In a startling revelation, an internal email exchange between Microsoft executives has unveiled the tech giant’s ambitious plans to surpass its competitors, specifically Sony, in the gaming industry. The correspondence, which came to light during the ongoing FTC v. Microsoft hearing, showcases the company’s strategy to invest substantial funds in acquiring game content and secure its position as a dominant force in the market. Dated December 2019, the email thread offers valuable insights into Microsoft’s gaming aspirations.
The email exchange involved Matt Booty, the head of Xbox Game Studios, and Tim Stuart, the Chief Financial Officer of Xbox. In the communication, Booty expressed Microsoft’s unique advantage in potentially outspending Sony, stating, “We (Microsoft) are in a very unique position to be able to go spend Sony out of business.” To achieve this goal, Booty proposed allocating a staggering $2 to $3 billion in 2020 to stay ahead of competitors and secure exclusive content offerings.
Recognizing the pivotal role of content as a differentiator, Booty emphasized that Sony was the only competitor capable of truly challenging Xbox Game Pass, Microsoft’s popular subscription-based gaming service. He declared, “Content is the one moat that we have, in terms of a catalog that runs on current devices and capability to create new. Sony is really the only other player who could compete with Game Pass.”
Responding to the disclosure, Microsoft promptly clarified that the email was outdated and that the proposed strategy was not pursued. David Cuddy, General Manager of Public Affairs at Microsoft, stated, “This email is three and a half years old and predates the announcement of our acquisition by 25 months. It refers to industry trends we never pursued and is unrelated to the acquisition.” Notably, the email exchange was also sealed as part of a separate legal case, further minimizing its current relevance.
While the full content of the email thread remains confidential, it appears that Microsoft was contemplating a potential revision of its approach to releasing its own games on Xbox Game Pass. Booty expressed reservations about such a shift, highlighting the potential challenges in persuading consumers about the viability of Microsoft’s other ventures, such as Mixer or xCloud, should the company alter its release strategy.
The leaked email provides a unique glimpse into Microsoft’s strategic outlook on Xbox Game Pass, its acclaimed gaming subscription service, in 2019. Since then, the company has made notable moves in the industry, including the landmark $7.5 billion acquisition of Bethesda. Microsoft is currently seeking regulatory approval for its proposed acquisition of Activision Blizzard, a monumental deal valued at $68.7 billion. These developments far exceed the financial figures discussed in Booty’s email, demonstrating the company’s significant evolution in its gaming pursuits.
Moreover, the correspondence reveals that Microsoft seriously considered acquiring esteemed game developers Sega and Bungie. Xbox chief Phil Spencer reportedly sought the approval of Microsoft CEO Satya Nadella to initiate discussions with Sega Sammy regarding the potential acquisition of Sega’s gaming studios. These potential acquisitions were part of Microsoft’s wider strategy to fortify Xbox Game Pass by securing key studios and mobile developers.