New Microsoft Vs FTC Court Documents Show That Xbox Really Wanted To Acquire SEGA

Team Green seemingly went after The Blue Blur

A new day in the ongoing court hearing between Microsoft and FTC over its proposed acquisition of Activision Blizzard means a new slate of compelling evidence and previously-unknown knowledge around the inner workings of Microsoft’s activity in acquiring publishers, developers and IP for the Xbox Game Studios family.

In new documents released recently as part of the ongoing trial, a list of proposed acquisitions has surfaced that shows Xbox was closely watching at least 100 different developers, eventually whittling down the list to a selection of candidates that include the likes of Thunderful (SteamWorld series, The Gunk), Supergiant Games (Bastion, Hades), Niantic (Pokémon Go), Playrix (Farmscapes), Zynga (FarmVille, Bungie (Destiny), IO Interactive (Hitman) and Scopely (Monopoly Go!).

Also revealed alongside these was an internal email from Xbox boss, Phil Spencer, to a number of other senior Xbox and Microsoft staff including Microsoft’s CFO, Amy Hood, and CEO, Satya Nadella, requesting strategic approval to seek out another big acquisition – SEGA’s gaming studios. Spencer specifically cites wanting to approach SEGA Sammy Holdings about acquiring just SEGA’s gaming business in the email, which was sent on November 10, 2020, and not the other parts of its business.

In the evidence submitted, Microsoft’s GM, David Hampton, is seen as simply responding with “Game on.”

While there isn’t much more to go off to say if this proposed deal was ever pursued, if it fell through or even if it might still be in discussion, the email does mention that the deal would involve some “complexities.”

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“I’m writing to request Strategy Approval to approach Sega Sammy regarding a potential acquisition of their Sega gaming studios. For context, Bill and I have reviewed the business case for acquiring Sega and are both supportive. We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console. Please find the attached memo and bullets below for additional detail on our strategy to prioritize our next acquisition target, a brief overview of Sega’s gaming portfolio, and the value drivers for the potential acquisition.

As the Sega gaming studios are owned by Sega Sammy, a publicly-traded Japanese company, we have called out a few deal complexities in the memo. Sega’s gaming has represented roughly half of Sega Sammy’s revenue and operating income, or ~$900M of revenue and $60-90M of operating income, in each of Sega Sammy’s last three fiscal years. The team is coordinating closely with CELA on next steps, if we were to receive SA.

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Image Sources: Microsoft/IGN