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Microsoft’s Zenimax acquisition is about the future of Games Pass more than console sales

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Photo of Karol Severin
by Karol Severin

With the acquisition of ZeniMax Media, Microsoft is gaining an important content asset for its portfolio – Bethesda’s games. And while the timing of the announcement certainly won’t make Sony too happy as it is about to launch PS5, the key benefits of this acquisition are tied to the future of Xbox Game Pass, rather than to who will sell more consoles this holiday season. This is because:

  • No exclusivity on key titles, for now: Executing and implementing the acquisition will take longer than just a couple of months to reap the full benefits. Xbox said it will honour current exclusivity deals Bethesda has with Sony regarding the already announced Deathloop and GhostWire with other console titles being available on a case by case basis. Meanwhile, Zenimax online studio director has already confirmed that PS4 support for Elder Scrolls will remain. These narratives could mean that other key titles such as Doom and Fallout could also remain available on both Sony and Xbox, at least for some time. Bethesda earns significant revenues from the Sony side. Making the flagship titles exclusive to Xbox from the outset could mean Microsoft having to subsidise the sudden loss of Bethesda revenue in order to retain current output – an investment it could afford to make, had it been looking to compete in the holiday season race for console sales. However, as a longer-term play for Game Pass, Microsoft doesn’t have to make this investment right now, and rather can stagger the transition to efficiently manage costs, as well as PR. Making these titles exclusive right now could also risk causing a PR headache for Xbox – it has been pushing the cross-platform and gaming freedom narrative for a while now and going exclusive too fast could cause disgruntled PS5 fans to attempt countering or tainting that message, if titles like Fallout or Doom suddenly became locked away from them.
  • The future of Xbox is Game Pass, not consoles: Xbox consoles have been Microsoft’s Trojan horse into interactive entertainment. While consoles enabled Microsoft to capture a part of the living room, the future of Xbox is about fulfilling entertainment needs across platforms. Xbox Game Pass is the door to that future. A future, where we might ultimately see an Xbox subscription without the need to purchase a games-dedicated piece of hardware. With the entrance of tech majors into cloud gaming, the gaming moat – which consoles once used to be – is shifting elsewhere – and with it, priorities for Xbox have evolved too. To be clear, convincing players to buy the console still remains important today, but making consumers stick to Game Pass is just as important now, and will likely become even more significant in the future. 

The importance of conversion rates

As the subscriptions are of crucial importance for the long-term future of both companies, it is useful to keep an eye on the progress in migrating audiences from pure console ownership towards adoption of their cloud gaming services. In this aspect, Xbox has arguably got one on PlayStation.


14% of consumers own an Xbox console, compared to 18% who own a PlayStation. However, more than a quarter of Xbox owners currently pay for Game Pass in the surveyed markets, compared to just under one fifth of PlayStation owners paying for PS Now. Xbox is already doing well on conversion to Game Pass and adding Bethesda to its content portfolio will solidify this even further. Xbox was quick to announce that Bethesda titles will appear on Game Pass on the day they launch – another indicator of this acquisition having Game Pass, rather than console sales in mind.

If you are looking to assess the true added value of this deal for Xbox and ultimately Microsoft, be sure to monitor closely what it does to the future uptake of Game Pass, rather than what it does to console sales this holiday season.

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