Microsoft Bought Four Game Studios to Boost Gaming Content



Microsoft’s four new game studios

In order to boost its gaming content, Microsoft (MSFT) has purchased four game studios—Ninja Theory, Playground Games, Undead Labs, and Compulsion Games. The financial details of the transactions were not available. The Playground Games acquisition has been completed, and the others are still in the closing process.

Playground Games’ Forza racing series was a partner of Xbox. Ninja Theory and Undead Labs are popularly known for the Hellblade and State of Decay series, respectively. Compulsion Games will launch its new title, We Happy Few, sometime this year.

From the graph above, you can see the revenue growth of Microsoft’s gaming business for the last five quarters. During that period, revenue grew at a CAGR (compound annual growth rate) of 4.2%. In the fiscal third quarter, which ended on March 31, its revenue was $2.3 billion, up 18.1% year-over-year.

Importance of game studios

Microsoft lacks popular gaming titles compared to Sony’s (SNE) popular exclusive games, including Uncharted, The Last of Us, and the recently launched blockbuster God of War. To counter competition with other video game players such as Sony, Nintendo’s Pokémon, and Take-Two Interactive Software’s (TTWO) NBA 2K franchise, Microsoft is looking forward to boosting its gaming content by expanding its studios.

Microsoft is also expected to build a new studio called The Initiative, which may help the company develop more games.

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