Phil Spencer thinks Xbox can recoup $7.5 billion Bethesda deal with software exclusives

There's a good chance you won't be playing Elder Scrolls 6 on PlayStation 5.

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Xbox has been making big moves lately. The console manufacturer has been scooping up studios, bolstering its in-house game development teams. Its latest acquisition of ZeniMax, the parent company of Bethesda, has led to a lot of questions in the industry. Will Xbox be releasing Bethesda titles on competitors’ consoles and is it feasible to even recoup the massive price tag attached to the purchase?

In a recent interview with Stephen Totilo of Kotaku, Head of Xbox’s Phil Spencer revealed that he believes Xbox can recoup the cost of the $7.5 billion acquisition without releasing Bethesda games on PlayStation.

Bethesda's titles are coming to Xbox Game Pass now that Xbox owns its parent company, ZeniMax.

To Totilo’s question of, “Is it possible to recoup a $US7.5 ($11) billion investment if you don’t sell Elder Scrolls VI on the PlayStation?” Spencer’s first and rather succinct response was, “Yes.” Phil went on to elaborate the point, paying special care to paint the picture that Xbox is able to reach even greater numbers through its multitude of platforms and services available to players:

“I don’t want to be flip about that. This deal was not done to take games away from another player base like that. Nowhere in the documentation that we put together was: ‘How do we keep other players from playing these games?’ We want more people to be able to play games, not fewer people to be able to go play games. But I’ll also say in the model — I’m just answering directly the question that you had — when I think about where people are going to be playing and the number of devices that we had, and we have xCloud and PC and Game Pass and our console base, I don’t have to go ship those games on any other platform other than the platforms that we support in order to kind of make the deal work for us. Whatever that means.”

For a lot of gamers, a console’s exclusive titles are the deciding factor in whether to get said console. PlayStation players have had a wealth of stellar exclusive titles compared to Xbox’s rather anaemic first-party line-up over the past generation. But all these acquisitions look to put Xbox in a strong position to have an extremely competitive first-party catalogue.

What’s more, the likes of Xbox Game Pass (Xbox’s Netflix-like service), xCloud (Xbox’s cloud streaming service), the company’s strong push for cross-platform play, and with more first-party titles coming to Steam, players are given a lot of options when it comes to where they play their games.

Though Spencer didn’t say outright that Bethesda titles would not appear on PlayStation, it seems unlikely Xbox would spend $7.5 billion to release games on a competitors’ platform. However, Spencer has noted that any existing deals would still be honored, which means Deathloop will still likely remain a timed-exclusive.

Now we just wait and see whether the Elder Scrolls 6 is a Microsoft-exclusive and honestly, it’s sounding like that will be the case.

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From The Chatty
    • reply
      October 16, 2020 8:33 PM

      My main concern out of this deal is what will happen with the mod community which has been carrying TES for almost two decades now.

      • reply
        October 16, 2020 9:20 PM

        I'm going to assume that there is still going to be modding available, but the reporting system will be overhauled vastly and tied into the Windows ecosystem.

        Not a bad thing by any means, but different.

        • reply
          October 17, 2020 9:05 AM

          It’s impossible to mod UWP games unofficially. They even encrypt the folder so you can’t view or delete it. Any mod support would have to be from official channels. We will see!

    • reply
      October 16, 2020 8:34 PM

      It's weird to think the next elder scrolls game is just on xbox

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        October 16, 2020 8:51 PM

        And PC.

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        October 16, 2020 10:27 PM

        I've never seen them as Sony games in the first place - I associate Oblivion with PC / 360 and Skyrim with PC - sure they came out on PS3 / PS5 but that's not their primary market.

        I'd be surprised if PS3 accounted for more than 15% of total Obvlivion sales and PS4 accounting for more than 25% of Skyrim sales.
        (someone about to post a link to surprise me, I'm sure)

      • reply
        October 17, 2020 3:52 AM

        With the exception of Skyrim VR, which was basically a VR version of the PS3 game, the Sony versions of the Bethesda RPGs have been kind of shit.

      • reply
        October 17, 2020 9:55 AM

        yeah, i'm happy to just skip it entirely if that's the approach. i planned on picking up an xbox, but decreasingly so if this is their approach.

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          October 17, 2020 10:00 AM

          It'll be on PC day one as well, a lot more open than Sonys exclusives.

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            October 17, 2020 10:03 AM

            Yep this, I don't see the issue. Sony and Nintendo are all about exclusives so I don't see the issue at all here, MS still feels more open than the competition by a wide margin even if the next TES is not on Playstation.

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              October 17, 2020 10:50 AM

              The issue was moreso the acquisition than the exclusive itself.

              If they bought up exclusivity for TES I would be less irked, e.g. It's the consolidation of the entire company into Microsoft I dislike in particular. Just adds an extra flourish of dookie to any decision they make with the franchises.

              • reply
                October 17, 2020 11:00 AM

                Ahhh yea, I see what you mean

              • reply
                October 17, 2020 11:01 AM

                Zenimax wasn't helping Bethesda MS seems to be looking after their new studios. For a PC only user it'd be better MS owning Bethesda than Zenimax in my opinion. Obviously not so good if you're a Playstation only user.

                But lets be honest Sony have bought studios like Insomniac which were making Xbox games previously (I was one of the people that loved Sunset Overdrive).

          • reply
            October 17, 2020 10:49 AM

            Yeah, I'm definitely not a fan of the lockout they did with Bloodborne. Huge waste.

            Consumers lose.

      • reply
        October 17, 2020 10:52 AM

        And PC, which is the only place it ever mattered.

    • reply
      October 16, 2020 10:24 PM

      Haha when I said this when it was announced shackers were all "wuhhhh, never!"

      • reply
        October 17, 2020 3:18 AM

        Yup even when they show these games and say they're exclusive people will still not believe it. Personally I prefer everyone being able to play games on any platform but that's not the world we live in.

        • reply
          October 17, 2020 10:54 AM

          There would be no reason for multiple platforms if this was the case.

    • reply
      October 17, 2020 2:50 AM

      I think they can recoup way faster selling them on other platforms. I mean, they are killer franchises.

      • reply
        October 17, 2020 3:05 AM

        It's same with any exclusive you're not just looking for the sales that one game will give you. If someone buys a PS5 for God Of War 2 they're going to stick around for Horizon 2.

        Same with Xbox if people buy gamepass for Starfield or Elder Scrolls they will keep it for the next Doom or Halo.

        • reply
          October 17, 2020 3:27 AM

          Yes but they don-t have to pay for Doom or Halo if they have game pass. If you buy two Microsoft published games on PS4 you've already paid MS more than for a year of game pass.

          • reply
            October 17, 2020 3:30 AM

            Phil Spencer has just told you they don't need to publish on PlayStation to make back 7.5 billion. They've done the math better than you or I.

    • reply
      October 17, 2020 3:30 AM

      I doubt Zenimax/Bethesda have sold $7.5bn worth of games over their entire existence.

      The idea that MS would make their money back by releasing the titles multi-platform was always silly. It's basically the one thing that would guarantee this takeover is a money-loser for MS.

      They make $7.5bn back by selling hardware, game pass subscriptions and third party games on the X-Box platform, and that means keeping these games as exclusives.

      That said I do think "exclusive" for MS definitely means PC too these days. .

      • reply
        October 17, 2020 4:01 AM

        Anything that you can install gamepass on will be their ecosystem.

      • reply
        October 17, 2020 7:55 AM

        They aren't a public company (or at least were) so they don't have to report. Its estimated that more than 7.5 billion made from three titles: Skyrim, Fallout 4, and Doom 2016. Skyrim itself probably accounts for most of that.

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          October 17, 2020 8:27 AM

          lol whose estimates? There’s no way they made $7.5bn from those three games unless they’re secretly the three highest selling games of all time by a long, long way.

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            October 17, 2020 8:42 AM

            How do you know that?

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              October 17, 2020 8:59 AM

              Because the basic maths aren’t very hard to do? $7.5bn would require 150 million copies sold at $50 revenue per copy to Bethesda.

              Given that average revenue per copy to Bethesda on those games is more likely to be sub $20 you’d be looking at needing 400m+ copies.

              Skyrim is actually estimated to have sold about 30m copies.

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                October 17, 2020 11:10 AM

                Yes, the original release of Skyrim across all platforms it was released on sold 30 million units. Not counting DLC ($45), Creation club, VR, and then you have the Special Edition release in 2016 after the 30 million mark which is still selling well.

                Basic math, ok
                A starting point would be its first year's sales which were more that 20 million. 20 million x $60 = 1.2 billion - 30% (platform holders, retail, and manufacturing costs) $840 million (This is missing sales, legendary editions, currency exchange rates, etc. There are a lot of unknowns there)
                Lets just say the next 10 million were sold at the lowest price of $5 listed on isthereanydeal.com. 20 million x $5 - 30% = $70 million
                The site Statista says that Skyrim sold $38 of DLC per owner on average. It probably includes creation club. You have to pay for the source and I'm not just to have an argument on the internet. 30 million x $38 - 30% = $756 million
                Now we have Skyrim VR. For the lack of a better source, VGchartz and steam spy says across PC and PS4 VR is sold 1.8 million. Taking the average sale price of $18 we get 1.8 million x $18 - 30% = $22 million (This doesn't include ps4 digital sales)
                Then we have the special edition. On all three platforms it sold 10.4 million (VGchartz and steam spy) with the lowest average price of $13. 10.4 million x $13 - 30% = $94 million

                On the absolute low end, we get 1.78 billion in sales. This is not counting Switch, digital console sales, and using the lowest possible likely prices. I've heard numbers are more like 60 million sold but that's just hearsay.


                • reply
                  October 17, 2020 12:09 PM

                  Except you’re not factoring in the GamePass subscribers, who won’t be buying a copy of the game at all....

                  Like I say down below, they are planning to turn at least one of these franchises into a GamePass only MMO with a monthly fee on top of basic GamePass. Tag this post. I am sure it’s going to happen all the way down to my bone marrow.

                  • reply
                    October 17, 2020 12:44 PM

                    I'm just talking about past performance. The claim was they hadn't made 7.5 billion in the past. Future performance is anyone's guess.

    • reply
      October 17, 2020 7:22 AM

      Wasn't there a bunch of people in the thread yesterday going all in gauranteeing all these games would come to playstation?

      Seems like they are hinting nope

      • reply
        October 17, 2020 7:27 AM

        It's the same interview but some people are just refusing to listen to what he's saying and have made up their minds anyway.

      • reply
        October 17, 2020 8:30 AM

        More like what they have now will still come out. Later not so much which anyone should have seen coming.

    • reply
      October 17, 2020 7:59 AM

      Gon get that horse armor cash!

    • reply
      October 17, 2020 9:24 AM

      I'm happy for MS. I feel like they've been playing catchup for awhile now and I want to see them stick it to Sony (in a healthy competitive way). Nintendo is in their own world.

      • reply
        October 17, 2020 9:56 AM

        i mean, they're swimming in cash. it's always just been a matter of when they want to flex it to tilt the market anticompetitively

        • reply
          October 17, 2020 9:58 AM

          Sure, but i think it would be fair to say they made a lot of bad moves early on the One’s life cycle. Certainly comparatively.

          • reply
            October 17, 2020 9:59 AM

            yeah, i really disliked the UI changes they made over the lifetime of the 360 and onto the one.

            just jam packed with more advert style content / business.

            the early blades were clean. RIP blades

    • reply
      October 17, 2020 12:03 PM

      I think this statement of his is being somewhat misread.

      They don’t feel they need to bring the games to a Sony platform to recoup their investment. It’s pretty obvious he’s being coy to encourage people to assume they’re exclusives, satisfying the vocal XBOX community, but he’s not making a definitive statement that he can technically tripped up on when they do wind up on PS5.

      One thing I DO expect out of this is there will be at least one game that will be 100% exclusive to GamePass, with a special monthly add-on price, MMO 2.0. That’s why MSFT feels confident of recouping this investment in the first place.

      • Zek legacy 10 years
        reply
        October 17, 2020 12:21 PM

        I see no reason for a game to be exclusive to Game Pass when it can be sold for $70 as well. They make more money by allowing it both ways.

        • reply
          October 17, 2020 12:39 PM

          Cool. So when are Mario Odyssey, God of War, and Last of Us 2 coming to Xbox since they would make more money selling those games on all platforms?

          All of the Bethesda studios are now first party Microsoft studios. It is safe to assume that as a first party studio anything they make will be exclusive to Microsoft platforms unless it is otherwise directly stated or contractually obligated. So stuff like Deathloop and the Doom expansions will be multiplatform. But the next full Doom, and next Dishonored games won't be. Starfield unless there is some undisclosed contract with Sony will be a Microsoft exclusive.

          Just because previous games in the series were multiplatform has no bearing on whether or not future games will be. At most you will probably see something like Sony is doing with Horizon where a port is released 1+ years after the game has been out.

        • reply
          October 17, 2020 12:47 PM

          Are you not from the World of Warcraft era?

          If a game is $10/month extra on GamePass, that’s $120 right there for a single year, not including the base price of GamePass and either an Xbox or a Windows license fee.

          WoW has always been $15/month, plus buying the base game and expansions. MSFT will make more in the long run by tying an MMO to GP as a premium tier game purchase on top of the base GP price, which will certainly be subject to price increases, at least for new customers.

          Even if they’re not making as much right up front upon a release, they would be consolidated and expanding GP adoption and potentially forcing Sony and/or Apple or Nintendo to allow GP as a service on those platforms, if the demand is high enough.

          There’s my reasoning.

          I do think they’re not going to push the consumer into the deep end of the pool all at once, and at least some Elder Scrolls/Fallout/Starfield (in particular) will be a standard cross-platform non-subscription release early on in what I’m sure is a multi-staged plan. You definitely need to interest the widest number of gamers out there before giving them something they want, but also charges an extra subscription fee to access. MMOs made the biggest money in gaming their day with a narrower player base. Of course MSFT would be happy to return to that if users were ok again with the fees.

      • reply
        October 17, 2020 12:24 PM

        I seriously doubt we would see a ton of xbox exclusives. I think the bigger strategy here isn't making a generation of consoles and games better than the competitor, but to make their name a staple of reliable great games and great services. Once they do that, they will have their name as the center of entertainment without actually needing to constantly supply hardware to the lowest common denominator.

        I believe that in 10+ years the Xbox series s equivelant will be significantly different, maybe the workhorse to push gaming on the go. For the series x, they will find additional ways to get it into people's homes. For example, you can go to GameStop to do a quick swap like you do with mobile phones.

        Making games exclusive will burn a lot of good will which is counter to what they are working so hard at right now. The better choice would be to make your 1st party games so good on the Xbox platform that it becomes a no brainier to buy it for the Xbox. I am definitely interested in buying games and being able to play it on either pc or xbox and pickup right where I left off. I also wouldn't mind buying from the app store either.

        • reply
          October 17, 2020 12:54 PM

          That’s why I strongly doubt any Bethesda game will be anything more than a timed exclusive at first. When GamePass market penetration reaches some target level and the first wave of Bethesdasoft franchise games come out to universal positive acceptance (you know just an engine upgrade alone is going to go very far with this), that’s when a GamePass exclusive or 3 could be offered on a tiered subscription basis.

          Tag me for later. It’s going to happen eventually. How successful it will be? Who knows. But it will probably not be a flop, that’s for sure!

      • reply
        October 17, 2020 1:03 PM

        Phil Spencer on Bethesda's games' exclusivity: "We want the xbox ecosystem be absolutely the best place to play and we think game availability is absolutely part of that."

        They're being coy because the sale takes time to go through, they're not allowed to say Bethesda games will be exclusive yet. But everything they're saying otherwise seems to be leading that way.

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          October 17, 2020 1:16 PM

          I think they’re fully prepared to gauge public interest and opinion before publicly declaring exclusivity vs a cross-platform release.

    • reply
      October 17, 2020 12:24 PM

      Seems like they'd be leaving a lot of money on the table by not selling Bethesda games to Playstation customers.

      Sure, some might buy an Xbox for an Elder Scrolls game - but will they end up subbing to Game Pass or upping their lifetime attach rate? Probably not if they already own a Playstation.

      They don't make money on the Xboxes really, so it seems like it'd be more profitable to sell $70 games wherever their customers want to play them.

      Lock up Xbox / PC owners with Game Pass; sell full-priced Bethesda games elsewhere.

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