How Microsoft’s Bethesda deal echoes Disney’s Star Wars and Marvel buys
Get rich (buy Bethesda) and stay rich (sell its franchises on Xbox)
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While Microsoft may have lost out on TikTok, it’s certainly not skimping on the consolation prize.
On Monday, the tech giant announced plans to acquire ZeniMax Media, the company behind well-regarded game maker Bethesda, for $7.5 billion, marking it among the Microsoft’s largest acquisitions ever. With the deal, Microsoft will own some of the most popular franchises in gaming, including Fallout and The Elder Scrolls.
If you’ve been following the TikTok saga, the ZeniMax tie-up makes sense: It’s a way to diversify Microsoft’s revenue further into the consumer realm, as the Bill Gates-founded company has largely grown in the B2B world with offerings including a cloud business that goes head-to-head against Amazon.
And the ZeniMax buy specifically echoes Disney’s acquisitions of Star Wars maker Lucasfilm in 2012 and superhero franchisee Marvel in 2008. Disney+, the House of Mouse’s subscription-based streaming service, has been an enormous success with over 50 million paid subscribers as of April, despite launching just months prior with many more mature competitors in the field. That was in no small part helped by the company’s deep bench of content, with many consumers signing up to watch the Star Wars spinoff .
For Microsoft, too, the ZeniMax acquisition is expected to bolster its own subscription gaming service: Xbox Game Pass, which recently surpassed 15 million subscribers. Microsoft, my colleague Jonathan Vanian notes, has been for years “criticized for failing to have as many compelling exclusive titles for its Xbox gaming business as competitors like Nintendo and Sony do for their consoles.”
But with names like The Elder Scrolls V: Skyrim or DOOM, Microsoft can certainly play. Whether it can successfully integrate the business is a different story.
NUMBERS ARE FUN! Yesterday, I wrote about the bizarre discrepancies between the ownership structures that ByteDance and Oracle each claimed to be true of the new TikTok Global. Following news that the U.S. had tentatively agreed to a deal in which Oracle and Walmart would take a combined 20% stake in TikTok Global, ByteDance wrote in a statement that it would actually own 80% of the company. Then Oracle asserted that ByteDance would have no part of the deal.
Which mathematically doesn’t work.
But technically, there’s a way in which both sides are correct—it just involves a lot of gymnastics, and probably doesn’t fulfill the Trump administration’s actual intent.
Here’s how Oracle’s statement that ByteDance “will have no ownership in TikTok Global” maps out, according to a source with knowledge of the matter: Because TikTok is backed by ByteDance investors (such as its employees and founder Zhang Yiming) rather than ByteDance itself, TikTok Global will not be backed by ByteDance at all.
Which also means that…TikTok, as it is today, was never ByteDance-owned in the first place. For ByteDance, the 80% figure appears to come from tallying the existing investor base, with the new Oracle-Walmart investment considered the non-ByteDance part of the equation.
In short: The divide involves a lot of semantics and reading between the lines.