Microsoft reportedly considered shutting down Xbox in 2021 before making major acquisitions like Bethesda and Activision.
Being an Xbox fan has always been about flexibility and choice. Whether it’s playing Halo on your console, cloud-streaming Gears of War on your phone, or diving into the depths of Game Pass’s massive library, Microsoft has consistently emphasized accessibility.
Microsoft CEO Satya Nadella has been vocal about the Xbox business in the past, saying that being an Xbox fan means playing Xbox games on “all your devices,” implying the company’s future multi-platform approach for exclusives. But behind the scenes, Xbox’s future wasn’t always this certain.
In a move that redefined its gaming strategy, Microsoft spent a jaw-dropping $82 billion acquiring major game studios like Bethesda in 2021 and Activision Blizzard in 2023. These purchases were aimed at supporting Game Pass, its subscription-based service.
But a new report suggests these moves weren’t just about growth — they were about survival.
Could Xbox Have Been Shut Down?
A new report from The Information (paywalled) reveals that the decision to invest in gaming was far from guaranteed. Nadella reportedly told insiders that Microsoft’s gaming division needed a significant push—or it might have been shut down altogether. The acquisitions of Bethesda and Activision were pivotal moments in ensuring the longevity of Xbox.
“In 2021, Microsoft CEO Satya Nadella faced a choice involving the company’s Xbox and cloud gaming business,” the report reads. “The company could either acquire major game studios to drive more subscriptions to its nascent Game Pass subscription service. Or it could wind down its games business entirely, Nadella told two people at the time.
“Nadella took the first path, acquiring Elder Scrolls maker Bethesda Studios for $7 billion in 2021 and Call of Duty maker Activision Blizzard for $75.4 billion in the fall of 2023.”
According to the report, Microsoft apparently set an ambitious target for Game Pass, aiming to reach over 100 million subscribers by 2030. To achieve this, the service would need to triple its current subscriber base in just five years, requiring a growth rate of 40% annually. “Before completing the Activision acquisition, Microsoft targeted having over 100 million Game Pass subscribers by 2030,” the report stated.
According to the report, Microsoft has faced challenges convincing major game studios to bring their titles to Game Pass. The subscription model, which offers fees to developers for participation, hasn’t universally resonated.
Meanwhile, recent reports suggest that several Xbox exclusives, including flagship titles like Halo, Microsoft Flight Simulator, and Gears of War, may be coming to PlayStation this year. This has further raised questions about Microsoft’s long-term strategy for exclusivity.
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