Microsoft: a takeover of Electronic Arts to revive the Xbox?

by Jerry

What if Microsoft buys Electronics Arts? A credible assumption given the situation of Microsoft on one side and EA on the other. Better yet, it would be the perfect time to take action. Several analysts believe the U.S. giant needs to react to revive its Xbox console and a takeover of EA would make sense. Especially since Microsoft has plenty of cash to carry out the deal, thanks in part to Donald Trump's tax reform tax cuts.

Microsoft needs to take action to relaunch its Xbox. This is the conclusion of four analysts interviewed by Polygon. If the exact figures are not released by Microsoft, it is estimated that 35 million Xbox Ones will be sold, while Sony would exceed 73 million with its PlayStation 4. For its part, Nintendo has regained the hair of the beast in 2017 with the release of the Switch, which is a real hit. Let's find out together how the Xbox is currently suffering and why a takeover of Electronic Arts seems to be a far from far-fetched possibility.

Microsoft is aware of the problem regarding the Xbox and according to analysts, is already looking for a heavyweight of the video game to buy back. There are rumours of an interest in Valve, a mainstay of the video game and publisher of the Steam platform and games like Counter Strike and Dota 2. Much less ambitious, echoes mention contacts with PUBG Corporation, which has developed one of the most popular games of 2017, Playerunknown's Battlegrounds. Latest indiscretion to date, from a trusted source and close to Microsoft, according to Polygon, the potential takeover of EA.

Microsoft interested in buying Electronic Arts

The Xbox One has disappointed players in terms of exclusivity, even though Microsoft managed to get it for PUBG on home consoles. It is trying to make an effort by adding, for example, all its exclusive games to the Xbox Game Pass subscription and it has been announced that Microsoft will "take out the checkbook" to invest in exclusives in 2018. But this still seems insufficient in the face of fierce competition from Sony and Nintendo.

Recovering and grabbing EA's gaming catalog would be a huge blow for Microsoft, which "gives the impression that its portfolio of exclusives is very meagre," says Joost van Dreunen, CEO of SuperData Research, a company specializing in data analytics and market video games. "They don't have a catalog of content consisting like Sony and I see them late. And many of their titles didn't work." To become the Netflix of video gamesas it wishes, Microsoft needs to review its catalog of exclusives, which EA can provide.

With licenses like FIFA, Battlefield or Star Wars Battlefront, EA has serious arguments to make. This is the type of games that can justify the purchase of a console on their own. Another argument is that Microsoft might appreciate EA's economic view of the video game market. The publisher is directly associated with the concept of "Game as a service". The principle is to offer players new content regularly and do everything to keep it on the game. But to enjoy it, you have to either go through the microtransactions, or buy a season pass or DLC.

Xbox One competes with PS4 and Switch

For its part, EA is going through a period of turmoil. The value of its stock dropped after the controversy of microtransactions on Battlefront II and the game was not even the commercial success hoped for. Mass Effect: Andromeda and Need For Speed: Payback also disappointed in terms of sales. Microsoft could take the opportunity to convince the publisher to accept the takeover and right these very powerful licenses.

"Microsoft in general had a very good year," says David Cole, owner of DFC Intelligence. "But it has nothing to do with the Xbox One." A buyout would cost a fortune: EA is valued at $36.23 billion on the stock exchange. Financially, Microsoft would of course take a risk but can afford it. It has $130 billion in equity and can take advantage of Donald Trump's tax reform tax cuts to further increase the amount of cash it has available.

All the conditions seem to be in place for what would be one of the most important buybacks of recent years. After Disney's record purchase of 21st Century Fox for $52.4 billion, all hopes seem to be well-kept. According to analysts, the economic situation is favourable for this type of transactions between tech giants. In 2018, some of them are even planning a takeover of Netflix by Apple.

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