Hold on to your breath folks. Microsoft seriously had a talk about acquiring Nintendo, and we don’t mean 20 years ago. This was a discussion they had as recently as August of 2020.
In one of many internal emails that leaked for the company, Xbox head Phil Spencer actually addressed the topic to Chris Capossela and Takeshi Numoto. Capossela is Microsoft’s Chief Marketing Officer for consumer business, and Numoto is their Chief Marketing Officer for the commercial business.
So this was a conversation Phil had with Microsoft’s top marketing people about the potential for acquisitions, with a key focus on Nintendo.
Here’s what Phil said in the letter:
“Takeshi, I totally agree that Nintendo is THE prime asset for us in Gaming and today Gaming is our most likely path to consumer relevance. I’ve had numerous conversations with the LT 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.
The unfortunate (or fortunate for Nintendo) situation is that Nintendo is sitting on a big pile of cash, they have a BoD that until recently has not pushed for further increases in market growth or stock appreciation.
I say until recently as our former MS BoD member ValueAct has been heavily acquiring shares of Nintendo (https://www.reuters.com/article/us-nintendo-valueact-exclusive-idUSKCN2232VT) and I’ve kept in touch with Mason Morfit as he’s been acquiring. It’s likely he will be pushing for more Nintendo stock which could create opportunities for us.
Without that catalyst I don’t see an angle to a near term mutually agreeable merger of Nintendo and MS and I don’t think a hostile action would be a good move so we are playing the long game. But our BoD has seen the full writeup on Nintendo (and Valve) and they are fully supportive on either if opportunity arises as am I.”
So Microsoft has had their eyes on trying to acquire Nintendo themselves for some time now. As Phil has also pointed out, such a deal would be highly unlikely at this time, because of the inconvenience that Nintendo happens to have been so historically successful that they are just rich in cash.
But of course, the big surprise here is that one of Microsoft’s own board members has also been trying to get more of Nintendo as far back as 2020. For what it’s worth, since that time, Nintendo has also seen investments from Chinese gaming giant Tencent, and the Saudi prince Mohammad Bin Salman, via their Savvy Games Group. Savvy has overtaken Tencent to be the top investor in Nintendo at the moment.
So Microsoft’s long dormant plan to acquire their console rival hasn’t come to any fruition. But then again, given who else got their money into Nintendo, there may be fans who would prefer that.
Phil seems since in thinking Microsoft acquiring Nintendo would be best for both companies, even if Nintendo may not entirely agree on their end. Here’s how Phil ends his letter:
“I love this discussion and value you looking at the opportunities here. 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…. :-)”
As Phil himself explained, Microsoft may want to acquire Nintendo, but it’s really unlikely that that is going to happen, at least at this time. Nintendo is actually ahead of them in the console race. If anything, Nintendo would be in a better position to buy the Xbox business, though that’s even less likely.
You see, ingrained in Nintendo’s corporate culture is to eschew industry trends and find their own ways to engage gamers. After Hiroshi Yamauchi and Satoru Iwata, the company still seems to beat the tune of their own drum, and finding more success than failure from it.
Microsoft owning Nintendo would certainly be a gigantic disruption of the industry. They would immediately have market share in Japan, and competing squarely against Sony in their home country. Microsoft and Nintendo combined would also be very likely to top Sony’s position in the industry.
In any case, don’t expect anything to come out of this right now. I can’t speak for Nintendo’s position on this, but I can say they are successful enough to not even have to consider it. This remains in the realm of what ifs, for now.