Xbox is in trouble -- and Microsoft is considering a major acquisition to fix it

Kevork Djansezian/Getty ImagesPhil Spencer, the head of Microsoft’s Xbox division.
  • Microsoft’s Xbox One platform is making ambitious moves but remains in second place behind Sony’s massively successful PlayStation 4.
  • A comparatively poor lineup of major exclusive games is a key factor in the Xbox One’s weaker position.
  • A new report from the gaming site Polygon says Microsoft is looking at a major acquisition to help the Xbox group.
  • Valve, EA, and PUBG Corp. are all cited as potential purchases.

Microsoft could buy Valve – the company behind Steam, the world’s largest gaming service. Or it may buy EA – the company behind “Madden,” “FIFA,” and “Need for Speed.”

That’s according to a new report from the gaming site Polygon, which cites “a reliable source close to Microsoft.”

Apparently, Microsoft is also eyeballing PUBG Corp., the South Korean developer in charge of what is essentially the biggest game in the world right now, “PlayerUnknown’s Battlegrounds.”

It’s unclear how far, if anywhere, these talks have gone. Microsoft representatives offered the following statement: “Microsoft does not comment on rumour or speculation.”

Whether any of these acquisitions make sense is a bit clearer: “Close to zero probability of buying EA,” the Wedbush senior analyst Michael Pachter told me in an email.

Madden NFL 18EA‘Madden NFL 18’ is the latest entry in EA’s long-running football game franchise.

That’s because of what EA is: a major third-party game publisher with a huge stable of games tied directly to licenses.

The “Madden” franchise exists because of EA’s partnership with the NFL. The “FIFA” franchise exists because of EA’s partnership with FIFA International. EA has a lengthy deal with Disney for rights to make “Star Wars” games.

Most important of all, EA makes games for everything. That means your Xbox One and your PS4 and whatever else. Every “Madden” comes to PlayStation 4 andXbox One.

EA is what is known as a multiplatform publisher – it benefits from selling its games on whichever console you’re playing on, including your phone. If Microsoft were to buy EA, it would do so (presumably) to retain exclusivity rights to EA’s large library of games.

Simply put: Microsoft would buy EA to make EA’s games available only on Xbox One and PC.

Star Wars Battlefront 2EA‘Star Wars Battlefront 2’ is EA’s latest ‘Star Wars’ game.

It would be a huge blow to Sony’s PlayStation 4, but it would also make the acquisition a failure.

“That would lower EA revenues – by a lot, unlikely to be made up by growth on Xbox – and would make a purchase prohibitively expensive,” Pachter said. Though EA has a large library of intellectual property, losing the revenue of selling that IP on competing platforms would hurt too much.

Valve or PUBG Corp. would perhaps make a bit more sense, but it’s hard to know. Valve is a privately owned company, as is PUBG Corp.’s parent company, Bluehole Studio.

Valve’s Steam gaming service and storefront is tremendously valuable, as is Valve’s stable of game franchises (including “Half-Life,” “Portal,” “Left 4 Dead,” and “DOTA 2”). PUBG Corp. has the one game, “PlayerUnknown’s Battlegrounds,” but that one game is outrageously popular. And Microsoft has a history of acquiring outrageously popular games with long legs.

Whether Valve or PUBG Corp. are even up for sale is another question; representatives for Valve and PUBG Corp. didn’t respond as of publishing.

Read the full Polygon report right here.

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