🎮 Microsoft Gearing Up to Take on Sony

What you need to know before the US markets open

Hey Global Investor, here’s what you need to know before the US markets open.

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Market Snapshot 📈

S&P 500 (Monday Close) 3,281.06 −38.41 (1.16%)

NASDAQ (Monday Close) 10,778.80 −14.48 (0.13%)

FTSE 100 (5 PM IST) 5830.29 +26.00 (+0.44%)

NIFTY 50 (Today’s Close) 11,153.65 −96.90 (0.86%)

USDINR (5 PM IST) 73.43 (1 Year +3.52%)

Microsoft’s Throws Down the Gauntlet at Sony – Acquires Bethesda for $7.5B

Microsoft announced Monday that it would acquire ZeniMax Media, parent of video game giant Bethesda for $7.5B.

What is Happening? The video game industry is currently exploding, and it’s common knowledge that Sony is ahead in the race. Microsoft is set to unveil Xbox Series S and Series X consoles in November to take on Sony’s PS5 in the next-gen console wars. The company lost ground to Sony in the current console generation as it sold nearly 60M fewer Xbox One units compared to PS4 and is keen to turn things around.

Enter ZeniMax Media, one of the foremost gaming firms in the world. Its $7.5B acquisition by Microsoft is a big deal. The tech giant will add eight new studios to the existing 15. It will publish hugely popular titles like The Elder Scrolls, Doom, Fallout, and Wolfenstein on Xbox’s “Game Pass” subscription service the same day they hit the market. Generally, third-party titles take months to show up on Game Pass after the initial release.

The Bethesda purchase highlights Microsoft’s need for gaming studios. The company currently has 15M Game Pass subscribers and is making nearly $1B in annual subscription revenue. By adding ZeniMax titles on the Game Pass the same day as their release, Microsoft plans to double its subscribers and ultimately earn substantial profits.

The acquisition which will consummate next year will preserve ZeniMax’s leadership structure. It is unlikely Microsoft will make all ZeniMax games exclusive to Xbox and PC as it would attract a lot of criticism from gamers worldwide. More importantly, the company would lose out on revenue from gamers buying ZeniMax titles for PS and Nintendo platforms.

With the Bethesda acquisition, Microsoft is positioning itself as a greater player in the gaming industry vis-à-vis Sony. Add to it, the soon-to-be-launched next-gen consoles, and Game Pass’s superb value, there’s enough pressure on Sony to make its move. It’s game on!

Market Reaction: Microsoft stock closed at $202.54, up 1.07%

Microsoft Snapshot 📈

MSFT $202.54 +2.15 (+1.07%)

Analyst Rating (31 Ratings) BUY 90%  HOLD 10%  SELL 0%

Newsworthy 📰

  • Intel ‘Outside’!: Intel gets U.S. licences to supply some products to Huawei (INTC -0.34%)
  • Expectations: What to expect from Tesla on Battery Day? (TSLA +1.64%)
  • Team Up: Walmart teams up with Goldman Sachs to offer online sellers business credit lines (WMT +1.32%, GS -0.44%)

Later Today 🕒

  • 6.30 PM IST: Existing home sales (SAAR)
  • 7.30 PM IST Fed Chair Jerome Powell testifies on the CARES Act
  • 9.30 PM IST: Richmond Fed President Tom Barkin speaks
  • After Market Close: Nike Inc (NKE) Earnings
  • Before Market Open: Manchester United Plc (MANU) Earnings

Fun Fact of The Day 🌞

If you lift a kangaroo’s tail off the ground it can’t hop.

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