Microsoft to Acquire Bethesda Softworks for $7.5 Billion

Fallout 76-Getty-H 2018
Chesnot/Getty Images

The deal unites the Xbox maker with the publisher of 'The Elder Scrolls' and 'Fallout'

Microsoft is growing its video game domain, acquiring the parent company of publisher Bethesda Softworks for $7.5 billion in cash.

Through the deal to purchase ZeniMax Media, the Xbox maker will become the owner of one of the largest private game developers and publishers, known for making such franchises as Fallout, Doom and The Elder Scrolls.

Microsoft cited its focus on growing cloud gaming service Xbox Game Pass, which has 15 million subscribers, as one motivation for the deal. Bethesda games, including Fallout 76, are already available on the service. More will be added to Game Pass and eventually the publishers new releases, including upcoming space epic Starfield, will be available on the service the same day the launch on Xboxes and PCs.

The Redmond, Washington, tech giant will also grow its portfolio from 15 creative studios to 23 through the acquisition. The publisher's studios include Bethesda Softworks, Bethesda Game Studios, id Software, Arkane, Alpha Dog and Roundhouse Studios.

"Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialize and play with their friends," said Microsoft CEO Satya Nadella. "Quality differentiated content is the engine behind the growth and value of Xbox Game Pass — from Minecraft to Flight Simulator. As a proven game developer and publisher, Bethesda has seen success across every category of games, and together, we will further our ambition to empower the more than three billion gamers worldwide."

Microsoft announced the purchase not long after revealing details of its two new consoles, Xbox Series X and Xbox Series S, which will launch Nov. 10. The acquisitive company has purchased a number of game developers over the years, including Minecraft maker Mojang in 2014. It was also among the companies that made a play for the U.S. operations of TikTok, but owner ByteDance ultimately chose to move forward with a deal with Oracle.

The deal marks a new chapter for Rockville, Maryland-based Bethesda, which was founded in 1999 by chairman and CEO Robert Altman. Microsoft says the company's leadership and operational structure will remain in place.

"This is a thrilling day for this company, our employees, and our fans," Altman said in a statement. "We have enjoyed a close partnership with Microsoft for decades, and this deal is a natural progression of those years working together. The big winners today are our fans. We are continuing to develop our slate of AAA games, but now with Microsoft's scale and entire Game Stack, our games can only get better."

Microsoft expects the acquisition to close in the first half of fiscal 2021.