In a released email from the FTC tonight, plenty of concerning points were brought up by Xbox CEO Phil Spencer. The email, between Phil Spencer, EVP Takeshi Numoto, and CMO Chris Capossela, revealed that Phil Spencer had his eyes set on Nintendo for a potential M&A with Microsoft Xbox. This email was released as a result of the Activision Blizzard trial currently ongoing. It is dated as August 2020.
Phil Spencer references both Nintendo and Valve, stating that Microsoft is “playing the long game”. Additionally, references to talks with WB Games about an acquisition were referenced in the email. These were previously rumored, however, the acquisition never came to light. Read the entire email below.
Microsoft “Playing the Long Game” with a Potential Nintendo Acquisition
The email reads as follows:
Takeshi, I totally agree that Nintendo is THE prime asset for us in Gaming and today Gaming is our most likely path to consumer relevance. I’ve had numerous conversations with the LT of Nintendo about tighter collaboration and feel like if any US company would have a chance with Nintendo we are probably in the best position. The unfortunate (or fortunate for Nintendo) situation is that Nintendo is sitting on a big pile of cash, they have a BoD that until recently has not pushed for further increases in market growth or stock appreciation. I say “until recently” as our former MS BoD member ValueAct has been heavily acquiring shares of Nintendo and I’ve kept in touch with Mason Morfit as he’s been acquiring. It’s likely he will be pushing for more from Nintendo stock which could create opportunities for us. Without that catalyst I don’t see an angle to a near term mutually agreeable merger of Nintendo and MS and I don’t think a hostile action would be a good move so we are playing the long game. But our BoD has seen the full writeup on Nintendo (and Valve) and they are fully supportive on either if opportunity arises as am I.
Confidentially we have two fairly active M&A discussions in Gaming right now, Warner Brothers Interactive and ZeniMax. I took ZeniMax to the BoD last week and prior to the BoD discussion I asked Amy and Satya if they wanted me to slow either or both of these given the TikTok discussions and they both emphatically told me “no”. They are fine doing all 3 of these if the deals make sense. I won’t say WB or Zeni is Nintendo but both are for sale and gettable by us if things align. Biggest obstacle in WB is IP ownership, we wouldn’t own any of the IP which hurts long term flexibility and the only obstacle on Zeni is valuation expectations of founders. But I think it’s likely one or both of these happen which will help us continue to double down on our Gaming relevance. To give a sense of scale, ZeniMax is about the size of our current first party studios org, so that would be doubling our content asset. Downside is it’s more core, less broad, not mobile, more north American/European etc.
I love this discussion and value you looking at the opportunities here. At some point, getting Nintendo would be a career moment and I honestly believe a good move for both companies. It’s just taking a long time for Nintendo to see that their future exists off of their own hardware. A long time…. 🙂
Phil
Let us know what your thoughts are about this polarizing email on Twitter. We’ll be sure to keep you updated if any more information is released.
