Random Thoughts – Randocity!

What Microsoft’s purchase of ZeniMax means?

Posted in business, microsoft, Sony, video gaming by commorancy on October 28, 2020
Can the PS5 succeed?

I’ve had this question recently posed to me on a Twitch stream. Yes, I stream games on Twitch in addition to penning this blog. I haven’t cross promoted my Twitch stream on this blog because blogging and gaming are mostly unrelated. However, if you’re interested in watching me game, please leave a comment below and I’ll post my Twitch channel. Let’s explore the answer to the above question.

Bethesda and Microsoft

Microsoft isn’t really a gaming company. They are a software company who produces gaming products in among all of their other hardware and software product lines. Sony is, likewise, not really a gaming company for a similar reason. Sony is mostly a content producing company who also produces gaming hardware.

Anyway, Microsoft’s purchase of Bethesda’s parent company ZeniMax likely means eventual changes to all of Bethesda’s game franchises. In fact, I’m actually surprised that the FTC has allowed such a purchase considering the negative impact it will likely have on consumer choice.

Sony and Microsoft

Let’s start with the elephant in the room. Sony and Microsoft are rivals when it comes to gaming systems. Sony has the PlayStation and Microsoft has the Xbox. Because Microsoft owns the Xbox console, purchasing large gaming companies firmly pushes this situation into conflict of interest and consumer choice reduction territory. Additionally, Microsoft’s purchase of ZeniMax before the PS5 has really launched can become an easy way to keep the PS5 from succeeding.

Why? Microsoft has designs on making the Xbox Series X console succeed and be more successful than the PS5. To do this, they want to lock Sony’s platform out of as much content as they can. How will this manifest with Bethesda’s games?

While the final outcome is entirely uncertain, the handwriting is on the wall. What I mean is that Microsoft may eventually make all of Bethesda’s newest released games exclusive to the Xbox. That means that Bethesda’s game franchises (plural) may ultimately end up playable only on the PC and on the Xbox console. Yes, that could mean that both the Nintendo Switch and Sony’s PS5 are equally negatively impacted by this purchase.

Both Sony and Nintendo could find themselves without future Bethesda titles on their gaming platforms. That could mean no more Fallout, no more Elder Scrolls, no more Doom and no more Wolfenstein will make their way onto Sony or Nintendo’s platforms. It doesn’t stop there. Titles like Bethesda’s upcoming Starfield, which has yet to be released, could be pulled from release on both Sony and Nintendo’s platforms… leaving this game only available on PC and Xbox.

Sure, it may lose Microsoft money by not releasing these games on these non-Microsoft platforms, but Microsoft will more than make up for those game sales losses by pushing more Xboxes and PCs into the home. Eventually, these games will be sold to newly purchased Xboxes and PCs more than making up for the losses in sales on those other platforms. Basically, Microsoft has an easy way to do the dirty to both Sony and Nintendo as far as Bethesda games are concerned.

Microsoft is also well aware of the leverage they hold over the gaming industry by purchasing Bethesda. More than this, Microsoft can steer new consumers onto their Xbox line of consoles and away from Sony and Nintendo consoles strictly by enforcing Xbox Exclusives.

Exclusives

Bethesda isn’t the only studio on the planet. However, Bethesda is a large studio with many very cherished video game franchises… franchises that bring in a lot of cash and drive console purchases.

While Microsoft can enforce making upcoming Bethesda games exclusive, Microsoft doesn’t necessarily have to take this step. However, knowing that Sony pretty much kicked Microsoft’s butt with the PS4’s sales, Microsoft isn’t eager to repeat that trend with the Xbox Series X. Purchasing ZeniMax gives Microsoft a definite edge. It also means Microsoft might also be eyeing the purchase of Activision, EA, Rockstar and even Ubisoft. Don’t be surprised if Microsoft snaps up some of these additional game developers as well.

By Microsoft purchasing large game studios like Bethesda, they can control which console becomes the dominant console this time around (i.e., theirs). This means even more exclusive Xbox games.

Exclusive games force consumers to buy specific hardware platforms to play these exclusive titles.

PS5

What does this news mean for a console like the PS5? It puts the PS5 at a severe sales disadvantage. Microsoft could request Bethesda to not produce PS5 games. Without Bethesda’s support on the PS5, that leaves the PS5 at a major disadvantage in the upcoming next gen gaming market.

This is part of the reason I am not purchasing a PS5 at this time. I’m waiting on how this plays out. Bethesda’s ownership by Microsoft means a very real possibility of future exclusive Xbox titles from Bethesda, with no releases on the PS5 or the Nintendo Switch.

This change would put Sony and Nintendo with a clear sales disadvantage. Sony would have to rely not on Bethesda games to drive the PS5’s sales, but instead rely on Sony Studio game releases… games they have developed themselves or by studios they own (i.e., Sucker Punch).

That doesn’t mean the PS5 will be worthless, but it means that the future of Bethesda’s games being released on the PS5 has become very unclear. In fact, I’d use the word “muddy” to describe these waters.

Here are some questions that come out of the above:

  1. Should I buy and Xbox Series X or a PS5? The answer to this question entirely depends on what Microsoft has planned for Bethesda. If they intend to turn all future Bethesda releases into Xbox exclusives, then the answer to this question is… buy an Xbox Series X. Even then, I’d still recommend buying an Xbox Series X because there’s a zero chance of losing Bethesda games on the Xbox. However, there’s a high probability the PS5 will lose Bethesda’s future games. The even larger answer to this question also depends on whether Microsoft plans to buy more large game studios.
  2. Will Bethesda lose money? The answer to this question is, no. Microsoft has deep, deep pockets. They can withstand any short term monetary losses from making Bethesda’s games exclusive to the Xbox and they can also withstand the long term needs to recoup those losses by selling new Xbox consoles and any exclusive Bethesda games. The more consoles Microsoft sells, the more games they can sell.
  3. Will Microsoft force Bethesda to make exclusives? Yes, they will. This is guaranteed. The question is, which games will be forced into this category? That’s still unclear. Will it only be some of Bethesda’s games, all of them, new games only or some combination of this? We don’t know. However, I can guarantee at least one of Bethesda’s games will be released as an Xbox exclusive. My guess is that most of Bethesda’s games will become exclusives.
  4. What about existing Bethesda games? What happens to these? Microsoft isn’t stupid. They will allow existing games to continue to be sold and operate on the PS4 and any other older non-Microsoft consoles. They won’t rock this boat. Instead, Microsoft will look at upcoming unreleased games and use the games that have never been released to become exclusive.

As a result of these questions and answers, it’s clear that if you love Bethesda’s games and you wish to play future upcoming Bethesda game franchises, you may want to wait before investing in one of these new consoles. It would suck to spend a wad-o-cash to walk home with a PS5 only to find that the one Bethesda game you thought you could play is now an Xbox Series X exclusive. That means, you’ll never see that game released on the PS5. Microsoft is very likely to make this situation a reality.

If Microsoft buys even more of these large developers, they could lock Sony’s PS5 out of the mainstream gaming market. That would push Sony’s PS5 into a situation like Nintendo (and the PS Vita), where the console maker is entirely responsible for creating compelling game franchises for their respective console on their own. Unfortunately, that’s just not enough to keep a platform like the PS5 alive.

In other words, with the purchase of Bethesda, there’s a very real possibility that this time around that Sony’s PS5 will be the underdog.

Ramifications

The bigger ramifications of this purchase is the lack of and reduction of consumer choice. This purchase can easily push Microsoft into an even more monopoly status than they already are. Locking down the biggest game developers to exclusivity for the Xbox means causing the PS5 to ultimately fail and for the same reason the PS Vita failed.

Personally, I believe this is Microsoft’s true agenda. The Xbox One’s sales paled in comparison to the PS4. Microsoft is not eager to repeat this situation with the Xbox Series X. By buying large developers like ZeniMax / Bethesda, Microsoft can all but assure the success of the Xbox Series X… and, at the same time, assure Sony’s failure of the PS5.

This purchase is honestly a one-two punch to Sony…. and for Sony, it’s gotta hurt.

Sony and Gaming

If Sony is smart, they’ll run out and buy Rockstar or Ubisoft right now. They shouldn’t wait. They should purchase one of these companies as fast as they possibly can. Rockstar would be the best choice for Sony.

Sony could then have this same bargaining chip in their back pocket just like Microsoft has with Bethesda. Should Microsoft dictate Xbox exclusivity for Bethesda’s upcoming games, Sony can do the same thing for Grand Theft Auto and Red Dead Redemption (once they own Rockstar). Ultimately, it will be a “tit for tat” situation.

In fact, Sony should buy both Ubisoft and Rockstar and have two bargaining chips. Even still, such a game exclusivity war would lead to fracturing the gaming market in half. Basically, the consumer would be forced to buy multiple consoles to play games that formerly landed on both consoles. It’s a loss for consumer choice… which is why I’m surprised the FTC hasn’t stepped in and blocked this one.

I’m guessing that because the final outcome has not yet manifested, the FTC can’t see the forest for the trees. However, once hindsight forces 20/20 vision, it will be too late for the FTC to block this purchase.

What does this mean for Fallout?

I know this is a very specific question about a very specific game. However, I was asked this very question on a Twitch stream. Let me answer it here.

If you’re a fan of the Fallout series and you’re unsure which of the upcoming console to buy, I’d recommend waiting to see what Microsoft has in store for upcoming Bethesda games.

With that said and to reiterate what I’ve said above, there is now zero chance that Microsoft will withhold Fallout for the Xbox Series X and newer Xbox consoles. However, Microsoft can easily block the release of future Fallout games from the PS5 and the Switch. This means that a consumer’s investment of cash into a PS5 could see the console without any future Fallout or Elder Scrolls or Doom games.

What that means is that should Bethesda take on the challenge of remastering Fallout 1, Fallout 2 and Fallout New Vegas for the newer consoles, these games may only find their way onto the Xbox Series X as exclusives and may not be found on the PS5.

Basically, proceed with caution if you really, really want a PS5. You may find that like the PS Vita, without titles released from Bethesda, the PS5 may end up a dying console before it really gets the chance to take off, particularly if Microsoft buys even more of these large game studios. If the PS5 does fail due to Microsoft exclusives, it will be mostly thanks to Microsoft.

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