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All the new things we've learned from Microsoft and the FTC's internal documents at court

Microsoft considered buying Sega, Bungie, and more

An image of the Xbox, PlayStation and FTC logos
Image credit: Rock Paper Shotgun

The legal battle between Microsoft and the US Federal Trade Commission continues to plod along as the FTC seeks to stop Microsoft’s proposed acquisition of Activision Blizzard King. Last week’s proceeding gave us some interesting revelations about revenue shares, Starfield development, and Indiana Jones exclusivity, but juicy inside baseball details continue to ooze out.

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Internal documents from the proceedings have begun to surface online, so let’s run through everything we’ve learned from the last couple of days.

  • Microsoft had been looking to acquire Sega Sammy and Xbox CEO Phil Spencer had approached higher-ups for approval in 2020. In an email seen by The Verge, Xbox CEO Phil Spencer said the Sega acquisition would “accelerate Xbox Game Pass both on and off-console.” Though there's no word on why the talks fell through.
  • A merger review document from 2021 suggests that Microsoft had their eyes on dozens of studios that they wanted to acquire, which was narrowed down to eight: Bungie (Halo, Destiny), IO Interactive (Hitman, James Bond), Supergiant (Hades), Thunderful (Spiritfarer), Niantic (Pokémon GO), Zynga and Playtrix (mobile games). Bungie were eventually bought up by Sony, and Zynga were later acquired by Take-Two.
  • The presentation also name-dropped studios such as Team Cherry, Paradox Interactive, and Remedy Entertainment as possible targets of acquisition.
  • Microsoft’s internal documents mentioned a mysterious new IP from Bungie codenamed Matter, which Microsoft expected would release in 2025. Since then, Bungie have announced a Marathon revival, which isn’t mentioned in the documents at all, so it's unclear whether Matter is, in fact, Marathon, or something else entirely.
  • Another document breaks down IO Interactive’s past and future games, and says that the studio’s upcoming Project Dragon (or Project Fantasy) is “for XGS publishing.” In other words, the studio’s online RPG will be published by Xbox and be released exclusively on Xbox and PC. Or at least, that was the case as of 2021.
  • Microsoft bought developer Ninja Theory for $117 after the studio shipped the first Hellblade, IGN reports.
  • Matt Booty - head of Xbox Game Studios - had some fighting words for competitors from an email thread in 2020. Mr. Booty said that “Amazon has shown no ability to execute on game content,” and Google were years away from having a “studio up and running.” He acknowledged that Sony were the only player capable of competing on the subscriptions front, but Microsoft were “able to go spend Sony out of business.” In a statement to The Verge, the company says the emails are outdated and “refers to industry trends we never pursued.”
  • In an email exchange between Phil Spencer and Xbox CFO Tim Stuart, Spencer says that he sacrificed Xbox Series X|S volume to spend more money on cloud gaming servers in late 2020. Partly explaining why the new consoles were so hard to find on store shelves.
  • Phil Spencer compared Xboxes to Polaroids: “we are exactly like Polaroid. We are core gaming which isn’t growing… while mobile gaming [monthly active users] is growing.”

After a short break for the weekend, proceedings will continue today with video dispositions from executives at Nvidia and PlayStation boss Jim Ryan.

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