Microsoft was considering acquiring Bungie and Sega to bolster Xbox Game Pass, according to internal emails

Microsoft is considering acquiring both Bungie and Sega, according to internal documents from the FTC v Microsoft to belong. In an email seen by The edgeXbox chief Phil Spencer wrote to both Microsoft CEO Satya Nadella and Microsoft CFO Amy Hood, requesting approval of the strategy to approach Sega Sammy about a potential acquisition of its Sega gaming studios.

“We believe Sega has built a balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off console,” Spencer said in the November 2020 email.

Microsoft believed an acquisition of Sega would boost Xbox Game Pass subscriptions across PC, console, and cloud. “The global appeal of Sega’s beloved IP will help expand the reach of Xbox Game Pass to new audiences around the world, particularly in Asia, where localized content is critical to success,” Spencer said in his pitch to Nadella at the time and Hood. Sega would also provide game transaction value for monetization in the future.

It’s not clear what happened with the Sega acquisition or whether Nadella ultimately approved the talks. But an April 2021 internal Microsoft merger review document still listed Sega as a key target. Microsoft had identified key areas for PC, mobile, and console acquisitions in several markets, and Sega, Bungie, Zynga, and IO Interactive were among a number of companies that Microsoft was seriously considering acquiring.

Bungie, a studio now owned by Sony, was on the list, with Microsoft’s internal document stating that the “acquisition of Bungie will secure valuable IP, Destiny (and its community) and integrate its dev & live ops infrastructure in Xbox Game Studios. .” Microsoft had identified a “high burn-rate” risk for Bungie, in addition to NetEase’s $100 million minority stake in 2018. It also noted that Destination was one of the ‘titles with the most hours on console Game Pass’.

assassin developer IO Interactive was also on the “final watch list” in 2021, alongside mobile companies like Thunderful, Supergiant Games, Niantic, Playrix, and Zynga. Microsoft was in talks to acquire Zynga before eventually turning its attention to Activision Blizzard for its mobile ambitions (Zynga was eventually acquired by Take-Two). It’s not clear whether Microsoft has had discussions with the other mobile-focused companies.