Why Microsoft Is the Perfect Fit
Today we announced we’re joining the Microsoft family (press release below).
And if you haven’t had a chance to read what Phil Spencer and Todd Howard shared in their posts this morning, be sure to check them both out.
When you work at a place as long as I’ve worked at Bethesda – just a month short of 21 years – you see some things. Chief amongst them is change. When I started, Bethesda was not much more than a handful of people. The team working on Morrowind fit in a couple of offices, and there were probably six or seven of us spread across everything else.
Bethesda Softworks, our parent company ZeniMax Media, and our many internal studios, now employ thousands of talented people working in publishing offices and development studios around the world. We’ve gone from one internal studio to many; from a focus on single-player fantasy RPGS to developing massive MMOs, first person shooters, and everything in between. The world, our industry, and our company has changed a lot in the 34 years since Bethesda Softworks was first founded. Today, it changed again. And I know that brings up questions.
But the key point is we’re still Bethesda. We’re still working on the same games we were yesterday, made by the same studios we’ve worked with for years, and those games will be published by us.
So why the change? Because it allows us to make even better games going forward. Microsoft is an incredible partner and offers access to resources that will make us a better publisher and developer. We believe that means better games for you to play. Simply put - we believe that change is an important part of getting better. We believe in pushing ourselves to be better. To innovate. To grow.
And, we have a long history of working with Microsoft. Our companies share many of the same basic principles. We believe in a culture that values passion, quality, collaboration, and innovation. When I think back to the first time we decided to shift from being a PC-only developer and make Morrowind for the original Xbox, it was a move that countless people said would never work…nobody on consoles wanted a game that big and complex. But Microsoft believed in us and so did you. And now RPGs of all shapes and sizes are hugely successful on consoles.
Yes, it’s a big change for us, but after taking a minute to absorb the magnitude of this acquisition, we’re going to continue doing what we know and love: making great games. We’re going to keep trying new things. We’re going to take the same passion we’ve poured into what we do, and the passion that our community brings to the things we make, and do even better.
And soon the conversation will move on from this deal to talking about our games again. And I can get back to answering the questions that get us all excited. Tell me more about Deathloop. When can I see more Ghostwire? What’s coming in Q4 for The Elder Scrolls Online? I want to see more of the DOOM Eternal DLC. WHEN THE HELL WILL YOU TELL ME ABOUT STARFIELD? I’m excited for those conversations and look forward to talking to you about all of that – and much, much more – in the weeks, months, and years ahead.
I believe in the people I work with. I believe in the company we have created together. I believe in the communities that have formed around the games we make. And I believe today’s announcement is just the next in a long line of changes in our history that will lead to bigger and better games for all of us.
Pete Hines
SVP, Global Marketing and Communications
PRESS RELEASE
Microsoft to Acquire ZeniMax Media and Its Game Publisher Bethesda Softworks
Iconic games portfolio, publishing expertise, and world-class talent accelerates growth in Microsoft’s Gaming business
REDMOND, Wash. September 21, 2020 – More than three billion people on the planet play games for fun, escape, and human connection. Unlike any other medium, games empower people to engage in creativity, strategic thinking and teamwork, immersing them into interactive stories and worlds created by some of the world’s most amazing creators. The cultural phenomenon of gaming has made it the largest and fastest-growing form of entertainment in the world—an industry that is expected to be more than $200 billion in annual revenue in 2021.
As the gaming industry transforms from a device-centric era to a player-centric era powered by new technology that provides the freedom to play with friends anywhere on any device, Microsoft (Nasdaq: MSFT) on Monday announced plans to acquire ZeniMax Media, the parent company of Bethesda Softworks, one of the largest, privately held game developers and publishers in the world. Creators of critically acclaimed and best-selling gaming franchises including The Elder Scrolls and Fallout among many others, Bethesda brings an impressive portfolio of games, technology, talent, as well as a track record of blockbuster commercial success, to Xbox. Under the terms of the agreement, Microsoft will acquire ZeniMax Media for $7.5 billion in cash.
With unique investments in content, community, and the cloud, Microsoft’s gaming strategy differs from others by empowering people to play the games they want, with the people they want, anywhere they want. Games are the primary growth engine in gaming, and games are fueling new cloud-gaming services like Xbox Game Pass, which has reached a new milestone of over 15 million subscribers. With the addition of Bethesda, Microsoft will grow from 15 to 23 creative studio teams and will be adding Bethesda’s iconic franchises to Xbox Game Pass. This includes Microsoft’s intent to bring Bethesda’s future games into Xbox Game Pass the same day they launch on Xbox or PC, like Starfield, the highly anticipated, new space epic currently in development by Bethesda Game Studios.
“Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialize and play with their friends,” said Satya Nadella, CEO, Microsoft. “Quality differentiated content is the engine behind the growth and value of Xbox Game Pass—from Minecraft to Flight Simulator. As a proven game developer and publisher, Bethesda has seen success across every category of games, and together, we will further our ambition to empower the more than three billion gamers worldwide.”
“This is an awesome time to be an Xbox fan. In the last 10 days alone, we’ve released details on our two new consoles which go on pre-order tomorrow, launched cloud gaming in Xbox Game Pass Ultimate, and now we’re making another investment in the most critical part of our strategy: the games,” said Phil Spencer, executive vice president, Gaming at Microsoft. “Generations of gamers have been captivated by the renowned franchises in the Bethesda portfolio and will continue to be so for years to come as part of Xbox.”
The planned acquisition includes publishing offices and development studios spanning the globe with over 2,300 employees, including Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios. Bethesda’s critically acclaimed and best-selling franchises include The Elder Scrolls, Fallout, DOOM, Quake, Wolfenstein, and Dishonored, among others.
Bethesda parent company ZeniMax Media was founded in 1999 by Chairman and CEO Robert A. Altman; Bethesda’s structure and leadership will remain in place.
“This is a thrilling day for this company, our employees, and our fans. We have enjoyed a close partnership with Microsoft for decades, and this deal is a natural progression of those years working together,” said Altman. “The big winners today are our fans. We are continuing to develop our slate of AAA games, but now with Microsoft’s scale and entire Game Stack, our games can only get better.”
The transaction is subject to customary closing conditions and completion of regulatory review. Microsoft expects the acquisition to close in the second half of fiscal year 2021 and to have minimal impact to non-GAAP operating income in fiscal years 2021 and 2022. Non-GAAP excludes the expected impact of purchase accounting adjustments, as well as integration and transaction-related expenses.
For more information, please visit the blog post from Phil Spencer, EVP Gaming at Microsoft.
About Microsoft
Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.
About ZeniMax Media Inc.
ZeniMax Media is a privately-owned media organization headquartered outside Washington DC with international publishing offices around the globe. Through its subsidiaries, ZeniMax Media creates and publishes original interactive entertainment content for consoles, PCs, and handheld/wireless devices. ZeniMax Media divisions include Bethesda Softworks, Bethesda Game Studios, id Software, Arkane Studios, Tango Gameworks, MachineGames, ZeniMax Online Studios, Alpha Dog Games, Roundhouse Studios, ZeniMax Europe Ltd., ZeniMax Asia K.K., ZeniMax Asia Pacific Limited, and ZeniMax Australia Pty Ltd. For more information on ZeniMax Media, visit www.zenimax.com.
Forward looking statements
Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as the risk that the ZeniMax Media transaction may not be completed in a timely manner or at all; any restrictions or limitations imposed by regulatory authorities; the impact of the acquisition on ZeniMax Media’s gaming community and customers; the impact of management and organizational changes on ZeniMax Media’s business; the impact on ZeniMax Media employees and our ability to retain key personnel; our effectiveness in integrating the ZeniMax Media platform and operations with Microsoft’s business; our ability to realize our broader strategic and operating objectives; significant investments in products and services that may not achieve expected returns; impairment of goodwill or amortizable intangible assets causing a significant charge to earnings; cyberattacks and security vulnerabilities that could lead to reduced revenue; increased costs, liability claims, or harm to our reputation or competitive position; excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure; quality or supply problems; legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property; claims that Microsoft has infringed the intellectual property rights of others; claims against us that may result in adverse outcomes in legal disputes; damage to our reputation or our brands that may harm our business and operating results; exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; adverse economic or market conditions that may harm our business; catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and the dependence of our business on our ability to attract and retain talented employees. For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at www.microsoft.com/en-us/investor.
