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Xbox boss Phil Spencer really wanted to buy Nintendo

One problem? Nintendo has a lot of money

A photo of Xbox head Phil Spencer wearing a Psychonauts T-shirt while speaking on stage at the Xbox E3 2019 briefing Photo: Christian Petersen/Getty Images
Michael McWhertor is a journalist with more than 17 years of experience covering video games, technology, movies, TV, and entertainment.

Microsoft has very visibly gone on a spending spree over the past decade, buying up more than a dozen development studios through acquisitions of ZeniMax Media, Obsidian Entertainment, Double Fine Productions, InXile Entertainment, and others. Microsoft hopes to soon close its $68.7 billion buyout of Activision Blizzard.

But Xbox head Phil Spencer said in 2020 — a month before Microsoft announced its plan to acquire ZeniMax and subsidiary Bethesda Softworks — that his No. 1 pick for an acquisition or merger is Nintendo. In emails leaked as part of the Federal Trade Commission’s case to block the Microsoft-Activision Blizzard deal in court, Spencer named Nintendo as “THE prime asset for us in Gaming.”

Spencer discussed the possibility of an acquisition or merger with Nintendo in an email with Microsoft executive Takeshi Numoto. Spencer said that he’d “had numerous conversations with the [leadership team] of Nintendo about tighter collaboration and feel like if any US company would have a chance with Nintendo we are probably in the best position.”

Two things stood in Microsoft’s way, according to Spencer: “The unfortunate (or fortunate for Nintendo) situation is that Nintendo is sitting on a big pile of cash,” and “they have a [board of directors] that until recently has not pushed for further increases in market growth or stock appreciation.” In the years prior, Nintendo had announced plans to expand its business and capitalize on its intellectual property with animated feature films, theme parks, and free-to-play mobile games. At the time of this discussion, Nintendo was sitting on $5.75 billion in cash and was generating operating profits of more than $3.2 billion.

Spencer said that he didn’t see a near-term, mutually agreeable merger of Nintendo and Microsoft, adding, “I don’t think a hostile action would be a good move so we are playing the long game.”

According to that email, Microsoft was then actively engaged in merger and acquisition discussions with Warner Bros. Interactive and ZeniMax — the latter of which came to fruition.

Spencer explained his rationale regarding Nintendo to Numoto in the midst of conversations around Microsoft’s potential acquisition of TikTok. Back in the summer of 2020, Microsoft pursued a purchase of TikTok in the U.S., Canada, Australia, and New Zealand. According to that plan, which was pushed by former President Donald Trump’s administration amid a crackdown on the social media platform, Microsoft would own, operate, and oversee TikTok’s business in those markets.

“I get that this whole Tic Tok discussion is happening outside the regular core biz discussions,” Numoto said in an email to Spencer and chief marketing officer Chris Capossela, “but it really makes me wonder why we would not find targets like Nintendo more attractive, if we want to find a way to increase our consumer exposure and relevance.”

Explained Nomuto, “It feels like Nintendo has such a rich set of franchises that can help us shore up our content franchises [...] I suspect you guys have talked about this multiple times, and I get that there are numerous challenges about this target, but thought I would at least share my musing (since it feels more logical than Tik Toc).”

“I love this discussion and value you looking at the opportunities here,” Spencer responded. “At some point, getting Nintendo would be a career moment and I honestly believe a good move for both companies. It’s just taking a long time for Nintendo to see that their future exists off of their own hardware. A long time.”

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