spencer sounds like he has something else in mind.

In an interview with GameSpot last year, Spencer described the change in the Xbox's focus through the Xbox One era. That new focus looked past hardware toward being more open, leading to things like Microsoft's expansion of Minecraft across numerous platforms (most recently PlayStation VR) and allowing cross-play in Xbox and PC games--something Sony has (somewhat begrudgingly) followed suit on. The last year has seen Microsoft push Game Pass as its big initiative--its Game Pass Ultimate cloud gaming service just hit Android devices, and is pretty impressive.

"The number of people that are actually buying a console every generation isn't growing dramatically, if at all," Spencer told GameSpot. "At one point you have to recognize that, okay, you can't just lead with one device. You can't just say, here's an Xbox. I'm going to go sell this device to every single person and that's what they're going to play on. That just doesn't work."

"Nintendo is a strong player in this industry," Spencer said. "Do I wish every Switch player was also an Xbox owner? That would be awesome, but that's not going to happen. Sony is the same way. I don't think gaming is better if Xbox somehow replaces PlayStation."

Again, it's tough to see the future, business strategies shift, and who knows if Microsoft and Spencer's position has changed after acquiring ZeniMax. But if you view the purchase as a part of the vision Spencer previously outlined, then it seems much more likely that at least some games, like Elder Scrolls VI, aren't going to be locked onto Xbox (in fact, Microsoft has already said that Bethesda games announced for other platforms will stay there). There's a bigger picture to see.

Maybe Microsoft thinks it can make money on consoles (it can't be a coincidence that the ZeniMax acquisition news dropped the day before Xbox Series X and S consoles become available for preorder), and subscriptions, and on games on other platforms. Maybe it wants to insulate against potential ebbs in console loyalty in five or seven years, even if it happens to come out swinging this generation. Maybe Microsoft is thinking that it has a worse chance of convincing you to replace the box you play games on with an Xbox--and a better one of turning that box into an Xbox.

It's hard to do more than speculate. But it does seem like, in paying $7.5 billion for ZeniMax, the chances are better for Microsoft to lose money by walling off games people love on a console not everyone will buy. From the way Spencer has been talking and the moves Microsoft has been making, securing a bunch of console exclusives comes off as shortsighted. We'll have to wait and see what Microsoft's actual plans turn out to be, but based on what we've heard so far, acquiring Bethesda and its related studios sounds less like a step backward toward traditional console competition than it does a step forward toward something new.

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Phil Hornshaw

Phil Hornshaw is a former senior writer at GameSpot and worked as a journalist for newspapers and websites for more than a decade, covering video games, technology, and entertainment for nearly that long. A freelancer before he joined the GameSpot team as an editor out of Los Angeles, his work appeared at Playboy, IGN, Kotaku, Complex, Polygon, TheWrap, Digital Trends, The Escapist, GameFront, and The Huffington Post. Outside the realm of games, he's the co-author of So You Created a Wormhole: The Time Traveler's Guide to Time Travel and The Space Hero's Guide to Glory. If he's not writing about video games, he's probably doing a deep dive into game lore.

The Elder Scrolls VI

The Elder Scrolls VI

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