The AA Space & Exclusivity: The Future of Bethesda & Microsoft

I’m sure mystical and other-worldly adjectives aren’t the first thing that comes to mind when thinking of Rockville, Maryland. Yet, the Maryland town, home to 68,000 people, has spawned some of interactive entertainment’s most ambitious experiences over the past 20-plus years. Nestled right off of Interstate 270, as it has been for the majority of the company’s existence, is Bethesda Softworks (as well as their once parent company ZeniMax Media), developer of industry-defining RPG franchises such as the Elder Scrolls and the newer iterations of Fallout. While developing these franchise out of their primary studios in Rockville and Austin, Texas has been Bethesda’s bread and butter for much of their tenure, over the past 15 years, they have also reached a point where financially acquiring additional development studios to publish their projects has become not only an achievable outing, but a successful one to boot. Legendary franchise such as Doom from id Software and Wolfenstein from Machine Games, along with fresh IP such as Dishonored & Prey from Arkane, and The Evil Within from Tango Gameworks, all have found their way under Bethesda’s umbrella over the years.

Todd Howard, Game Director & Executive Producer at Bethesda Games Studios, at Bethesda’s E3 2018 Showcase

Flash forward to September 21st, 2020. Looking to yet again combat a generation’s worth of sour narratives regarding first party titles, Microsoft announces its plans to acquire ZeniMax Media, and with it Bethesda Softworks, its studios and IPs, for the astronomically large amount of $7.5 billion. Since its announcement, the move has began to send shock waves throughout the industry. Fans and media alike have been speculating not only the big question regarding exclusivity, but what the future looks like for not only Bethesda Games Studio titles, but titles from their additional 7 studios as well. To be blunt, I think both of those subjects go pretty hand-in-hand when analyzing them. Will we see titles that were well-received critically but didn’t match its performance commercially have a future within its new Microsoft future? Will the upcoming Starfield, Elder Scrolls 6, and inevitable Fallout 5 be exclusive to Microsoft’s ecosystem of support devices (Xbox, PC, xCloud, etc)?

In short: it’s complicated.

When the news first broke about the Bethesda acquisition, my mind instantly jumped to one thing: Mojang and Minecraft. Not only is Microsoft familiar with spending quite a bit of cheddar for high value properties, but they also aren’t afraid to get the most back on it. When Microsoft acquired Mojang, and with it one of gaming’s most popular titles at the time in Minecraft, in 2014 for $2.5 billion, a similar (yet arguably not as vocal given the lesser emphasis on the exclusivity narrative this console generation has produced) sentiment was shared: what’s going to happen to non-Xbox versions of Minecraft? Yet, Microsoft tried to off-set its lack of install base by releasing the title on Sony’s PlayStation 4, as well as Nintendo’s 3DS handheld system and the Wii U. Even recently, PlayStation VR support has been added to the title. With Bethesda reaching an audience that ranges across a broad spectrum of gaming sects, why not continue to cast the net as far as possible, akin to Minecraft?

The addition of Fallout 4 & The Elder Scrolls Online announced at Microsoft’s E3 2018

Enter Xbox Game Pass.

For all intents and purposes, Game Pass is Microsoft’s true next generation “system”. The overarching message from Xbox that past year or so, as we move towards the upcoming launch of Xbox Series X and S has been simple: they don’t care how you play their games, just that you’re playing their games in their ecosystem. That may be on the brand new Xbox Series X, that whops a beefy 8 core custom Zen 2 CPU and a GPU that boast 12 TFLOP power. It may be on your sweet gaming PC that your can play Game Pass for PC titles on with buttery smooth frame rates. Hell, it may be a simple as playing your favorite tiles on the go straight from your mobile device or table with xCloud. The point remains, in Microsoft’s perspective, a console isn’t the next generation of gaming: it’s an inclusive and expansive ecosystem. With the service now encompassing over 15 million subscribers (as of the time of this article’s writing) and growing, it’s hard to not look at this acquisition as being primarily focused on Game Pass.

In short, it’s hard to compare the two acquisition in 2020, given how drastically different the Xbox brand now is to its 2014-self. In 2014, console exclusivity was expected and pushed harder than ever, and it helped Sony’s PlayStation 4 become one of the best selling console of all time on the back of its stellar first party releases such as God of War, Uncharted 4, and most recently The Last of Us Part II. But as we begin to close out this console generation, we’re beginning to see more and more platform walls crumble, with cross-play and support becoming almost the norm with each new third party AAA release. At the basis, Microsoft has every right to gate-keep their titles to their ecosystem of supported platforms. I mean, you don’t pay $7.5 billion to not have a say in where your now-owned IP can be played. Yet, I think Microsoft is in a position where they may just be able to have their cake and eat it too.

The other prong of Bethesda’s acquisition also both helps keep the AA experience alive while also hopefully helping combat the breaking of the AAA blockbuster bubble, in terms of game development budgets. One move that became apparent this generation is the all-but extinction of the AA game. While we did see some of the most critically well received titles come from the AA space this generation (i.e. Dishonored 2, Titanfall 2, X-Com 2, and more), many of these franchises have been put on hold since due to lack of sales, or have been reworked into live service experiences (i.e. Apex Legends). At the end of the day, we live in a capitalist society and the bottom line makes the final decision. But, with the pairing of Microsoft’s deep cash funds and a service in constant need of content refreshes, the ability for Bethesda’s smaller studios to continue to produce AA experiences could be all but solidified for the next 5 to 10 years. While budgets continue to sky rocket for large scale, open world, AAA blockbuster experiences, such as we expect to see with Bethesda Games Studio’s next installments in the Elder Scrolls, Fallout, and their next IP Starfield, having a platform that benefits both from having an ever growing catalog of content and provides both a player base and financial return for the project itself could be the saving grace the AA space needs. This is where I see exclusivity coming into play heavily with this acquisition. The next Dishonored entry, Prey’s potential sequel, the next entry in The Evil Within (fingers crossed); these releases fit perfectly into the Game Pass mold. Experiences that don’t necessarily have the breath or scope of an Assassin’s Creed: Odyssey, Fallout or Elder Scrolls in terms of their world, but are interesting, complex, and engaging experiences that deserve to be told.

Fallout 76 faced a poor critical response when it launched in the fall of 2018, but has continued to provide content updates since launch. This includes its recent Wastelanders update which finally implemented long-awaited NPCs.

Also, many seem to forget about Bethesda’s footprint within the games as service, with titles such as the Elder scrolls Online and Fallout 76, that have still performed well in the background (well, more so the former than the latter). With Microsoft’s recent agreement with Bungie to bring Destiny 2 and all of its current and future expansions (including the upcoming Beyond Light due to release this November) to Xbox Game Pass, the idea of potentially incorporating both Bethesda games as a service titles seems almost a given. While both titles have previously been offered on Game Pass, the idea of having the newest content drop included with a Game Pass subscription, is something that is probably exciting for the very dedicated ESO fan base.

So that leaves just one major piece left on the board, the big guns: Bethesda Games Studio’s titles, ala Starfield, the Elder Scrolls 6, and a future Fallout installment.

Starfield and The Elder Scrolls 6 were both officially announced at Bethesda’s E3 2018 Showcase. While no other official information or footage has been shown since, they remain two of the most anticipated titles in AAA gaming.

Let’s first examine what is being left behind if Microsoft would decide to hold these titles to Xbox and PC only. As of September 2020, Skyrim alone had a combined player count of 18.2 million lifetime players across both PS3 and PS4. Additionally, between Fallout 3 & 4, Sony’s two home consoles have accounted for more than 21.3 million players, which gives us a total of almost 40 million combined users across four releases. While Microsoft, as expected given the commitment to backwards compatibility and accessibility of their back catalog, accounted for 53.3 million players across the four releases, you would be hard pressed to find a publisher who wouldn’t be happy with a combined player count of almost 40 million players across four single player experiences. Where I think Microsoft can dine on the previously mentioned cake is in the form of timed-exclusivity. We’re already seeing Microsoft playing legal ball by honoring the PlayStation 5 timed console exclusivity for both Arkane and Tango Gameworks’ upcoming titles in the forms of Deathloop and Ghostwire: Tokyo (respectively). While that’s not much of a shock to many, and is fairly expected given the current climate of the games industry, many forget that Sony and Microsoft are in two completely different financial stratospheres. Currently, Microsoft is valued at over $1 trillion (USD), while Sony currently clocks in around an estimate $45 million for net worth. While that comparison is somewhat apples and oranges, it’s important to note that if Microsoft wanted to legally fight the time exclusivity contracts with Deathloop and Ghostwire: Tokyo, they could easily weather the storm.

Even with the massive financial security that Microsoft has, in which if they gate kept BGS’s upcoming releases and potentially lost money (though it’d be a hard stretch to imagine that happen), why completely limit your sales? $7.5 billion definitely earns you first dibs to your consumer base, but for those players who didn’t want to invest in the Xbox ecosystem at $15/month (which it seems there are still many), why not sell them the game for $70 if they’re willing to pay? While Bethesda titles will absolutely play a large part in the plans for Game Pass in the coming years, they aren’t the “end all, be all” for the service and won’t be the only reason Microsoft entices you to join in. More people are gaming now than ever in the medium’s history, and Bethesda franchises like the Elder Scrolls and Fallout have the ability to transcend consumer sects. With all Bethesda titles confirmed to be releasing day and date on Game Pass, timed-exclusivity gives the opportunity to get the heavy initial player base to join the service and hopefully keep them long term, but after a year could bolster sales again heavily, as we all expect the PlayStation 5 to have a very impressive adoption rate this generation.

We truly don’t know what the future for Bethesda and Xbox holds. The deal won’t be finalized until around the second half of 2021 (per Microsoft), but with a deal of this magnitude: one thing is abundantly clear: a $7.5 billion deal will never be simple. Maybe mystical could fit the bill for what could happen to the gaming industry out of Rockville, Maryland?

Author: Travis White

Editor-In-Chief & Creator of Bonus Accessory. When not publishing on Bonus Accessory, Travis also host the Game Pass Gamecast podcast, centered around Xbox & PC gaming. He also knows that Ubisoft will eventually make another mainline Splinter Cell title (may not be until he's 50, but hey, he'll take it).

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