October 22, 2021

Microsoft tried to take over EA, Nintendo and Square Enix around 2000

Before Microsoft released its first Xbox, the company tried to acquire game companies such as EA, Nintendo, Square Enix and Midway Games. Microsoft wanted to get exclusives for its new consoles.

Xbox prototype
Prototype of the first Xbox – Photo: Graeme Boyd

The failed takeover attempts are described in a Bloomberg article on the creation of the Xbox, for which the publication spoke to numerous Microsoft employees involved. Steve Ballmer, then CEO of Microsoft, also contributed to the article. It has been known for several years that Microsoft has tried to take over Nintendo, but the new article provides more details and also tells about other takeover attempts.

The first company to try to acquire Microsoft was publisher Electronic Arts. Bob McBreen, who was head of business development at Microsoft at the time, says EA simply thanked for this. Microsoft then attempted to recruit Nintendo.

“Steve Ballmer let us schedule a meeting with Nintendo to see if they would consider a takeover. They laughed at us. Imagine someone laughing at you for an hour. That’s something like that meeting went,” says Kevin Bachus. then the director of third-party relations at Microsoft.

According to McBreen, Nintendo did have discussions with Microsoft in January 2000 to work out details about a joint venture to be set up. He says that Microsoft then gave all the technical details about the Xbox to Nintendo. Microsoft tried to persuade Nintendo to collaborate by offering better hardware and leaving Nintendo responsible for the games. However, that collaboration did not materialize.

Microsoft also made an attempt in 1999 to acquire Final Fantasy creator Square, known today as Square Enix. Steve Ballmer, among others, traveled to Japan for this, but Square thought the amount offered was too low and canceled the deal. An attempt to take over Mortal Kombat maker Midway Games also failed. The studio was interested in a takeover, but the parties did not agree, partly because the studio still had contracts with Sony for PlayStation games.

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Although Microsoft did not succeed in acquiring a large game company, the Xbox maker did manage to make a good hit with the acquisition of Bungie, at the time a small studio that worked on the still unknown PC game Halo. The company was in financial trouble and Take-Two was interested in an acquisition, but Bungie eventually fell into Microsoft’s hands. The Halo games became major system sellers for Xbox consoles.

The article also describes the meetings that preceded the decision to proceed with the Xbox project. Bill Gates, who had just handed over his role as CEO to Steve Ballmer, would not like the plan. On Valentine’s Day in 2000, there was a meeting with everyone involved in which Gates exploded in anger and accused the Xbox team of breaking Windows. At the same meeting, the green light was eventually given to continue, due to the threat of competition from Sony, which brought a ‘PC’ into the living room with its PlayStation 2. Microsoft then released its first Xbox console in the United States in November 2001.