Phil Spencer, CEO of Xbox, emailed Microsoft CEO Satya Nadella and CFO Amy Hood in November 2020 to ask for permission to approach Sega Sammy to acquire its gaming studios.
In an email seen by The Verge, he wrote about the Japanese company, “We believe that Sega has built a well-balanced portfolio of games across segments with global geographic appeal, and will help us accelerate Xbox Game Pass both on and off-console.”
Spencer continued, Due to its global PC catalog, Asia-based mobile presence, and global brand affinity for consoles through its classic IP, Sega is the most appealing next acquisition target.
The message was included in internal documents from Microsoft’s ongoing legal battle with the US Federal Trade Commission, which wants to stop the Xbox maker from buying Activision Blizzard for $69 billion.
Sega was also listed on a document from April 2021 titled “M&A final watchlist,” but it is not clear how Nadella responded to Spencer’s request.
Zynga, which would later merge with Rockstar owner Take-Two in the games industry’s largest ever completed deal, and Bungie, which was later acquired by PlayStation maker Sony, also appeared on the watchlist.
Hitman creator IO Interactive, Hades creator Supergiant Games, and Pokémon Go studio Niantic all did the same. Scopely, Thunderful, and Playrix were other options.
The acquisition of Activision Blizzard by Microsoft would dwarf the $12.7 billion that Take-Two paid for Zynga, the maker of FarmVille.
Last week, Spencer said that Microsoft talked a lot with Zynga before moving on to other targets.
He stated, “We thought we needed to have something even bigger than Zynga was given our very small starting space in the mobile business in the end for our opportunity.”