A high-ranking Microsoft executive expressed a strong determination to financially overpower Sony in order to enhance the position of Xbox

Microsoft executive expressed a strong determination to financially overpower Sony

In a December 2019 email exchange revealed during the FTC v. Microsoft hearing, Matt Booty, the head of Xbox Game Studios at Microsoft, urged Xbox CFO Tim Stuart to allocate significant funds towards acquiring game content. The objective was to position the company for a competitive battle against Sony in the realm of subscriptions. Booty stated that Microsoft had a distinct advantage, expressing a willingness to invest $2 to $3 billion in 2020 to prevent rivals from gaining an advantage in content offerings in the future.

Booty also remarked that it would be extremely challenging for any new video streaming service to emerge on a large scale at that point, alluding to formidable competitors such as Google, Amazon, and Sony. He emphasized the importance of content as a protective barrier, asserting that only Sony truly had the potential to contend with Xbox Game Pass.

In games, Google is 3 to 4 years away from being able to have a studio up and running. Amazon has shown no ability to execute on game content. Content is the one moat that we have, in terms of a catalog that runs on current devices and capability to create new. Sony is really the only other player who could compete with Game Pass and we have a 2 year and 10 million subs lead.

Microsoft contends that the referenced email is outdated and that they never pursued the mentioned strategy. David Cuddy, the General Manager of Public Affairs at Microsoft, states that the email is three and a half years old and precedes the announcement of their acquisition by 25 months. He clarifies that it refers to industry trends they ultimately did not pursue and is unrelated to the acquisition. Furthermore, the internal conversation has been sealed as part of a separate legal case known as the “gamers lawsuit.”

The email, which is part of a discussion about Xbox Game Pass, lacks the context of the rest of the conversation as it has been redacted. However, it appears that in 2019, Microsoft was considering reversing the concept of releasing their own games on Xbox Game Pass on the same day as their official launch—a decision that Matt Booty expressed dissatisfaction with. He expressed concerns that if they changed their approach, it would be difficult to convince people of the viability of initiatives like Mixer or xCloud.

The email sheds light on Microsoft’s strategy and thinking regarding game content for Xbox Game Pass subscriptions in 2019. Since then, Microsoft has acquired Bethesda for $7.5 billion and is currently working on finalizing its proposed $68.7 billion deal with Activision Blizzard—both of which are significantly larger in scale compared to the $2-3 billion figure mentioned by Booty in 2019.

Additionally, Microsoft seriously contemplated acquiring Sega and Bungie. Xbox Chief Phil Spencer even sought strategy approval from Microsoft CEO Satya Nadella to explore a potential acquisition of Sega’s gaming studios. Both Sega and Bungie were part of a broader list of studios and mobile developers that Microsoft had identified as potential targets to strengthen Xbox Game Pass.