Before Microsoft released its first Xbox, the company tried to acquire game companies like EA, Nintendo, Square Enix and Midway Games. Microsoft wanted to get exclusives for its new consoles.
The failed takeover attempts are described in a Bloomberg article on the creation of the Xbox, for which the publication spoke with numerous Microsoft employees who were involved. Steve Ballmer, then CEO of Microsoft, also contributed to the article. It has been known for several years that Microsoft has attempted to acquire Nintendo, but the new article provides more details and also talks about other takeover attempts.
The first company Microsoft tried to acquire was publisher Electronic Arts. Bob McBreen, who was head of business development at Microsoft at the time, says EA simply thanked for this. Then Microsoft tried to acquire Nintendo.
“Steve Ballmer had us schedule a meeting with Nintendo to see if they would consider an acquisition. They laughed at us. Imagine someone is laughing at you for an hour. That’s how that meeting went,” said Kevin Bachus, was the director of third-party relations at Microsoft at the time.
According to McBreen, Nintendo did have talks 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 making 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 come to an agreement, partly because the studio still had contracts with Sony for PlayStation games.
Although Microsoft failed to acquire a large game company, the Xbox maker did manage to make a good start with the acquisition of Bungie, at the time a small studio that was working 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 the hands of Microsoft. The Halo games became major system sellers for Xbox consoles.
The article also details the meetings leading up to 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 burst into anger and accused the Xbox team of destroying Windows. At the same meeting, the green light was finally given to continue, because of the threatening competition from Sony, who 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.
Prototype of the first Xbox – Photo: Graeme Boyd