Microsoft and Nintendo: A Rumored Deal That Never Happened

Introduction

In early 2020, a rumor circulated online that Microsoft was interested in acquiring Nintendo, the Japanese video game giant behind popular franchises such as Mario, Zelda, and Pokemon. The rumor claimed that Microsoft was willing to offer $40 billion for Nintendo, which would have been one of the biggest deals in the history of the gaming industry. However, the rumor was quickly debunked by both companies, who denied any talks of a merger or acquisition. In this blog post, we will explore the origin and impact of this rumor, as well as the reasons why it was unlikely to happen in the first place.

The Origin of the Rumor

The rumor of Microsoft wanting to buy Nintendo first appeared on a website called [Gaming News], which claimed to have an exclusive source with insider information. The website posted an article on January 15, 2020, titled “Microsoft Wants To Buy Nintendo For $40 Billion”. The article stated that Microsoft was looking for a way to boost its presence in the gaming market, especially in Japan, where it had struggled to compete with Sony and Nintendo. The article also claimed that Microsoft had approached Nintendo with a proposal to buy the company for $40 billion, which was more than twice its market value at the time. The article cited an unnamed source who said that Nintendo was considering the offer, but had not made a decision yet.

The article quickly spread on social media and gaming forums, where many fans expressed their skepticism or excitement about the possibility of a Microsoft-Nintendo deal. Some speculated that Microsoft could bring Nintendo’s games to its Xbox and PC platforms, while others feared that Microsoft could ruin Nintendo’s creative vision and quality standards. However, many also questioned the credibility of the website and its source, noting that it had no track record of breaking reliable news or providing evidence for its claims.

The Denial of the Rumor

The rumor of Microsoft wanting to buy Nintendo was soon debunked by both companies, who issued official statements denying any talks of a merger or acquisition. On January 16, 2020, a spokesperson for Microsoft told [IGN], a leading gaming media outlet, that “there is no truth to this rumor”. Similarly, on January 17, 2020, a spokesperson for Nintendo told [Bloomberg], a reputable business news source, that “we have not received any kind of offer from Microsoft”. Both companies also reaffirmed their commitment to their own strategies and platforms, dismissing any need or interest in a partnership or collaboration.

The denial of the rumor by both companies effectively put an end to the speculation and hype that had surrounded it. Many fans and analysts expressed their relief or disappointment at the news, depending on their perspective and preference. However, some also wondered why the rumor had emerged in the first place, and what it revealed about the state and future of the gaming industry.

The Reasons Why the Rumor Was Unlikely

While the rumor of Microsoft wanting to buy Nintendo was intriguing and exciting for some fans and observers, there were many reasons why it was unlikely to happen in reality. Here are some of the main factors that made the rumor implausible:

The Financial Aspect

One of the most obvious reasons why the rumor was unlikely was the financial aspect. The rumored offer of $40 billion for Nintendo was far too high for Microsoft to pay, and far too low for Nintendo to accept. According to [Forbes], Microsoft had a cash reserve of about $134 billion as of December 2019, which meant that it could technically afford to buy Nintendo. However, spending nearly a third of its cash on one acquisition would have been a risky and irresponsible move for Microsoft, especially considering that it had other priorities and investments in its core businesses of cloud computing, software, and hardware. Moreover, Microsoft had already spent $7.5 billion on acquiring ZeniMax Media, the parent company of Bethesda Softworks, one of the largest game publishers in the world. This deal gave Microsoft access to several popular game franchises such as Fallout, Doom, Elder Scrolls, and Wolfenstein, which enhanced its gaming portfolio and reduced its need for another major acquisition.

On the other hand, Nintendo had a market value of about $53 billion as of January 2020, which meant that the rumored offer of $40 billion was significantly lower than its worth. Furthermore, Nintendo had a strong financial performance in 2020, thanks to the success of its Switch console and games such as Animal Crossing: New Horizons. This success increased Nintendo’s market value to over $85 billion as of December 2020, making it even more unlikely that it would sell itself for less than half its value. Additionally, Nintendo had a history of being a profitable and independent company, with a loyal fan base and a unique brand identity. Nintendo had no reason or incentive to sell itself to Microsoft, or any other company, as it had enough resources and capabilities to sustain and grow its business on its own.

The Cultural Aspect

Another reason why the rumor was unlikely was the cultural aspect. The rumor implied that Microsoft and Nintendo had similar or compatible visions and values, which was not the case. Microsoft and Nintendo had very different corporate cultures, histories, and philosophies, which would have made a merger or acquisition difficult and problematic. Microsoft was an American company that focused on technology, innovation, and competition. Microsoft had a global and diverse audience, and aimed to provide a variety of products and services across multiple platforms and devices. Microsoft was also known for being aggressive and ambitious in its acquisitions and partnerships, as it sought to expand its market share and influence in various industries.

Nintendo, on the other hand, was a Japanese company that focused on entertainment, creativity, and quality. Nintendo had a niche and loyal audience, and aimed to provide unique and memorable experiences through its own hardware and software. Nintendo was also known for being conservative and cautious in its acquisitions and partnerships, as it sought to preserve its brand identity and reputation in the gaming industry.

The cultural differences between Microsoft and Nintendo would have posed many challenges and conflicts in a potential deal. For example, how would Microsoft integrate Nintendo’s games and characters into its Xbox and PC platforms, without compromising their originality and charm? How would Nintendo adapt to Microsoft’s corporate structure and management style, without losing its autonomy and independence? How would the two companies align their strategies and goals, without sacrificing their core competencies and strengths? These questions would have been hard to answer or resolve, as they involved fundamental aspects of each company’s culture and identity.

The Legal Aspect

A final reason why the rumor was unlikely was the legal aspect. The rumor suggested that Microsoft and Nintendo had no legal or regulatory obstacles to overcome in a possible deal, which was not true. Microsoft and Nintendo were both subject to various laws and regulations in different countries and regions, which would have affected their ability to merge or acquire each other. For instance, Microsoft and Nintendo would have faced antitrust scrutiny from authorities such as the U.S. Department of Justice (DOJ), the European Commission (EC), and the Japan Fair Trade Commission (JFTC), who would have examined the potential impact of the deal on competition, consumer welfare, and market power. The authorities could have imposed conditions or restrictions on the deal, such as requiring divestitures or concessions from the parties involved. The authorities could have also blocked or rejected the deal altogether, if they found that it violated antitrust laws or harmed public interest.

Moreover, Microsoft and Nintendo would have faced political backlash from governments and stakeholders who opposed the deal for various reasons. For example, some governments could have viewed the deal as a threat to their national security or sovereignty, especially in light of the ongoing trade tensions between the U.S. and China. Some stakeholders could have viewed the deal as a betrayal of their interests or values, especially in light of the cultural differences between the two companies. Some stakeholders could have also viewed the deal as a loss of their identity or heritage, especially in light of the historical significance of Nintendo in Japan.

The legal challenges and risks that Microsoft and Nintendo would have faced in a potential deal would have been significant and costly. The two companies would have had to spend a lot of time, money, and effort to obtain approval from various authorities and stakeholders, while also dealing with uncertainty and opposition along the way. The two companies would have also had to consider the consequences of failing or abandoning the deal, such as reputational damage or legal liability.